WASHINGTON, April 9, 2008
Report: Millions Blown On Government Cards
GAO Says Federal Employees Paid For Online Dating, Suits And Lingerie With Federal Credit Cards
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Gov't Credit Card Abuse
An audit has found widespread abuse of government credit cards including the purchase of extravagant dinners, lingerie and online dating services. Chip Reid reports.
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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.
Fast Fact
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.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.
"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.
© MMVIII, CBS Interactive Inc. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed. The Associated Press contributed to this report.
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See all 96 CommentsI had to vet cardholder statements while I was on active duty, so I know the drill. Anything bought had to be signed-off and approved by at least one individual.
So, if these people were getting away with it, then their statement reviewers are the ones to also take the blame.
Unfortunately, with the push to reduce overhead costs, often reviewers are physically unable to verify each and every charge and must resort to a sampling of charges and simply sign off on the rest. I do agree with you in that all purchases should be reviewed.
It takes Bulldozers to move the Money SHRUB has Wasted!
If RepubliCONS REALLY stand for cutting back on government spending, the GAO is one agency even they ought to agree ought to be expanded. It ought to pay for itself . . .
By now, it should be clear the same lack of integrity that pervades the ranks of Bush appointees at FEMA, FDA, FAA, and other agencies is the true Bush legacy-- which Bush leaves for others to clean up.
Why would anyone be shocked by this news?
"And every single one of those mis-used cards was used by a cardholder who''''s monthly expenditure sheet HAD to be reviewed, as required by law, by a person placed in charge of card-holders.
I had to vet cardholder statements while I was on active duty, so I know the drill. Anything bought had to be signed-off and approved by at least one individual.
So, if these people were getting away with it, then their statement reviewers are the ones to also take the blame."
http://www.gao.gov/about/index.html
Our Work is done at the request of congressional committees or subcommittees or is mandated by public laws or committee reports. We also undertake research under the authority of the Comptroller General. We support congressional oversight by
* auditing agency operations to determine whether federal funds are being spent efficiently and effectively;
We are currently having a local scandal over the exact same issue in our county mayor''s office. We have one official who claims it is a racial witch hunt. Our mayor blithely shrugs off the whole thing and the taxpayers are PO''d. We recently went through a county commission scandal where our officials violated open meetings laws to manipulate the local political scene so they could keep their cushy positions and continue the cronyism that has run rampant for years. Finally, the whole thing has blown up in their face and now it needs to happen on a national level. Government officials at all levels need to remember that they work for us and our trust is not to be violated. Examples should be made of these violators and our money should be repaid.
Do like I have to do. Get purchase approved. Put charges on my cards. Wait for reinbursement. While this would take time, that is all we all have to sell to our employer. Remember, the title, public servant?
Administration EVER
The voters who put them in and the Morons who Uphold them should be VERY ASHAMED of themselves
a True National DISGRACE!
As long as you allow them to "tax the rich", which they tell you is the other guy, not you, they''re stealing you blind if fees and passed down costs.
Government in it for themselves for over 16 years now.
Administration EVER
The voters who put them in and the Morons who Uphold them should be VERY ASHAMED of themselves
a True National DISGRACE!
Posted by neobrian
I actually agree with most of your post however; with a little homework you would have discovered that the Clinton Administration created the Federal Credit Card program and issued the Executive Order mandating its use for travel.
Posted by mjvw2
I don''t care who started the system, and I''m sure most people don''t care, what we should care about is punishing those that abused the system. You steal money, you go to jail, simple as that.
So what did you do for all the years you were in charge of congress now it is a problem.
Posted by neobrian the fact remains that it got bad because it was tolorated at the top that is the only way corruption can exists. Sorry to spoil your Clinton bashing but this has truly become a problme in the last 8 years.
Sorry I did not mean to be rude it is just we keep hearing it is Clintons fault not the Republicans fault and they have been in power and I am sick of them passing the buck. That is why I left the neo con party.
Republicons inaction
buSHAMErica
Any Present or Past abuse of the card: Fire the offenders, NOW.
Private Companies would.
I am tired of my tax $$$ going down the drain to Government Workers that think working there is a right and taking our tax $$$ is theirs to do with as they wish.
I am sure there are people, Like Me, that would and could fill the empty jobs and do them better.
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I agree... fraud crosses all lines and if people have no honor then they will abuse the job. Democrat, Republican, Independent, Other.
''WE" might be able to fix this, but you are part of the problem.
If your are working (now) and chatting here then is that abuse of your jobs?
Posted by mjvw2
I don''''t care who started the system, and I''''m sure most people don''''t care, what we should care about is punishing those that abused the system. You steal money, you go to jail, simple as that.
Posted by alexma50085
Couldn''t agree with you more. The post I originally replied to blamed the current administration for the program. Just correcting that mis-statement
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