Military waste under fire / $1 trillion missing
A study by the Defense Department's inspector general found that the Pentagon couldn't properly account for more than a trillion dollars in monies spent. A GAO report found Defense inventory systems so lax that the U.S. Army lost track of 56 airplanes, 32 tanks, and 36 Javelin missile command launch-units. And before the Iraq war, when military leaders were scrambling to find enough chemical and biological warfare suits to protect U.S. troops, the department was caught selling these suits as surplus on the Internet "for pennies on the dollar," a GAO official said.
At least $9 billion of this total lost can be attributed to the Coalition Provisional Government run by Bremer et al. One has to wonder incredible dollars involved lost not just to accounting errors, but to corruption, extra legal activities the Bush Administration is infamous for, and corporate payoffs.
Audit Slams U.S. Handling of Iraqi Funds
The U.S.-led provisional government in charge of Iraq until last summer was unable to properly account for nearly $9 billion in Iraqi funds it was charged with safeguarding, according to a scathing audit report. The Coalition Provisional Authority may have paid salaries for thousands of nonexistent employees in Iraqi ministries, issued unauthorized multimillion-dollar contracts and provided little oversight of spending in possibly corrupt ministries, according to the report by Stuart W. Bowen Jr., the special inspector general for Iraq reconstruction.
Defense Spending | Iraqi Spending
SF Gate www.sfgate.com
Military waste under fire $1 trillion missing
Bush plan targets Pentagon accounting
- Tom Abate, Chronicle Staff Writer
Sunday, May 18, 2003
The Department of Defense, already infamous for spending $640 for a toilet seat, once again finds itself under intense scrutiny, only this time because it couldn't account for more than a trillion dollars in financial transactions, not to mention dozens of tanks, missiles and planes.
The Pentagon's unenviable reputation for waste will top the congressional agenda this week, when the House and Senate are expected to begin floor debate on a Bush administration proposal to make sweeping changes in how the Pentagon spends money, manages contracts and treats civilian employees.
The Bush proposal, called the Defense Transformation for the 21st Century Act, arrives at a time when the nonpartisan General Accounting Office has raised the volume of its perennial complaints about the financial woes at Defense, which recently failed its seventh audit in as many years.
"Overhauling DOD's financial management operations represent a challenge that goes far beyond financial accounting to the very fiber of (its) . . . business operations and culture," GAO chief David Walker told lawmakers in March.
WHAT HAPPENED TO $1 TRILLION?
Though Defense has long been notorious for waste, recent government reports suggest the Pentagon's money management woes have reached astronomical proportions. A study by the Defense Department's inspector general found that the Pentagon couldn't properly account for more than a trillion dollars in monies spent. A GAO report found Defense inventory systems so lax that the U.S.
Army lost track of 56 airplanes, 32 tanks, and 36 Javelin missile command launch-units.
And before the Iraq war, when military leaders were scrambling to find enough chemical and biological warfare suits to protect U.S. troops, the department was caught selling these suits as surplus on the Internet "for pennies on the dollar," a GAO official said.
Given these glaring gaps in the management of a Pentagon budget that is approaching $400 billion, the coming debate is shaping up as a bid to gain the high ground in the battle against waste, fraud and abuse.
"We are overhauling our financial management system precisely because people like David Walker are rightly critical of it," said Dov Zakheim, the Pentagon's chief financial officer and prime architect of the Defense Department's self-styled fiscal transformation.
Among the provisions in the 207-page plan, the department is asking Congress to allow Secretary of Defense Donald Rumsfeld to replace the civil service system governing 700,000 nonmilitary employees with a new system to be detailed later.
The plan would also eliminate or phase out more than a hundred reports that now tell Congress, for instance, which Defense contractors support the Arab boycott of Israel and when U.S. special forces train foreign soldiers, as well as many studies of program costs.
The administration's proposal, which would also give Rumsfeld greater authority to move money between accounts and exempt Defense from certain environmental statutes, prompted influential House Democrats to write Speaker Dennis Hastert last week complaining that the proposals would "increase the level of waste, fraud, and abuse . . . by vastly reducing (Defense) accountability."
"The Congress has increased defense spending from $300 billion to $400 billion over three years at the same time that the Pentagon has failed to address financial problems that dwarf those of Enron," said Rep. Henry Waxman, D-Los Angeles, one of the letter's signatories.
Saying critics of the bill "were arguing for more paperwork," Hastert spokesman John Feehery said his boss would support the Bush reforms on the House floor. "The purpose is to streamline the Pentagon to become a less bureaucratic and more efficient organization . . . while also making it more accountable," Feehery said.
