Personal About Politics: Out Tax Dollars At Work: Fraudulent Spending With Government Issued Credit Cards

After reading in both the Washington Post and the New York Times about the misuse of federally issued credit cards, I decided to check out the report from the Government Accountability Office for myself.  It's a real page-turner with 61 riveting pages.   

I'll cut to the chase. It's a flawed system.

According to the GAO "The federal government spends billions annually through its purchase card programs, using purchase cards and convenience checks to acquire millions of items –everything from paper and pencils to computers – and to make payments on government contracts for a variety of goods and services, such as vehicles and relocation services."

And this is interesting. "The primary responsibility for purchasing these items rests with the cardholder and the officials who approve their purchases."

So, basically, no accountability.

Here's a statement I really like, "Because of the position of public trust held by federal employees, Congress and the American people expect cardholders and approving officials to maintain stewardship over the federal funds at their disposal."

Well, yeah. I was hoping that would be the case, since they are using my tax dollars (and yours) with their credit cards and convenience checks. However, the convenience checks were apparently just a little too convenient.
 
The Federal Acquisition Regulation (FAR) designates the "purchase card as the preferred method for making micropurchases"

Now get this. The FAR defines a micro-purchase as anything under $2,500.

Are they joking? A micro-purchase for me is a cup of coffee.

It isn't difficult to connect the dots. Give a federal employee a credit card allowing them to make "micro-purchases" without accountability and you will be creating a climate for fraud.

The GAO stated, "the purchase card program demonstrated that if not properly managed and controlled, use of the purchase card results in fraud, waste and abuse."

Duh.

To identify examples of fraud, improper and abusive purchase card activity, the GAO data mined purchase card transactions from July1, 2005, through September 30, 2006. From that they estimated that 41% of the transactions were not properly authorized. They also found that "control weaknesses over accountable property procured with the purchase card resulted in missing or stolen assets; some of these assets appeared to have been acquired for personal use."

From July 1, 2005 to June 30, 2006 alone, federal agencies purchased over $17 billion of goods and services using government purchase cards.

After conducting an audit from September 2006 to February 2008, they made this profound statement: "Overall, the results of this audit show that the government-wide failure rate is unacceptably high."

Here are some examples of fraudulent purchases made with federally issued credit cards.

•    An employee of the National Science Foundation used her purchase card to spend over $1,800 at a nail salon and on women's accessories at a specialty shop.

•    Over a 15-month period, a postmaster used the purchase card to subscribe to two Internet dating services spending $1,100.

•    During a six- year period a forest service employee wrote out 180 checks totaling $642,000 to her live-in boyfriend.

•    In 2006 four DOD cardholders purchased clothing and accessories for service members including $45,000 from Brooks Brothers, Talbot's and Johnston Murphy. The cost of the suits from Brooks Brothers totaled $2,300 per individual. The cardholders also purchased over $32,000 at other clothing stores, spending a total of $77,700.

•    The USPS spent $13,500 for one dinner at Ruth Chris Steakhouse for 81 people.

(no wonder the postal rates keep going up)

•    An FBI cardholder charged coffee and "light" refreshments for 50 to 70 conference attendees for 4 days averaging about $50 per person per day. The total bill was $15,000.

  The list goes on and on, with purchases large and small, but here is my personal favorite.

•    A State Department cardholder purchased women's underwear/lingerie for use during jungle training by trainees of a drug enforcement program in Ecuador for  $360.

Priceless.

The GAO made a long list of recommendations. My recommendation: Cut up the credit cards.
 

Cheri Cabot – Political Correspondent

Cheri's column, "Personal About Politics", published weekly, will reflect on how the life of a 58 year-old, middle class woman is affected by politics, policy and the current state of the nation - a look at the personal aspects of politics. The articles will be posted to Politics.gather.com as part of Gather Essentials.

Cheri is a single, freelance writer living in Southern California.  She has two grown children, one in Iowa and one at Columbia University, and is the proud grandmother of two. Cheri is also a purveyor of fine coffee, warm chatter and dry wit.

You can find all of Cheri's columns on Personal About Politics at www.ccabot.gather.com.