Freakonomics Radio - 134. Government Employees Gone Wild

Episode Date: July 18, 2013

The Encyclopedia of Ethical Failures catalogs the fiscal, sexual, and mental lapses of federal workers -- all with an eye toward preventing the next big mistake.

Are you looking for a good beach read this summer? If so, I can help you. I've got just the book for you. It's got pretty much everything in it. Sex, crime, power struggles. It's got drug dealers and prostitutes, cheating scientists, Russian brides, even rogue real estate agents. And the best part? Every word is true.

And oh, oh yeah, it won't cost you a penny. Because it's already been paid for by your tax dollars. What is this magical book? It's called The Encyclopedia of Ethical Failure. From WNYC, this is Freakonomics Radio, the podcast that explores the hidden side of everything. Here's your host, Stephen Dupner. So I am very pleased to present today the founding editor and current editor of one of the most unusual publications I've ever come across. It's called the Encyclopedia of Ethical Failure, and it's published by the United States Department of Defense. So, gentlemen, can I first ask you to introduce yourselves, please?

I'm Jeff Green. I'm a senior attorney in the Standards of Conduct Office as part of the Office of General Counsel here at the Department of Defense. And that would make you the current editor of this publication, correct? Correct. Okay. And I'm Steve Epstein. I used to work with Jeff at the Department of Defense. I've moved on now. I'm the chief counsel for ethics and compliance at the Boeing Company.

Very good. And that would make you the founding editor of the Encyclopedia of Ethical Failure, correct? Yes. So Epstein and Green are my new favorite authors. The Encyclopedia of Ethical Failure is meant to be a sort of manual, an ethics guide for government employees. Steve Epstein started it about 10 years ago. There is a requirement that we train our senior officials and many other officials in the government every year. And the problem, of course, is keeping that

training fresh, keeping it relevant. And to do that, we discovered the first thing you have to do is you have to entertain folks enough so they will pay attention. And entertaining it is because this encyclopedia is 160 odd pages of true stories about government employees who screwed up. Now, the chapter headings are helpful. You've got your fraud, gambling, conflicts of interest, abusive position. And even though the book is published on the Department of Defense website, actually, it's not even really published. It's just sitting there as a Microsoft Word document for anybody to read. But anyway, the screw ups that it chronicles are not limited to the Department

of Defense. The stories come from all over the federal government. You've got the IRS represented, Veterans Affairs, government safety inspectors. Here, here's one entry. The headline is, but judge, I didn't get anything. An offshore safety inspector found much of the government's equipment to be in need of repairs to meet safety standards. He then referred the business to his brother-in-law's repair shop. The rig operators smelled a rat and called the FBI. They discovered that in return for each referral, the brother-in-law was treating the inspector to an evening with a lady of dubious morals. The case was brought to trial. In his defense, the inspector claimed that he had not received a thing of value in return for the referral. The judge didn't buy it, and neither did his wife. Now, it should be said

that Epstein and Green are rather considerate in how they point their fingers. They don't always name names, and they don't include a story unless it's been settled with a conviction or a guilty plea or some other disciplinary measure. The stories are taken from media reports, press releases, and the inspectors general of other agencies. There are so many favorites. I mean, it's like going to an ice cream shop and picking your favorite flavor. There's really no such thing. But the one that I always remember was an employee in actually DOD who was also a real estate agent. And she basically put her on her real estate

card, her business card, she put her phone number and address at the Pentagon. And at her desk in the Pentagon, she would answer the phone, KNB Real Estate. Even I could tell that's probably no-go. And this one, it sort of surprised us that she was so bold in basically taking her outside business and making it her primary business. Now, I don't know how well you know the case, Steve, but do you have any recollection of or knowledge of what her response was when she was challenged on this, when she was caught on it? Well, as a matter of fact, that's part of it. And yes, she was basically called and pointed out that she was misusing government office and her government resources to carry on her outside business, which is also prohibited by the rules. And she said, well, in that case, I'd rather be a real estate agent than she quit. Okay. Jeff, how about a favorite from you?

I like Steve. There's so many. Different ones, but one of the ones actually was not involving a Defense Department employee. It involved the Drug Enforcement Agency, and they had an agent who was responsible for protecting a confidential source whose husband was a drug trafficker. Oh, I remember this one, I hate to say. Yeah, this is unbelievable. Go ahead. Sorry.

Yes. He had a government vehicle. He was taking her to a cafe. He was taking her to the airport and then got to the point where he was taking her to the hotel to go to bed with her. And he even was kind enough to give her some of his ammunition for her gun. So this is a DEA official who's got a confidential informant, and he's cheating on the informant's wife and giving her government bullets in a nutshell, yeah?

Yes, and one of the problems that the MSPB really went after him for was the misuse of the vehicle, which I thought was kind of funny. Sex, as you may expect, is a common theme. But a plain old extramarital affair gets a lot more problematic in the military, where adultery is a crime. And you know what happens next, right? Like they say, the cover-up is always worse than the crime. We had one involved, a Navy officer. He was in charge of a submarine.

