VA admits it wrongly paid $11M in bonuses

Secretary orders executives to repay, but some of the money was already spent

Veterans Affairs leaders improperly handed out almost $11 million in bonuses to more than 180 senior executives last year, with several taking home more than $100,000, a new investigation has found.

The bonuses came from funds Congress earmarked to recruit and keep staff needed to process billions of dollars in new veterans benefits —not to reward top officials in Washington.

When Secretary Denis McDonough learned of the payments in September, he ordered all the executives to repay VA. But the bonuses still are being recouped eight months later because many who received the money had already spent it, and some are challenging the order, according to a 92-page report by Inspector General Michael Missal’s office, obtained by The Washington Post ahead of its public release Thursday.

The episode exposes a litany of blunders and missing safeguards within VA as its top leaders disregarded rules to hand payouts to all career senior leaders in the D.C. headquarters of the health and benefits systems — then failed to keep McDonough and others informed about the plan, Missal’s office found.

“The missteps … clearly had the potential to damage the confidence placed in VA by veterans, employees, taxpayers, and members of Congress,” the report said.

In his response to a draft of the report, McDonough concurred with numerous recommendations, including the need for better assessments of future bonuses, a new review of previous awards and more oversight from VA’s legal office. McDonough also pledged to decide whether the leaders who approved the improper payments should face discipline.

“VA intends to learn from [the] findings to execute on these important authorities to better effect for Veterans, and consistent with congressional intent, VA policy, and best management practices,” the secretary wrote.

“Secretary McDonough has made clear from the beginning that he takes responsibility,” VA spokesman Terrence Hayes said in an email. He called the incentive pay “critical to retaining and hiring VA public servants... and we will make sure that we are utilizing it effectively, correctly, and as responsible stewards of taxpayer money.”

A top lawmaker with oversight over the agency said he was outraged by the bonuses.

“VA inappropriately used the money to line the pockets of executives to the detriment of its workforce and the veterans they serve,” Rep. Mike Bost, R-Ill., chairman of the House Veterans’ Affairs Committee, said in a statement following the report’s release.

The vast majority of the payouts investigated by the inspector general went to senior executives inside the massive veterans health system, led by Shereef Elnahal, undersecretary for health. Elnahal signed off on 148 bonuses to headquarters executives averaging $61,666 — but repeatedly did not notify McDonough, investigators found.

The report also concludes that Joshua Jacobs, Elnahal’s counterpart leading another arm of VA, the Veterans Benefits Administration, approved 34 bonuses at an average of $50,000. He told McDonough that he was awarding bonuses to some headquarters executives but did not make clear that all of them would receive the money, investigators found.

VA provided no data to document that any of the 182 senior executives were at risk of quitting and should be paid extra to keep them.