Report: Millions Blown On Government Cards
Federal employees charged millions of dollars for Internet dating, tailor-made suits, lingerie, lavish dinners and other questionable expenses to their government credit cards over a 15-month period, congressional auditors say.
A report by the Government Accountability Office examined spending controls across the federal government following reports of credit-card abuse at departments including Defense, Homeland Security and Veterans Affairs.
The review of card spending at more than a dozen departments from 2005 to 2006 found that nearly 41 percent of roughly $14 billion in credit-card purchases, whether legitimate or questionable, did not follow procedure - either because they were not properly authorized or they had not been signed for by an independent third party as called for in federal rules to deter fraud.
For purchases over $2,500, nearly half - or 48 percent - were unauthorized or improperly received.
Out of a sample of purchases totaling $2.7 million, the government could not account for hundreds of laptop computers, iPods and digital cameras worth more than $1.8 million. In one case, the U.S. Army could not say what happened to computer items making up 16 server configurations, each of which cost nearly $100,000.
In one example, CBS News correspondent Chip Reid reports, a forest service employee used her card to funnel $642,000 - money intended to fight forest fires - to her boyfriend who used it for everything from gambling to shopping. The employee is now serving 21 months in prison.
Agencies often could not provide the required paperwork to justify questionable purchases. Investigators also found that federal employees sometimes double-billed or improperly expensed lavish meals and Internet dating for many months without question from supervisors; the charges were often noticed only after auditors or whistle-blowers raised questions.
"Breakdowns in internal controls over the use of purchase cards leave the government highly vulnerable to fraud, waste and abuse," investigators wrote, calling the governmentwide failure rate in enforcing controls "unacceptably high."
"This audit demonstrates that continued vigilance over purchase card use is necessary," the 57-page report stated.
The report calls for the General Services Administration and Office of Management and Budget, both of which help administer the government's credit-card program, to set guidance to improve accounting for purchased items, particularly Palm Pilots, iPods and other electronic equipment that could be easily stolen.
OMB and GSA were also urged to tighten controls over convenience checks, which are a part of the credit-card program, and to remind federal employees that they will be held responsible for any items if the purchases are later deemed improper.
"We agree that no level of abuse or misuse is acceptable," Doan wrote.
The GAO study comes amid increasing scrutiny of purchase cards, which are used by 300,000 federal employees and are directly payable by the U.S. government. Minnesota Sen. Norm Coleman requested the investigation, Reid reports.
"These things were being paid at government expense," he said. "Government purchase cards and nobody looked at the bill."
The AP reported Sunday that VA employees last year racked up hundreds of thousands of dollars in government credit-card bills at casino and luxury hotels, movie theaters and high-end retailers such as Sharper Image. Government auditors have been investigating these and similar charges, citing past spending abuses.
In Tuesday's report, investigators did not seek to determine the extent of fraud or waste at each agency. They cited numerous cases of questionable spending, which they said represented what could be found government-wide, including the VA.
"The purchase card is a useful tool for the government, and in no way are we suggesting it shouldn't continue to be used widely," said Gregory D. Kutz, GAO's managing director of forensic audits and special investigations, in a telephone interview. "However, I would say these cases once again show that lack of internal controls cost taxpayers millions of dollars and thus continued focus is needed on improving these controls."
Among the expenditures cited in the report:
U.S. Postal Service workers separately billed more than $14,000 to government credit cards for Internet dating services and a dinner at a Ruth's Chris Steakhouse in Orlando, Fla., for 81 people at a cost of $160 each for steaks and crab. The dinner bill also included more than 200 appetizers and more than $3,000 worth of wine and brand-name liquor such as Courvoisier, Belvedere and Johnny Walker Gold.
In the Internet dating case, a postmaster charged $1,100 over 15 months for two online services, including the Ashley Madison Agency. The expenses went unnoticed for more than a year even though he was under internal investigation for viewing pornography on a government computer. The postmaster was eventually told to repay the Internet charges but faced no disciplinary action.
