Corruption and Bribery in Veterans Affairs Hospital Deal

April 9, 2014

According to the Veterans Affairs' (VA) inspector general (IG), a VA hospital lease deal in Pennsylvania was rife with corruption, bribery and embezzlement, says the Washington Examiner.

In January 2010, the Department of Veterans Affairs sought bids from developers to secure a piece of land near Pittsburgh, build a medical center and lease the property back to the VA for a 20 year period.

In May 2012, the VA granted a $152.7 million dollar lease agreement to Westar Development Company.

  • Robert J. Berryhill founded Westar in 1998. When the VA awarded the contract to Westar, an unsuccessful bidder protested, insisting that Berryhill had admitted in court to embezzling $300,000 from a previous employer. The VA and its lawyers did not look into these allegations and dismissed them as rumor.
  • Westar earned extra points from the VA staff evaluating the bids for claiming that their project team would include former VA executive William Montague, raising the value of their bid. But Montague was not actually involved in the project and had no agreement with Westar. Furthermore, he ended up pleading guilty to accepting bribes and kickbacks during his time at the agency in return for inside information about agency contracts. (It is unclear whether any of these crimes were related to the Westar deal.)
  • The VA did not conduct routine verifications about the company and its work history. Westar claimed that it was a veteran-owned small business, which gave it special consideration -- yet the VA did not even check their records to determine whether this was true. When the IG looked into the situation, he found that Westar was not listed in the VA database of qualified firms.
  • Similarly, Westar claimed that it had worked on 11 other federal buildings, including hospitals. Not only was this not true, but the company had never built anything prior to this VA deal.
  • During the inspector general's investigation, he received a tip that Westar was acting as a front company for an Ohio builder by the name of Michael Forlani, who had been suspended from doing business with the VA after a bribery and racketeering indictment in 2011 to which he pled guilty and was serving an eight-year prison sentence. The IG determined that Forlani had been involved in the Pennsylvania project from the beginning and throughout the land purchase.

Source: Mark Flatten, "Crooks Had No Trouble Getting Construction Contracts from Department of Veterans Affairs, Report Shows," Washington Examiner, April 1, 2014.

 

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