2 FEDERAL INQUIRIES AIMED AT CUSTOMS

U.S. Senate and Treasury investigators have launched simultaneous
nationwide probes of alleged mismanagement within the U.S. Customs
Service, questioning systematic cronyism and undeserved leniency
toward favored employees who break the law.

Both investigations were prompted in part by stories in The Herald
that found dozens of examples of careers that flourished after
misdeeds such as dating drug smugglers, tampering with evidence,
skimming seized drug cash, having sex with a paid informant and other
crimes and policy violations.

The investigations are expected to culminate this summer in Senate
oversight hearings and proposed reforms. One possibility: stripping
the 20,000-employee Customs Service of all its internal affairs functions.

Customs' own ongoing investigation found inappropriate leniency in at
least five cases cited by The Herald, and Customs Commissioner Raymond
Kelly has begun a major agency shake-up that has included forced moves
of Miami's three top administrators.

Kelly's actions are the latest in a series of attempted reforms
imposed on the agency by federal regulators and oversight panels in
recent years.

A team from the Treasury Department's Office of Inspector General is
reviewing all the Florida cases detailed by The Herald. Last week, the
team told Customs it is expanding the probe to include an audit of
1997 and 1998 internal affairs case files in El Paso, New Orleans,
Philadelphia, Chicago, Los Angeles, Miami and the Customs database
center in Virginia.

In addition, U.S. Sen. William V. Roth Jr., R-Delaware, chairman of
the Senate Finance Committee, requested three years of disciplinary
records nationwide, including all complaints, allegations of employee
misconduct, and all of Customs' internal referrals to federal
prosecutors.

`Serious questions'

The Dec. 13 newspaper stories "raised serious questions about the
ability of Customs to effectively assess allegations of mismanagement,
and to impose appropriate discipline in cases of proven misconduct,"
Roth wrote in a Dec. 17 letter to Kelly.

"An agency cannot be successfully managed if it cannot ensure that
there are internal controls in place that fairly and effectively
address issues of fraud, abuse, and misconduct."

In response, Kelly ordered the Miami transfers, changed three
assistant commissioners, stripped regional commands of many
promotional and disciplinary decisions and began a shake-up designed
to thwart unfair employment practices.

Kelly, who in August became the sixth head of the agency in the past
decade, detailed that shake-up in a Jan. 14 response to Sen. Roth
obtained by The Herald.

In it, Kelly provided a summary of his office's investigation of the
Herald report, including findings that some "discipline imposed was
less than the minimum discipline provided as a guideline" and that
"some individuals were promoted or selected for a career-enhancing
assignment after being previously disciplined.

Managers notified

"In response to these findings, I have directed that action be taken
to insure employee conduct history is part of the decisional process
in considering candidates," Kelly wrote. "I have clearly communicated
to all managers and supervisors that they will be held accountable for
taking appropriate disciplinary action."

Kelly's letter says discipline was inappropriately lenient in cases
where South Florida employees were caught wrecking a Customs car while
drinking, soliciting an undercover Miami police officer for
prostitution in a Customs car, planting marijuana in the bags of a
cruise ship passenger, and skimming seized drug cash.

In the marijuana case, Kelly's office referred the 5-year-old
internal affairs file to the U.S. attorney's office for prosecution on
Dec. 30. Federal prosecutors declined to file charges.

In another case, a former Miami supervisor promoted to Washington
after he was caught living with a drug smuggler has been put on
administrative leave while under investigation for possibly continuing
contact with the woman.

Although records in most of the specific cases remain under review,
Kelly's report to Roth said discipline had been meted out within
Customs guidelines in four of the cases listed by The Herald.

Changes called for

Kelly said the investigation revealed a need to "strengthen and ensure
consistent application" of penalties, to restructure the investigative
process, to eliminate oral admonishments for serious misconduct, to
expand the disciplinary review board and to review the quality and
timeliness of investigative reports.

Kelly also said he appointed seven teams to address needed reforms in
categories ranging from immediate discipline to whistle-blower protection.

"In the past, Headquarters lacked strong national direction and
control over the conduct of investigations and discipline programs,"
Kelly said. "New policies and practices are being implemented to bring
about greater consistency and accountability."

So far, Kelly's actions have not stopped momentum for outside
review.

On Jan. 19, the Treasury Department's Deputy Assistant Inspector
General for Investigations Michael Tarr announced the start of a probe
of mismanagement allegations.

Extensive probe promised

"Our inquiry will include interviews, reviews of internal affairs
investigative case files, management inquiry reports, official
personnel files, management inspection reports, disciplinary review
reports and other files and records as deemed appropriate," Tarr wrote
Kelly.

"In addition, we will also pursue independent allegations involving
mismanagement and malfeasance involving U.S. Customs officials that
have been brought to our attention since the news article."

Two weeks later, on Feb. 4, Tarr sent another memorandum expanding the
probe of Customs internal affairs to include a systematic review of
case files in seven major offices around the country -- including Miami.