Two Navy inspector general reports detailed Tuesday the hot water that two ousted Naval Postgraduate School leaders found themselves in.
The reports dated Nov. 21 detail allegations going back several years against school president, retired Navy Vice Adm. Dan Oliver, and school provost Leonard A. Ferrari.
While some allegations deal with improper handling of gifts, primarily through the school foundation, the reports don't suggest either man engaged in schemes for personal enrichment.
The report concerning Oliver runs to 98 pages, while the report on Ferrari contains 27 pages. The blistering reports also call into question the future relationship between the school and its supporting foundation.
The documents say there will be follow-up reports "on the doings of others at NPS we do not consider to be senior officials."
The report on Oliver deals with six allegations that:
· He hired a finance-administrative vice president as a contract employee to get around federal salary limits.
Colleen Nickles, a former associate vice president at CSU Monterey Bay, holds the senior leadership job. A 2008 consulting report recommended that NPS create the vice president position because the school needed "greater clarity" in budget and financial areas.
· He allowed the executive director of the Naval Postgraduate School Foundation to interview candidates for the job.
· He allowed a female contract employee — whose name was redacted — to perform government duties.
· He placed the school's comptroller in an improperly subordinate position.
· He accepted and solicited gifts from the foundation on behalf of the Navy in violation of several policies.
· He engaged in excessive and wasteful overseas travel.
The inspector general upheld five of the six complaints, only finding that Oliver's overseas travels "had a reasonable connection to his official duties."
The report said the violations were "particularly egregious" in light of Oliver's 34-year naval career and flag officer position.
Oliver was aware of ethics training and the rules and held others accountable to them, but "failed to comport himself in accordance with those rules," the report said.
Oliver's conduct regarding the vice president position, in which he paid the employee $275,000 a year after she rejected $162,000 per year plus a one-year $25,000 bonus, amounted to "waste and gross mismanagement."
Oliver testified that the cost of her contract would be offset by salaries of unfilled senior civilian jobs, the report said.
The report said Oliver accepted two personal gifts — patio furniture and a gas grill — from the foundation. But he asserted the items were used for official functions at his residence, the Stanley House, on NPS grounds.
"I moved in a with a suitcase and a television, and I probably won't take the TV when I leave," Oliver is quoted in the report.
The report said Oliver was instrumental in creating a foundation "recruitment and retention" fund that should have been given as a gift of money to the Navy for the school. The report criticized Oliver for his refusal to acknowledge the fund existed.
Foundation money also was used improperly to cover a $10,000 expense to bring a Nobel laureate to the school, the report said. And Oliver improperly allowed Navy school employees to get expense reimbursements from the foundation.
"Rather than set an example of exemplary behavior, President Oliver was an integral part of the problem," the report said.
Because of widespread inappropriate behavior regarding gift rules and the foundation, the inspector general recommended that NPS's gift acceptance authority be rescinded pending revision of the rules and training.
The report also said the secretary of the Navy should look into whether the relationship between the school and the foundation be permitted to continue.
"The Foundation, whose primary purpose is to support NPS, appears willing to undertake actions on behalf of NPS that foundation leadership knows would be improper if attempted by NPS itself," the report said. "This is inexcusable and intolerable."
The president of the Naval Postgraduate School Foundation board of trustees said Tuesday night by phone that the nonprofit does not have oversight of the process by which its gifts are accepted at the college.
"From my perspective, no one has done anything illegal," board President Bill Warner said. "Nobody stole any money"
The function of the foundation, which is legally separate from the school, is to support the school through internships, academic awards, upgrades to facilities and other efforts detailed on its website.
"It's important that people don't have the wrong conclusion that something nefarious was going on," Warner said, "that people were stealing money, doing something bad, something criminal."
Warner, who has been president of the 24-person board for five years, called the firing of the school's top officials "unfortunate."
"Everyone has the proper intent of helping the school," he said, "of helping it succeed."
The foundation had raised $1.5 million from contributions, grants, investments and other revenue in 2010, said its most recent publicly available tax records. Its total expenses that year were $1.2 million, records say.
Efforts to reach Merrill Ruck, executive director of the foundation, were unsuccessful.
Allegations against Ferrari
As for Ferrari, the Office of the Naval Inspector General looked into two specific allegations that he:
· Solicited and accepted gifts from the foundation in violation of laws and Navy rules.
· Took excessive and wasteful overseas trips.
As with Oliver, the inspector general didn't find anything wrong with Ferrari's travels abroad. But it said the foundation improperly reimbursed Ferrari by check and paid vendors on his behalf.
From 2007 to the present, the report said, the foundation made proper gifts of cash and property worth more than $900,000 to benefit the school.
But during the same period, Oliver, Ferrari and "various NPS staff and faculty members accepted gifts directly from the foundation in a manner inconsistent" with laws and Navy rules, the report said.
In Ferrari's case, the improper gifts included payments for wine, dinners, taxi fares, gift coins, tie pins and coffee table books, the report said.
The report doesn't indicate Ferrari engaged in any activities for large-scale personal gain, but exhibited "poor judgment" in seeking and accepting gifts.
Herald Staff Writer Phillip Molnar contributed to this report.
Larry Parsons can be reached at 646-4379 or firstname.lastname@example.org.