St. Paul Veterans Benefits Office Chief Kim Graves, freshly demoted from allegations of financial wrongdoing, has appealed the demotion and has had the demotion rescinded because the bureaucracy committed an administrative error, VA officials said Thursday.

The VA attempted to demote Graves Nov. 20 after the VA Inspector General found she orchestrated a move to Minnesota from the East Coast, receiving $130,000 in publicly paid moving expenses and retaining her $173,000 salary for much less work in Minnesota.

She was supposed to be demoted in November to an assistant director job at the Benefits Office in Phoenix. Graves was also supposed to take a paycut.

But Graves, and another Philadelphia VA director alleged to have done the same thing, appealed the demotions to the Merit Systems Protection Board.

During the appeal, VA's lawyers discovered that, due to an administrative error, one of the five binders of evidence supporting the demotion had inadvertently been omitted from the materials provided to the employees with their proposed demotion paperwork.

To rectify this, the Department must rescind the demotion and give employees the opportunity to respond. The VA said they will "re-initiate" the proposed actions, but both employees continue to report to the Benefits' central office.

Rep. Tim Walz, a Democratic member of the House Veterans Affairs Committee, said the entire process is frustrating.

“After weeks of failing to provide information about the actions they were taking to hold employees accountable, we find out today the VA has botched the process to ensure accountability and we now have to start over," he said, in an e-mail. "This is completely unacceptable and I’m calling on Secretary McDonald to take immediate action to address this appalling lack of accountability.” 

The House Veterans Affairs Committee meets next week to discuss further accountability at the VA.