At the Pentagon, four employees purchased $77,700 in clothing and accessories at high-end clothing and sporting goods stores. The spending included more than $45,000 at Brooks Brothers and similar stores for tailor-made suits - $7,000 of which were purchased a week before Christmas. The credit-card holders said the items were for service members working at U.S. embassies with civilian attire. Pentagon rules allow purchases of civilian clothing when performing official duty, but generally only up to $860 per person.
Justice Department and FBI employees charged $11,000 at a Ritz Carlton hotel for coffee and "light" refreshments for 50 to 70 attendees for four days, averaging about $50 per person. Seventy percent of the total conference cost of $15,000 was for the food and beverages, while audiovisual and other support services totaled only about $4,000, or 30 percent of the charges. It was not clear what action, if any, that Justice took in light of the conference expenses, which GAO deemed excessive.
At the State Department, one credit-card holder bought $360 worth of women's lingerie at Seduccion Boutique for use during jungle training by trainees of a drug enforcement program in Ecuador. One State Department official later agreed that the charge was questionable and stated that he would not have approved the purchase had he known about it.
"Too many government employees have viewed purchase cards as their personal line of credit," said Sen. Norm Coleman, R-Minn., the top Republican on the Senate Homeland Security subcommittee on investigations, which requested the GAO report. "When money that was intended to pay for critical infrastructure, education and homeland security is instead being spent on iPods, lingerie and socializing, we must immediately remedy the problem."
Sen. Carl Levin, D-Mich., who chairs the investigations subcommittee, agreed. "Although internal controls over government credit cards have improved, we still have a long way to go to stop the fraudulent use of these cards," he said.
© 2010 CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report. A report by the Government Accountability Office examined spending controls across the federal government following reports of credit-card abuse at departments including Defense, Homeland Security and Veterans Affairs.
The review of card spending at more than a dozen departments from 2005 to 2006 found that nearly 41 percent of roughly $14 billion in credit-card purchases, whether legitimate or questionable, did not follow procedure - either because they were not properly authorized or they had not been signed for by an independent third party as called for in federal rules to deter fraud.
For purchases over $2,500, nearly half - or 48 percent - were unauthorized or improperly received.
Out of a sample of purchases totaling $2.7 million, the government could not account for hundreds of laptop computers, iPods and digital cameras worth more than $1.8 million. In one case, the U.S. Army could not say what happened to computer items making up 16 server configurations, each of which cost nearly $100,000.
In one example, CBS News correspondent Chip Reid reports, a forest service employee used her card to funnel $642,000 - money intended to fight forest fires - to her boyfriend who used it for everything from gambling to shopping. The employee is now serving 21 months in prison.
Agencies often could not provide the required paperwork to justify questionable purchases. Investigators also found that federal employees sometimes double-billed or improperly expensed lavish meals and Internet dating for many months without question from supervisors; the charges were often noticed only after auditors or whistle-blowers raised questions.
"Breakdowns in internal controls over the use of purchase cards leave the government highly vulnerable to fraud, waste and abuse," investigators wrote, calling the governmentwide failure rate in enforcing controls "unacceptably high."
"This audit demonstrates that continued vigilance over purchase card use is necessary," the 57-page report stated.
The report calls for the General Services Administration and Office of Management and Budget, both of which help administer the government's credit-card program, to set guidance to improve accounting for purchased items, particularly Palm Pilots, iPods and other electronic equipment that could be easily stolen.
OMB and GSA were also urged to tighten controls over convenience checks, which are a part of the credit-card program, and to remind federal employees that they will be held responsible for any items if the purchases are later deemed improper.
In response, both OMB and GSA agreed with portions of the report. But GSA administrator Lurita Doan noted the vast majority of federal employees use their cards properly and that many oversight measures already are in place. She acknowledged there is room for improvement but added that by using purchase cards the federal government saves about $1.8 billion in administrative costs each year.
"We agree that no level of abuse or misuse is acceptable," Doan wrote.
The GAO study comes amid increasing scrutiny of purchase cards, which are used by 300,000 federal employees and are directly payable by the U.S. government. Minnesota Sen. Norm Coleman requested the investigation, Reid reports.
