Defense Secretary William Cohen said he had ordered his own inquiry.
"I'm concerned about it. I have in fact asked the IG to report to me on the findings they have to date and also asked my general counsel to look into the matter," Cohen told reporters at the Pentagon.
"We will pursue this," he said.
The case involves David Hale, a 53-year-old major general who asked to retire after serving only four months as the Army's deputy inspector general. Gen. Dennis Reimer, the service's chief of staff, approved the retirement on Feb. 28, the Army said.
The handling of the case contrasted sharply with the recent court-martial of Gene McKinney, the former sergeant major of the Army.
McKinney was reduced in rank and reprimanded after he was convicted of one count of obstruction of justice in a sexual misconduct case. He was acquitted of 18 counts alleging sexual harassment of six military women.
In a report published Friday, The Washington Times said a woman named Donnamaria Carpino had told military investigators that Hale "forced her into a four-month sexual relationship" in Izmir, Turkey, while her husband, an Army colonel, was posted there. At the time, Hale was the deputy commanding general of NATO's allied land forces in southeastern Europe.
Mrs. Carpino told the Times that Hale had promised to protect her husband from prosecution on charges of adultery if she would make a "physical commitment" to him. The adultery charges turned out to be bogus, the newspaper quoted her as saying.
The matter is now under review by the office of the Pentagon's inspector general, Eleanor Hill, said Susan Hansen, a Pentagon spokeswoman.
"At the time of Major General Hale's request for retirement, the Army was not aware of any substantiated allegations that would preclude his retirement. Moreover, when and if the Army receives a report of investigation with substantiated allegations, the Army will take appropriate action," said a statement issued by the Army.
Although allegations against senior officers normally are handled by the Army's own inspector general, allegations against members of the Army inspector general's office are passed on to the Pentagon's inspector general.
On Capitol Hill, Sen. Olympia Snowe, R-Maine, said she has asked Reimer to explain "an apparent inconsistency in the prosecution of sexual misconduct cases."
Snowe, who is a member of the Armed Services Committee, said in a statement that Hale's retirement "at the same time that he faces charges of sexual misconduct raises serious questions about the commitment of the Army leadership to the vigorous pursuit of justice in this area, regardless of the rank of the accused."
©1998 The Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed