In wake of scandal in general counsel’s office, credit union regulator sets up new ethics office

A new ethics office – established in the wake of lurid accounts of actions by senior staff that became public last month – was announced Wednesday by the federal credit union regulator, following up on recommendations by the agency’s inspector general.

In a release, the National Credit Union Administration (NCUA) announced the creation of the new Office of Ethics Counsel. The new office within the agency, according to the release, will include a chief ethics counsel who will serve as the agency’s most senior ethics official. “This individual will report directly to the NCUA Board and will be supervised by the NCUA Chairman. The selection process for the new Chief Ethics Counsel is underway.”

According to the agency, the new office will certify NCUA compliance with “relevant federal ethics laws and regulations, promote accountability and ethical conduct, and help ensure the success” of the agency’s ethics programs.

On March 6, a report made public by the NCUA Office of Inspector General (OIG) stated that former NCUA General Counsel Mike McKenna – then the agency’s designated ethics official – had retired late last year after his interview with the agency inspector general’s office over allegations of workday strip-club visits, alcohol consumption, and consumption of marijuana “edibles” with the agency’s deputy general counsel.

That report was made publicly available only hours after NCUA Board Chairman Rodney Hood issued a statement decrying the alleged activity, which he said also pointed to possible harassment. He also indicated then that the agency was following up on creation of the Office of Ethics Counsel, which he said would supplement NCUA’s “existing anti-harassment training programs, and offering additional third-party counseling services to employees.”

According to the OIG report, NCUA Executive Director Mark Treichel and Deputy Executive Director John Kutchey on Nov. 17 informed the OIG that Kutchey had learned from then-Deputy General Counsel Lara Daly-Sims that she and then-General Counsel McKenna drank alcohol and went to strip clubs during work hours. According to NCUA, the reporting agent (RA) opened an investigation Nov. 18. The RA later expanded the scope of the investigation to include an examination of Daly-Sims’ time and attendance after the RA discovered that Daly-Sims’ NCUA daily parking garage duration was routinely less than eight hours.

According to the report, the investigation substantiated the allegations that McKenna and Daly-Sims drank alcohol and went to strip clubs during work hours; both affirmed this in their interviews.

NCUA announced McKenna’s retirement Nov. 20. Daly-Sims resigned from her post Jan. 10, 2020, while on administrative leave.

NCUA Establishes New Office of Ethics Counsel