PROCESS WILL TAKE MONTHS
The debate will center around the defense authorization bill, the policy- setting prelude to the defense appropriations measure that comes up later in the session. With the House and Senate considering different versions of the transformation proposals, it will be months before each passes its own bill and reconciles any differences.
But few on Capitol Hill would deny that, when it comes to fiscal management,
Defense is long overdue for "transformation."
In congressional testimony Rumsfeld himself has said "the financial reporting systems of the Pentagon are in disarray . . . they're not capable of providing the kinds of financial management information that any large organization would have."
GAO reports detail not only the woeful state of Defense fiscal controls, but the cost of failed attempts to fix them.
For instance, in June 2002 the GAO reviewed the history of a proposed Corporate Information Management system, or CIM. The initiative began in 1989 as an attempt to unify more than 2,000 overlapping systems then being used for billing, inventory, personnel and similar functions. But after "spending about $20 billion, the CIM initiative was eventually abandoned," the GAO said.
Gregory Kutz, director of GAO's financial management division and co-author of that report, likened Defense to a dysfunctional corporation, with the Pentagon cast as a holding company exercising only weak fiscal control over its subsidiaries -- the Army, Navy, Air Force and Marines. Today, DOD has about 2,200 overlapping financial systems, Kutz said, and just running them costs taxpayers $18 billion a year.
"The (Pentagon's) inability to even complete an audit shows just how far they have to go," he said.
Kutz contrasted the department's loose inventory controls to state-of-the- art systems at private corporations.
"I've been to Wal-Mart," Kutz said. "They were able to tell me how many tubes of toothpaste were in Fairfax, Va., at that given moment. And DOD can't find its chem-bio suits."
CRITICS CALLED UNPATRIOTIC
Danielle Brian, director of the Project on Governmental Oversight, a nonprofit group in Washington, D.C., said waste has become ingrained in the Defense budget because opposition to defense spending is portrayed as unpatriotic, and legislators are often more concerned about winning Pentagon pork than controlling defense waste.
"You have a black hole at the Pentagon for money and a blind Congress," Brian said.
But things may be changing.
GAO's Kutz said Rumsfeld has "showed a commitment" to cutting waste and asked Pentagon officials to save 5 percent of the defense budget, which would mean a $20 billion savings.
Legislators are also calling attention to Defense waste. "Balancing the military's books is not as exciting as designing or purchasing the next generation of airplanes, tanks, or ships, but it is just as important," Sen. Robert Byrd, D-W.V., said last week. In a hearing last month about cost overruns, Rep. John Duncan, R-Tenn., of the House Committee on Government Reform said: "I've always considered myself to be a pro-military type person, but that doesn't mean I just want to sit back and watch the Pentagon waste billions and billions of dollars."
But while Capitol Hill sees the need, and possibly has the will to reform the Pentagon, the devil remains in the details, and the administration aroused Democratic suspicions when it dropped its 207-page transformation bill on lawmakers on April 10 -- leaving scant time to scrutinize proposals that touch many aspects of the biggest department in government.
"We have as much problem with the process as with the substance," said said Rep. John Spratt, D-S.C., who co-signed Waxman's letter calling the transformation bill "an effort by the Department to substantially reduce congressional oversight and public accountability."
Defense's Zakheim counters that the reform proposals would "remove the barnacles of past practices (and provide) DOD with modern day management while preserving congressional oversight and prerogatives."
But Waxman, a critic of the administration's handling of Iraqi reconstruction contracts, called the proposals "a military wish list" to take advantage of "the wartime feeling."
"Secretary Rumsfeld is hoping to march through Congress like he marched through Iraq," Waxman said.
E-mail Tom Abate at tabate@sfchronicle.com.
Page A - 1
©2005 San Francisco Chronicle
latimes.com
http://www.latimes.com/news/nationworld/world/la-fg-audit31jan31,1,7400150.story?coll=la-headlines-world
Audit Slams U.S. Handling of Iraqi Funds
The coalition authority in charge through June was lax in its oversight of $9 billion, report says. Officials say the study ignores hardships.
By T. Christian Miller
Times Staff Writer
January 31, 2005
WASHINGTON — The U.S.-led provisional government in charge of Iraq until last summer was unable to properly account for nearly $9 billion in Iraqi funds it was charged with safeguarding, according to a scathing audit report.
