Pension Benefit Guaranty Corporation:

Appearance of Improper Influence in Certain Contract Awards

T-OSI-00-17: Published: Sep 21, 2000. Publicly Released: Sep 21, 2000.

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Pursuant to a congressional request, GAO investigated alleged contracting irregularities at the Pension Benefit Guaranty Corporation (PBGC), focusing on allegations that PBGC's Director of Insurance Operations, Bennie Hogan, improperly influenced the award of two contracts to Myrna Cooks.

GAO noted that: (1) between April 4 1997, when Ms. Cooks resigned from Office Specialists (a PBGC contractor) and October 10, 1997, when Integrated Management Resources Group, Inc. (IMRG) was awarded its first contract, 34 calls were logged from either Mr. Hagans' PBGC office telephone or his PBGC cellular telephone to Ms. Cooks' home, the location of IMRG; (2) regarding her many telephone conversations with Mr. Hagans after she left Office Specialists, she stated that they concerned "personnel problems" at Office Specialists; (3) on or about August 29, 1997, after IMRG had submitted its several contract proposals but before the auditing contract was awarded on October 10, 1997, Ms. Cooks met with an officer of a Maryland bank to seek financing for IMRG; (4) at that time, Ms. cooks was IMRG's only employee and operated business out of her home; (5) the bank officer stated that he had a telephone conversation with Mr. Hagans and afterwards was convinced that Ms. Cooks claim that she would get the contract awards was truthful; (6) Mr. Hagans' actions demonstrated a lack of impartiality with respect to IMRG and created the appearance of improperly influencing the award to the two contracts GAO investigated; and (7) as a result GAO plans on referring this matter to PBGC and the Department of Justice for them to determine what, if any, additional action may be appropriate.

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