By Andrew Duehren 

WASHINGTON -- The Trump administration didn't have the legal authority to hold millions in security assistance to Ukraine this summer, Congress's nonpartisan watchdog found, adding more scrutiny to the funding freeze that led to the impeachment of President Trump.

In its opinion Thursday, the Government Accountability Office wrote that the Office of Management and Budget improperly froze the money for policy reasons.

"Faithful execution of the law does not permit the President to substitute his own policy priorities for those that Congress has enacted into law," GAO wrote.

The Office of Management and Budget has repeatedly defended the legality of the hold, arguing that it was necessary to allow the administration to review the security assistance. In a letter to GAO in December, Mark Paoletta, OMB's general counsel, said that the administration had the legal authority to hold the funds, which were released in mid-September.

"We disagree with GAO's opinion. OMB uses its apportionment authority to ensure taxpayer dollars are properly spent consistent with the President's priorities and with the law," Rachel Semmel, a spokeswoman for OMB, said in a statement.

Mr. Trump and members of the administration have said that the hold was in place because of concerns about corruption in Ukraine and questions about how much money other countries were contributing to Ukraine, which is battling pro-Russian forces. The Defense Department had previously certified that Ukraine had taken sufficient steps toward combating corruption to receive the funds.

Democrats, in their impeachment investigation, charged that Mr. Trump froze the aid as part of his effort to pressure Ukraine to open investigations that would benefit him politically.

The Democratic-controlled House passed two articles of impeachment, one focused on abuse of power and the other on obstructing Congress, in December. The GOP-led Senate, which is expected to acquit Mr. Trump of the charges, will soon begin considering them.

The opinion, signed by GAO General Counsel Thomas Armstrong, found that the freeze on $214 million in Defense Department funding for Ukraine didn't meet the legal standards for the administration to freeze the funds.

Under the Impoundment Control Act, the president can freeze funding in limited circumstances, including if it is to help programs run more efficiently. GAO also said that the administration didn't follow the legal procedures for notifying Capitol Hill of the hold.

"OMB did not identify -- in either the apportionment schedules themselves or in its response to us -- any contingencies as recognized by the ICA, savings or efficiencies that would result from a withholding, or any law specifically authorizing the withholding," Mr. Armstrong wrote.

Responding to Mr. Paoletta's justification for the hold, GAO wrote that "OMB's assertions have no basis in law."

GAO said it was continuing to review the hold on State Department funding for Ukraine.

"OMB and State have failed, as of yet, to provide the information we need to fulfill our duties under the ICA regarding potential impoundments of FMF funds," the report said. "We will continue to pursue this matter and will provide our decision to the Congress after we have received the necessary information."

House Appropriations Chairwoman Nita Lowey (D., N.Y.) said that her committee was pursuing a package of reforms to prevent similar situations in the future.

"Given that this illegal conduct threatened our security and undermined our elections, I feel even more strongly that the House has chosen the right course by impeaching President Trump," she said in a statement.

The GAO opened its review after Sen. Chris Van Hollen (D., Md.) asked about the legality of the hold at an October hearing with U.S. Comptroller General Gene Dodaro, who leads the office.

In the weeks after the beginning of the funding freeze last summer, officials at OMB and the Pentagon raised questions about whether the administration had the legal authority to indefinitely suspend money approved by Congress.

Mark Sandy, a career budget staffer, told impeachment investigators that he immediately flagged legal questions about freezing aid to Ukraine when Mike Duffey, his boss and a political appointee, instructed him to do so in July.

After consulting with lawyers at OMB and the Defense Department, Mr. Sandy signed the paperwork for the first pause on the security assistance. Mr. Duffey, a former Pentagon staffer and executive director of the Wisconsin Republican Party, subsequently began signing the paperwork for apportioning funds in his portfolio and kept the Ukraine aid on hold.

Mr. Sandy told investigators he had never seen a political appointee take the responsibility for signing apportionments before.

In the paperwork executing the funding freeze, OMB allowed the Defense Department to continue to prepare to spend the funds while not actually releasing them. Pentagon officials repeatedly warned that the hold could prevent them from spending the money before it expired at the end of the fiscal year on Sept. 30.

Congress ultimately included a provision in a short-term spending bill passed in September preventing roughly $30 million in unspent funds from expiring.

Write to Andrew Duehren at andrew.duehren@wsj.com

(END) Dow Jones Newswires

January 16, 2020 11:10 ET (16:10 GMT)