The Coalition Provisional Authority may have paid salaries for thousands of nonexistent employees in Iraqi ministries, issued unauthorized multimillion-dollar contracts and provided little oversight of spending in possibly corrupt ministries, according to the report by Stuart W. Bowen Jr., the special inspector general for Iraq reconstruction.
"While acknowledging the extraordinarily challenging threat environment that confronted the CPA throughout its existence and the number of actions taken by CPA to improve the [interim Iraqi government's] budgeting and financial management, we believe the CPA management of Iraq's national budget process and oversight of Iraqi funds was burdened by severe inefficiencies and poor management," the report says in its conclusion. An advance copy of the report, scheduled for release today, was obtained by The Times.
In a letter to Bowen, former agency administrator L. Paul Bremer III blasted the findings of a draft copy, saying that the report was filled with misconceptions and inaccuracies.
Bremer acknowledged that financial systems in Iraq were weak but said that Bowen failed to consider the U.S. mandate to quickly turn over control to an Iraqi government. The agency disbanded after transferring power to the interim Iraqi government in late June.
Bremer could not be reached for comment Sunday.
The "auditors presume that the coalition could achieve a standard of budgetary transparency and execution which even peaceful Western nations would have trouble meeting within a year, especially in the midst of war," Bremer wrote. "Given the situation the CPA found in Iraq at liberation, this is an unrealistic standard."
A Pentagon spokesman also disagreed with the report's conclusions, saying Sunday that the agency had implemented reforms to improve accountability.
"The CPA was operating under extraordinary conditions from its inception until mission completion," spokesman Bryan Whitman said in a statement. "Throughout, the CPA strived earnestly for sound management, transparency and oversight."
The audit adds to a growing body of evidence that the U.S.-led occupation government created a two-tier system of oversight that continues to severely hamper the rebuilding of Iraq.
U.S. taxpayer funds received relatively close scrutiny from dozens of federal auditors and investigators. Iraqi funds stemming from oil sales and assets seized from the regime of Saddam Hussein, however, appear to have been spent without controls designed to ensure accountability.
As a result, companies tapping into the $18.4 billion in U.S. reconstruction funds have moved slowly, partly due to security fears, but also due to worries about making financial missteps in the painstaking federal government contracting process. The delay has left many Iraqis without services such as electricity, water and transportation.
Contracts paid with Iraqi funds, however, were issued with little planning or oversight. Such contracts have frequently fallen prey to charges of fraud and cronyism, reinforcing the belief of many Iraqis that corruption continues to run rampant, even under U.S. oversight.
The view that there has been too much control over U.S. funds and too little over Iraqi money has fueled a sense among those who worked in Iraq that the reconstruction was deeply flawed from the start.
"We had too few contract officers and too much to do and high turnover," Col. Thomas X. Hammes, a professor at the National Defense University who participated in the rebuilding effort last year, said at a recent symposium on contractors in Iraq. "It was penny-wise and pound-foolish."
The audit being released today focuses on about $8.8 billion in Iraqi money from a development account that passed through the coalition authority to Iraqi ministries. Previous reports by a U.N.-appointed board also found problems with the account, the Development Fund for Iraq, which amassed $20.6 billion in oil revenue and assets during the agency's tenure in Iraq. One of the past audits, conducted by the International Advisory and Monitoring Board, found that oil proceeds had been properly accounted for but that there were insufficient controls over the fund.
Today's report finds that U.S. senior advisors attached to the ministries failed to exercise adequate oversight of the money. In one case, the coalition's main budget office had 12 of the 55 staff members that were needed, and most of them were "inexperienced recent college graduates," the report says.
In another case, the coalition awarded a $1.4-million contract to Northstar Consultants to review the controls over the development fund. The firm had no certified public accountant and did not perform the review, according to the report. Attempts to reach Northstar were unsuccessful Sunday.
In yet another case, a government consultant reviewed one ministry's budget in April 2004 and found that there were insufficient controls over a $435-million budget.
The financial process was "left open to fraud, kickbacks and misappropriation of funds," the report said.
The report singles out seven senior advisors for failing to provide adequate financial oversight at their ministries, though it does not identify them. In the past, senior advisors have described chaos in the ministries. Iraqi officials frequently ignored their advice, while U.S. officials paid little attention to their pleas for more help.
In February 2004, one advisor sent top CPA officials a plea for more guidance in performing his duties, according to an e-mail provided to Bowen.
The response: "There are no written guidelines delineating the senior advisors' role, responsibilities and authorities."
If you want other stories on this topic, search the Archives at latimes.com/archives.
Copyright 2005 Los Angeles Times
No comments:
Post a Comment