GAO Probes Katrina Credit Card Bills
Tuesday, December 27, 2005
Federal employees helping victims of Hurricane Katrina charged more than $39 million on government credit cards for disaster relief items -- and that has at least one senator a bit worried.
Much of the merchandise, which included $60,639 worth of sleeping bags and four 27-inch televisions purchased for $713, was bought at retail rather than cheaper, volume prices after the Aug. 29 storm, according to federal records. The spending also included $150,000 worth of Jockey underwear, $3,200 for golf carts, and six nail clippers.
The Federal Emergency Management Agency says it needed some items -- such as the underwear-- quickly, for evacuees in temporary shelters. Jockey International says the underwear was sold at or below the company's cost.
Federal officials responding to Katrina "were not going to spend days calling all across the country and haggling prices -- the initial purchases were about saving lives," said Department of Homeland Security spokesman Larry Orluskie.
The lists of purchases provided by five government agencies show nothing outrageous -- bottles of water, hundreds of maps of New Orleans and Texas, pizza dinners, and lots of insect repellent. DHS also spent nearly $1.5 million on 50 automatic heart defibrillators for use at shelters.
But the credit cards, which are billable directly to Uncle Sam, were vulnerable for abuse in the Katrina aftermath after agencies were given the power to raise the credit limit from $15,000 to $250,000. That authority was repealed Oct. 3.
There is a history of credit card abuse by government employees, including charges for $400 Coach briefcases, a dog and Victoria's Secret clothing.
Sen. Charles E. Grassley (R-Iowa), chairman of the Finance Committee, pushed for the credit limits to be lowered back to $15,000. "When I began looking into this issue several years ago, we uncovered hundreds of millions of dollars of taxpayer money that was lost due to inadequate controls," Grassley said. "When you've seen this kind of abuse, it's hard to justify increasing the limit on these cards."
This time, congressional audits -- the first of which is due out early next year -- will focus not only on abuses but also on missed opportunities to get discounted rates for commonly purchased items such as office supplies and clothing, according to the Government Accountability Office, the investigative arm of Congress.
Based on previous audits, at least 10 percent of the Katrina charges -- or about $4 million -- might have been saved if the government used its leveraging power to pay lower-than-retail cost, said Greg Kutz, managing director of special investigations at the GAO. Only a thorough review will tell whether spending went notably awry.
Danielle Brian, executive director of the watchdog group Project on Government Oversight, expressed concern with many instances of retail purchases, which included $66,632 worth of supplies from Wal-Mart. "Only time will tell where the money has been squandered which should have gone to help Katrina victims," Brian said.
In many instances, the government records showed anomalies. The Transportation Department, for example, reported a purchase of a paper shredder for $5,374; it later said the shredder, which apparently was designed to meet security standards, was improperly designated as a Katrina expense.
Auditors, including Homeland Security Inspector General Richard L. Skinner, have already cited the Red Cross and FEMA for similar errors that they said reflected inadequate accounting procedures.
Robert Johnson, a spokesman for the Transportation Department, said most federal employees are trying to do the right thing. His agency's expenses, totaling more than $400,000, included $5,728 for boots and for T-shirts with DOT logos, many of them worn by auditors in the Gulf Coast region.
"We think that people generally are doing what they think is right to deal with the circumstances they're facing at the moment," he said. "But we are committed to making sure every dollar spent was spent for the right reason."