VA Watchdog: Top Executives Received Nearly $11 Million Meant for Recruitment and Retention

Funds earmarked to recruit and retain staff for critical shortage positions within Veterans Affairs were inappropriately used to pay more than 180 senior executives bonuses worth almost $11 million last year, a new report revealed.

VA Undersecretary for Health Shereef Elnahal signed off on bonuses for 148 executives averaging more than $60,000, according to the 92-page report from Inspector General Michael Missal’s office. Joshua Jacobs, who leads the Veterans Benefits Administration, gave away an additional 34 bonuses worth $50,000 to top-level executives.

At least seven executives received more than $100,000 in bonuses, but Elnahal reportedly did not inform Secretary Denis McDonough of the extent of the payments. It wasn’t until last September that VA Secretary Denis McDonough learned of the payments and then ordered all of the executives to repay the VA. However, Missal found that most had already spent their checks, and some were challenging the order.

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

Neither Elnahal nor Jacobs, appointed by the Biden administration last year, analyzed whether the bonuses were earned, per the report, nor was there any document or data showing that these executives were at risk of quitting, for the turnover rate for top executives was just 2.4%.

“There did not appear to be a valid retention concern supporting these incentives,” the report found, adding that because of this, “the blanket award of [bonuses] to all … central office executives at the highest allowable percentage without sufficient justification was inconsistent with both the PACT Act and VA policy.”

VA offices, such as human resources and the legal department, failed to flag these bonuses, which investigators found to be a “breakdown in leadership and controls and missed opportunities at multiple levels.”

Elnahal had allegedly told investigators that he had no idea that the health system has more than 150 senior executives when he signed off on the awards. “I had no idea that we had upwards of 150 of them,” he said, according to the report. “I think if I had known that, my management instinct would be to get the same level of justifications together and the costs [as for the field executives].” However, the report reveals that Elnahal received an email that included a spreadsheet listing each leader due for a bonus.

The report found that Deputy Counsel for Legal Operations Brent Pope was shocked when he reviewed the health system’s justification after the awards were questioned by the secretary

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“I honestly couldn’t believe it. I said, ‘Is that all that was there?’” Pope said, noting the documents revealed that top executives “were all given 25 percent and the justification was … two sentences.”

The VA is in the middle of a legal review with hopes of receiving those misallocated bonuses. McDonough is calling on the VA’s Office of Accountability and Whistleblower Protection to determine if any disciplinary action should be brought against the leaders involved in the bonuses.