copyright 2009, The Washington Post WASHINGTON -- One of the best things about dealing with federal employees is appreciating their sense of mission. Federal workers really care about ensuring our safety, protecting our health and safeguarding our natural resources, among their many, many duties. So reading what the Securities and Exchange Commission's inspector general has to say about how that agency botched its probe of Bernard Madoff is particularly disturbing. David Kotz, the inspector general, issued an exhaustive 477-page report last week with the title 'Investigation of Failure of the SEC To Uncover Bernard Modoff's Ponzi Scheme.' And what a massive failure it was. While it was the result of many things, one point is clear: Federal employees failed miserably in their mission to protect American citizens from a gigantic ripoff. And poor management is one culprit. Fortunately, new SEC Chairman Mary Schapiro is taking steps to implement lessons learned the hard way. Right up front, Kotz makes it clear this failure was not due to corrupt employees. The first sentence of the executive summary says his 'investigation did not find evidence that any SEC personnel who worked on an SEC examination or investigation of Bernard L. Madoff Investment Securities, LLC (BMIS) had any financial or other inappropriate connection with Bernard Madoff or the Madoff family that influenced the conduct of their examination or investigatory work.' So if it wasn't corruption, was it incompetence? In the final words of the report, Kotz provides this answer: 'The conduct of the (SEC Madoff) examinations and investigations was similar in that they were generally conducted by inexperienced personnel, not planned adequately, and were too limited in scope. While examiners and investigators discovered suspicious information and evidence and caught Madoff in contradictions and inconsistencies, they either disregarded these concerns or relied inappropriately upon Madoff's representations and documentation in dismissing them. Further, the SEC examiners and investigators failed to understand the complexities of Madoff's trading and the importance of verifying his returns with independent third-parties.' 'Inexperience' is a word found repeatedly in the report. That focus on the inexperience of the employees says more about the incompetence of their managers than it does about the performance of the staffers. This and many other situations Kotz describes cries out for an explanation -- why didn't supervisors assemble better trained, more well-rounded teams for this probe? 'Junior examiners were overmatched in their interactions with Madoff,' according to the report. Other times, supervisors did not allow their staffers, and not necessarily the junior ones, to push the investigation as aggressively as they wanted. In July, my colleague Zach Goldfarb wrote about Genevievette Walker-Lightfoot, a former SEC attorney, who tried to ring the bell on Madoff, only to be told to direct her energies elsewhere. Unlike the staffers who were taken in by his explanations, Walker-Lightfoot told her supervisor that Madoff's tales didn't make sense and suggested a series of probing questions for him. With her experience from working at the American Stock Exchange, and the broad view gained during her MBA studies, she recognized that the information supplied by Madoff leaked with inconsistencies. Several of her 'questions directly challenged Madoff activities that much later turned out to be elements of his massive fraud. ...' Goldfarb wrote. 'Her concerns would later prove to be on the mark.' But rather than following Walker-Lightfoot's concerns, her boss took her off the case. In an interview Tuesday, Walker-Lightfoot said two big problems during her five years at the SEC were an organizational culture that resembled a high school 'cool kids club' that led to 'hiring people based on relationships rather than qualifications' and a staff that was top-heavy with lawyers. 'Diversity of thought is very important,' she said. 'You must be able to think like a business in order to surveill that business.' Recent reforms at the agency should make a difference. A newly restructured enforcement division 'will include specialized units that will enable staff in those units to concentrate their expertise in focused areas,' a SEC statement says. The agency also plans to 'bring in new staff with diverse skill sets to expand its knowledge base,' improve training and hire additional personnel. Better late than never. 