He was married and was carrying on an affair with another woman, and he got her pregnant. And so he rigged up his email so that someone else sent her an email and said, well, he passed away in the service of his country. So she was so upset about it, she took her mother, they drove to his home in Virginia, and the new owner said, oh, he's fine. He's up in Connecticut. So they drove up and all of a sudden they find out that it was all a ruse. And so let's make a long story short. Her sister contacted the Navy JAG office and he will no longer be

head of any kind of ship or commander of any sort. But... No, let me just ask you quickly, Jeff, what's worse there, the sex or the pretending to be dead? The UCMJ, which is the law that governs military officers, prohibits that kind of activity. In addition, pretending to be dead is a pretty draconian way of trying to solve the problem. It's another poor judgment, I think. When we come back, you'll hear about an absolutely idiotic burglary, a creative use of religious leave, and a story about governmental red tape, actual roles of governmental red tape. From WNYC, this is Freakonomics Radio. Here's your host, Stephen Dubner. The Encyclopedia of Ethical Failure, an ethics guide published by the Department of Defense, includes plenty of kickbacks and bribes, misuse of government funds,

and what might be called the misuse of theology. Some military members who were, instead of taking annual leave, which is the government's way of vacation time, they decided to bank everything under what they called religious leave. And whether it was going to the doctor, whether it was playing golf, they used it as religious leave. So at some point, someone found out about this and called the IG for an investigation. And when they were questioned about this, someone said, well, what did you think of golf as a religious experience? And the military member said, well, I think it certainly could be, you know. But they ultimately

were dismissed and weren't able to take advantage of their religious leave. I think it's only a religious experience when you hit the hole in one. One thing that's astonishing is how lazy some scammers are about covering their tracks. Here, from the Encyclopedia of Ethical Failure, is an entry called It's Five O'Clock Somewhere. A government employee attached to a service base in the United States ended up taking a permanent vacation after a pattern of working an abbreviated work week. The investigation showed the employee worked an average of three hours a day before leaving around 9 or 10 each morning to spend the rest of the day drinking in a local bar. The employee put in for retirement in lieu of disciplinary action. And this one is called,

What do you mean this isn't my property? One entrepreneurial federal employee backed his panel van up to the office door one night and stole all the computer equipment. He wasn't too hard to catch. He tried to sell everything at a yard sale the next day, with barcodes and property of U.S. government stickers still prominently displayed. violations among different departments, maybe among even different political parties, male versus female, any kind of categorizing that you can help us with a way to think about how different violations sort of break down? Peter Van Doren Well, I actually did a taxonomy of this several years ago.

Trevor Burrus Oh, you did, yeah. Peter Van Doren Because I was intrigued by why in most cases good people make bad mistakes. And I found it didn't really relate to grade or rank or gender, but I found that at least within the government, where I think most of your people are trying to do the right thing, the predominant issue was at the moment they didn't think of the ramifications. It was an error in judgment of people who were generally well-meaning, but at the time, they saw an advantage or they saw something which distracted them from what they should have been doing.

And I think in most of the cases, when you would sit down with these folks afterwards and say, what were you thinking? They would be banging their heads on the table and saying, you're right. I wasn't thinking. Mm-hmm. Jeff and Steve, you both sound and on paper look like the kind of guys who would not have the jobs you have if you were the type who would make the kind of bad decisions that get made by the people who are in your book. But I'm still curious whether either of you

have ever been on the border of doing something that may be just a little bit beyond the reach of good judgment and thought back to that story in your own encyclopedia of ethical failure and helped yourself with your encyclopedia? Well, I could emphatically say yes, and more than once. Okay. There are times when I would like to do something, and I first of all check the legality of it and say, OK, I think this is legal. But then I step back and say, OK, now let's think about it one more time. How would this appear? You know, how would people challenge my judgment if this were disclosed?

And then, you know, it comes into very much some of the stories we look at about that. And it causes me to back off. Do either of you ever worry that this encyclopedia of ethical failure could be read not so much as a set of cautionary tales, but instead as a handbook for, oh, there's something I hadn't thought of doing. There's a way to wrangle a little extra money or influence or whatnot. Well, it's funny. Good point you raised there. I don't see that because in most of these cases, you see people who made very poor judgment calls and they weren't very successful in a criminal manner. So it would hardly be a handbook for how to be a successful criminal.

As a matter of fact, it's more of a handbook of how to be an unsuccessful criminal. The lessons of the Encyclopedia of Ethical Failure are pretty straightforward and helpful, whether you work in government or not. Don't steal stuff from your office and sell it at home in a yard sale. Don't spend all day in a bar if you're supposed to be working. Don't pay a kickback with hookers. And if you are going to do any of these things, don't lie about it and then pretend you're dead. It just won't work. Now, it's impossible to say how successful the encyclopedia has been, if at all, in preventing ethical failures.

One thing it has going for it is that it tells stories. It doesn't dwell on the rule that gets broken. It tells us who does what, to whom and how, sometimes why. Nobody wants to read a set of rules, but all of us like a good story and will remember it too. With that in mind, I'll leave you with my favorite story from this wonderful book. This one's called Employees Fail to Profit from Red Tape. Two workers at the Veterans Affairs Consolidated Male Outpatient Pharmacy, which mails prescriptions to veterans, were charged with taking kickbacks for purchasing a product from a supplier at more than twice the normal price.

The product? Red tape. The employees were charged with purchasing 100,000 rolls of the tape, which is stamped with the word security and is meant to deter tampering, at $6.95 a roll rather than its $2.50 retail value. In return, they received kickbacks of more than $1 per roll. The duo will have plenty of time to appreciate the irony of their situation as they face a sentence of 15 years in jail. Hey, podcast listeners. You know what they say. A quitter never wins and a winner never quits. Or, as Churchill put it, never, ever, ever, ever, ever, ever give up.

Well, that's what they say. One of the single most important explanations for how I managed to succeed against all odds in the field of economics, it was by being a quitter. On the next episode of Freakonomics Radio, we revisit the upside of quitting. Talk to you then. Thank you. and more.