"These things were being paid at government expense," he said. "Government purchase cards and nobody looked at the bill."
The AP reported Sunday that VA employees last year racked up hundreds of thousands of dollars in government credit-card bills at casino and luxury hotels, movie theaters and high-end retailers such as Sharper Image. Government auditors have been investigating these and similar charges, citing past spending abuses.
In Tuesday's report, investigators did not seek to determine the extent of fraud or waste at each agency. They cited numerous cases of questionable spending, which they said represented what could be found government-wide, including the VA.
"The purchase card is a useful tool for the government, and in no way are we suggesting it shouldn't continue to be used widely," said Gregory D. Kutz, GAO's managing director of forensic audits and special investigations, in a telephone interview. "However, I would say these cases once again show that lack of internal controls cost taxpayers millions of dollars and thus continued focus is needed on improving these controls."
Among the expenditures cited in the report:
In the Internet dating case, a postmaster charged $1,100 over 15 months for two online services, including the Ashley Madison Agency. The expenses went unnoticed for more than a year even though he was under internal investigation for viewing pornography on a government computer. The postmaster was eventually told to repay the Internet charges but faced no disciplinary action.
"Too many government employees have viewed purchase cards as their personal line of credit," said Sen. Norm Coleman, R-Minn., the top Republican on the Senate Homeland Security subcommittee on investigations, which requested the GAO report. "When money that was intended to pay for critical infrastructure, education and homeland security is instead being spent on iPods, lingerie and socializing, we must immediately remedy the problem."
Sen. Carl Levin, D-Mich., who chairs the investigations subcommittee, agreed. "Although internal controls over government credit cards have improved, we still have a long way to go to stop the fraudulent use of these cards," he said.
Popular on CBSNews.com
- Oklahoma tornado victim search efforts winding down
- Children rescued from two elementary schools in Oklahoma 19 Photos
- Deadliest U.S. tornadoes 10 Photos
- Tornado's destructive path 17 Photos
- Up-close video of Moore, Okla., tornado Play Video
- Oklahoma tornado as seen by storm chasers Play Video
- Oklahoma tornado recovery grinds on amid grim scenes 180 Comments
- Twisters touch down in the Midwest 13 Photos
This story will be buried in a flash!
Business as usual for the Bu$h administration,
wonder who will be promoted this time?
How about hookers, or sexxx trips to Thailand for govt officials?
Any gambling junkets to Vegas?
This is all typical typically scandalous GOP behavior under Bush. It''''s probably not much worse than previous administrations, just costs more now since our dollar isn''''t worth as much under Bush.
Posted by gce65 at 11:19 PM : Apr 09, 2008"
Maybe you should ask Democrat Barney Frank:
On Aug. 25, 1989, The Washington Times revealed Rep. Barney Frank''s male-prostitution scandal. Frank''s prostitute-later-lover, male prostitute Stephen Gobie, ran an illicit gay s.e.x. ring out of Frank''s home, and Frank fixed his local parking tickets.
In fact, his presidential retirement benefits cost taxpayers almost as much as those of the other two living ex-presidents combined.
The price tag for Clinton%u2019s federal retirement allowance from 2001 through the end of this year will run $8 million, compared to $5.5 million for George H. W. Bush%u2019s and $4 million for Jimmy Carter%u2019s during the same period.
Since 2001, Clinton has received more of almost every benefit available to former presidents %u2014 from his pension to his staff%u2019s salaries and benefits to supplies. His $420,000 phone bill and $3.2 million office rent tab both nearly surpassed the totals rung up for those purposes by Bush, Carter and the late former presidents Gerald Ford and Ronald Reagan combined. As a group, they spent $484,000 on telephone service and $3.8 million on rent in the same span.
The figures come from congressional reports studying the presidential retirement program and from summaries of annual budget requests by the U.S. General Services Administration, which administers the program, created to allow former presidents to enjoy dignified retirements without having to take jobs that demean or commercialize the presidency.