NCUA Inspector General Ignored Daly-Smith’s Sexual Harassment Allegations, Attorney Charges

The NCUA’s Inspector General ignored sexual harassment allegations by former Deputy General Counsel Lara Daly-Sims and instead focused on charges of drinking alcohol, going to strip clubs and using marijuana, her attorney said Sunday.

In doing so, the IG ignored claims by Daly-Sims that she had been coerced into the misconduct by her boss, former General Counsel Michael McKenna, said Cathy Harris, chair of the Sexual Harassment and Sexual Orientation, Transgender and LGBT Practice Sections at Kator, Parks, Weiser & Harris, a Washington, D.C., law firm.

Smith added, “We are appalled that the IG publicly released a report with the name of a sexual harassment victim without her consent.”

“Ms. Daly-Sims was sexually harassed by her former supervisor at the NCUA,” Smith said. “She reported this sexual harassment, which launched the IG investigation.”

Those charges are likely to focus more attention on how the NCUA handled Daly-Sims’ allegations.

On Friday, the agency IG reported that Daly-Sims and former McKenna, who also was the agency’s chief ethics officer, had gone to strip clubs, consumed alcohol and may have used marijuana during work hours.

The report stated Daly-Sims had told investigators that she had felt coerced by McKenna; it also alleged Daly-Sims had reported working during hours when she had not been working.

But the report made no conclusions about whether Daly-Sims had been sexually harassed.

Harris said Daly-Sims reported the sexual harassment to a manager on Nov. 18 and 19, 2019, in accordance with agency policy.

She later initiated an Equal Employment Opportunity complaint through the agency on Dec. 2, 2019. That complaint is still pending, Harris said.

In a statement even before the IG report was released, NCUA Chairman Rodney Hood said when the agency learned of allegations of misconduct, including allegations of harassment, they were reported to the IG’s office.

He said because the allegations involved possible abuse of work time, the IG opened an investigation.

Under the Freedom of Information Act, CU Times obtained copies of the notes from interviews conducted by the IG.

The drinking and strip club visits began in February or March 2017, according to the IG’s notes.

“Daly-Sims told the investigators that she felt very uncomfortable drinking and being at a strip club during work hours, but did not think someone could tell that she felt uncomfortable,” she said.

When Daly-Sims raised her concerns, McKenna simply told her to say they were outside the office on business, according to Daly-Smith.

She said that once, when they were at a restaurant, she called a man she was casually dating and said McKenna wanted to go to a strip club but that “she really did not want to go but felt that she had to go because McKenna was her friend, her boss, and was helping her get the general counsel job.”

The visits and drinking continued, Daly-Sims said, adding that on Oct. 26, 2019, McKenna told her that her performance review had to be over drinks.

In an interview with the IG’s office on Nov. 18, 2019, McKenna said the two went to a strip club two or three times at the end of a work day.

He later retired, amid requests that he submit to a drug test.

“McKenna thought it was probably his idea the first time they went to a gentlemen’s club, but that Daly-Sims had previously mentioned that she had never been to a gentlemen’s club and wanted to go,” he told the IG.

And he said that Daly-Sims “never objected to going and never stated she did not want to go.”

McKenna could not be reached for comment.

In his statement before the IG report was made public, Hood said the agency is evaluating its policies and processes for reporting allegations. He said the NCUA is creating an Office of Harassment Counsel, adding training programs and offering third-party counseling.

“Harassment and misconduct have no place at the NCUA. These types of behaviors are unacceptable and will not be tolerated,” he said. “The agency is committed to creating a culture where we treat every employee with the utmost respect and dignity.”

Trade groups said they are carefully watching what actions the agency takes, although CUNA President/CEO Jim Nussle initially joked about the report on Twitter.

“Between $450 dinners, $45 shots of whiskey, marijuana and trips to the strip club… Who was in charge over there @TheNCUA ; Lindsay Lohan and Charlie Sheen?” Nussle tweeted.

He later said, “With early indications of misconduct and workplace harassment detailed in the Office of the Inspector General’s report, to say we are profoundly disappointed is an understatement.”

Nussle added it was stunning that the incidents went on for so long.

NAFCU President/CEO B. Dan Berger said credit unions have long been pushing for more transparency, accountability and prudent budgeting at the NCUA.

“We are encouraged to hear Chairman Rodney Hood is taking action to put processes in place to ensure this unacceptable behavior stops immediately and does not occur in the future,” he said.