WASHINGTON — Two high-ranking officials at the Department of Veterans Affairs were demoted Friday in response to allegations that they manipulated the agency's hiring system for their own gain.
The VA said in a statement that Diana Rubens and Kimberly Graves were demoted from senior executives — the highest rank for career employees — to general workers within the Veterans Benefits Administration.
Rubens was paid $181,497 as director of the Philadelphia regional office for the VBA, while Graves earned $173,949 as leader of the St. Paul, Minnesota, regional office.
The VA's acting inspector general said in a report this fall that Rubens and Graves forced lower-ranking regional managers to accept job transfers against their will. Rubens and Graves then stepped into the vacant positions themselves, keeping their pay while reducing their responsibilities.
Rubens and Graves refused to testify to Congress earlier this month, telling lawmakers they were asserting their Fifth Amendment rights to protect themselves against self-incrimination.
Before taking the regional jobs, Rubens was a deputy undersecretary at the VA's Washington headquarters, while Graves was director of VBA's 14-state North Atlantic Region.
Rubens and Graves kept their top-level salaries in their new positions, even though they had less responsibility and a lower pay range than their previous positions.
Rubens grew up near Philadelphia, while Graves has family in Minnesota, the IG's report said.
In addition to naming themselves to vacancies, Rubens and Graves obtained more than $400,000 in questionable moving expenses through a relocation program for VA executives, the IG's report said. The two face possible criminal prosecution.
The relocation program has since been suspended, the VA said in congressional testimony this month.
Rep. Jeff Miller, R-Fla., chairman of the House Veterans Affairs Committee, said Rubens and Graves "clearly should have been fired," adding that, "for those wondering whether VA is committed to real accountability for corrupt employees, VA leaders answered that question (Friday) with a resounding 'no.'"
The VA's failure to fire Rubens and Graves "gives me no hope the department will do the right thing and take steps to recover the more than $400,000 in taxpayer dollars Rubens and Graves fraudulently obtained," Miller said. "The millions of American veterans who depend on VA and the hundreds of thousands of VA employees who are dedicated professionals deserve better than this broken status quo."
Dale Barnett, national commander of the American Legion, said the VA's failure to fire Rubens and Graves was "an insult and a disgrace to all veterans. Any promises that VA officials make about accountability in the future need to be taken with a grain of salt."
Allison Hickey, the former head of the Veterans Benefits Administration, resigned in October amid criticism of a backlog in disability claims and questions about her role in the transfers obtained by Rubens and Graves. The IG's report said Hickey and other top VA officials may have encouraged the scheme.
Rubens will serve as assistant director of the VBA's Houston regional office, while Graves will serve as assistant director of the Phoenix regional office, the VA said. Both will take unspecified pay cuts.
Cheryl Rawls has been named acting director of the Philadelphia regional benefits office. Kay Anderson will serve as acting director in St. Paul.
Follow Matthew Daly: http://twitter.com/MatthewDalyWDC