A PROBE IN THE DRUG CZAR'S OFFICE

WASHINGTON - Congressional investigators opened a criminal investigation of
the White House drug czar's office this spring after uncovering evidence
that contractors improperly inflated advertising costs for the $1 billion
national anti-drug campaign.

Robert Hast, head of the congressional General Accounting Office's elite
criminal fraud unit told the House Government Reform criminal justice
subcommittee Wednesday that GAO auditors uncovered evidence involving an
estimated $8 million in inflated charges submitted in 1999 involving
government advertising contracts.

The charges involve inflated billing for work done on the anti-drug
contracts, payments of bonuses to executives, and improper travel charges.
Hast said a former employee of the giant New York advertising firm Ogilvy &
Mather also gave investigators testimony of other improprieties.

"We are looking at the fraud," he said.

Hast said that the progress of the investigation has been hampered since
April by White House drug czar Barry McCaffrey, who has refused to allow
auditors for the U.S. Department of Health and Human Services to complete
an audit of the drug office contracts. That department oversees government
drug programs.

Aides to the former U.S. Army general say McCaffrey wants to transfer the
auditing responsibilities for his office to the U.S. Navy, but has not yet
received approval for the Navy to do the work.

Hast also recounted how McCaffrey was involved in several other curious
activities in the case. Although McCaffrey was told of the contracting
irregularities in a two-page memo dated April 13 from his staff, Hast said
McCaffrey initially denied to his investigators that he knew anything about
the matter.

He then changed his testimony after the investigators showed McCaffrey a
copy of the April 13 memo, which contains McCaffrey's own handwritten
comments in the margin.

Hast also testified that in June, McCaffrey met privately with an Ogilvy &
Mather representative, and told drug office subordinates after the meeting
that he was "satisfied with the contractor's costs."

Howard Pleffner, the drug office's project officer supervising the
contracts, said the audit is needed to close the books on a backlog of more
than $13 million in pending bills from Ogilvy, and $5 million from other
contractors. Some of the bills are a year overdue, he said.

Pleffner, who authored the April 13 memo to McCaffrey detailing the
contract irregularities, found that some vouchers submitted for payment
were 33 percent higher than those submitted earlier for the same services.

He said he stands by his conclusions that an investigation is needed to
find out why this happened . "Yes, I still believe that," he said.

Rep. John Mica, R-Fla., the panel's chairman, said there's no reason for delay.

"If someone ripped off the taxpayers, I want this pursued,'' he said.

Mica warned that controversies surrounding the drug office are eroding
support in Congress for the anti-drug campaign. The program is designed to
use advertising and Internet campaigns to change tolerant views of American
youth toward drug abuse.

Ogilvy officials were not asked to appear at the hearing.

But Bill Gray, president of the advertising firm, said in a statement later
that all of the bills he submitted "were fair and appropriate" for work
done on the anti-drug campaign. He said the company is prepared to make any
adjustments necessary if some errors are found in the company's billings.

Don Maple, a senior policy analyst with the White House drug office, said
the agency isn't sure that any fraud was committed.

"We don't have evidence of fraud, and we don't believe there is. We need
the audit to verify this," Maple said.