Her resignation has raised questions regarding the role of the Government's roster of inspectors-general - an elite team of watchdogs who are appointed to police the workings of all federal departments, and who can only be sacked by the President.

For nearly a year, a sub-committee of the Senate Governmental Affairs committee had been arguing that Mrs Lau was herself in need of policing, after it emerged that she had broken government rules by awarding a US$90,000 (HK$695,700) management consultancy contract without putting it out to competitive tender.

The contract went to a friend, Frank Sato - who had previously written a glowing reference letter to the White House recommending her for the inspector-general job.

The Senate panel also began investigating Mrs Lau after reports suggested she launched a politically motivated internal disciplinary probe against two Secret Service agents who had given congressional testimony embarrassing to the White House.

During the 1996 'Filegate' controversy - in which secret FBI files on senior Republicans were found to have ended up in the hands of White House political aides - the two agents disputed the Clinton administration's claims that the affair had been an administrative error.

Not long afterwards, Mrs Lau launched action against the agents, but later denied to Congress that any such investigation had taken place.

After the Senate held hearings on the Lau case, a government body chaired by a senior FBI official launched its own investigation into Mrs Lau's conduct, and was due to file a report when she announced her resignation.

She has repeatedly refused to comment on her case, and her resignation letter gave no mention of the controversy.