Post Office Big Accused Of Waste

(CBS)  Finding fraud and waste in the post service is what the Inspector General's office is 'supposed' to be all about. But with lavish spending on team-building exercises -- professionally videotaped for agency morale -- it turns out the IG's office is wasting more taxpayer money than it's saving, reports CBS News Correspondent Joie Chen.

"The whole organization of employees is being terrorized by the IG and her management team to conduct themselves in a cult-like type of organization," said a whistleblower.

The former employee says spending in Inspector General Karla Corcoran's department has run amok.

Millions of dollars were spent on "corporate" retreats, thousands to make videos of employees dancing, building gingerbread houses, and other activities many employees found humiliating. Cash bonuses -- $1,750 per employee last Christmas -- were awarded for taking "morale boosting" on-line tests. There was even a $5,000 treadmill purchased for use by one executive

Whistle-blowers -- including many who still work there -- say the IG saved taxpayers only 50 cents for every dollar it spent. The office identifyied $56 million in wasteful spending in 2001 -- but spending $117 million dollars to do so.

Senators are not amused.

"If everybody else in the postal service wasted money the way she wasted money, it seems to me like instead of 37 cent stamps you'd have 74 cent stamps," said Sen. Charles Grassley, R-Iowa.

Though she declined to be interviewed, Corcoran defended her performance -- posting a statement on her agency's Web site saying the allegations are "riddled with misleading facts and unfair accusations."

Ironically, Corcoran's "team building" exercises may be her undoing. Two investigations into her conduct are underway, fueled by information and evidence leaked by employees of her own agency -- who have come together to fight against her.