A senior official in the Department of Energy’s (DOE) green technology loan program hired a friend and referred multiple job candidates to a contractor, actions that “could have caused others to perceive a misuse of position,” the department’s internal watchdog said.

The Office of Inspector General (IG) report made public Monday does not conclude there was an ethics violation, calling instead for more inquiry by the loan program and warning the agency about the “appearance of favoritism” that could “erode public trust.”

It also finds that the official should have taken “recusal actions” with regard to hiring a friend and taken special care to show an “arm’s-length relationship” with the contractor’s hiring decisions.

An Energy Department official defended the agency.