Daily News.com
By Bill Hillburg
Washington Bureau
March 14, 2002
WASHINGTON -- More than 700 military officials have walked away from debts on their government-issued credit cards, including expenses for luxury leather goods, Christmas presents and even breast implants, Congress was told Wednesday.
Wednesday's hearing focused on $12,000 worth of unauthorized credit card purchases by military and civilian workers at the Space and Naval Warfare Systems Command Systems Center and the Navy Public Works Center, both in San Diego. But critics warned that the entire Pentagon card system is poorly supervised and that unauthorized purchases likely run into the millions of dollars.
"It's not their money. It's we the taxpayers' money," said an outraged Rep. Stephen Horn, R-Lakewood, whose Subcommittee on Government Efficiency, Financial Management and Intergovernmental Relations took testimony on numerous and ongoing abuses of the Defense Department's purchase card system.
Defense Department employees are authorized to buy needed goods worth up to $2,500 -- known in Pentagon jargon as "micropurchases" -- with government MasterCards issued by Citibank. The program was designed to streamline cumbersome Pentagon procurement procedures, including competitive bidding, and to better track the military's spending.
Horn and other critics also warned that the situation will only get worse if Congress approves a bill, backed by Pentagon officials and many defense suppliers, that would raise the "micropurchase" limit to $25,000.
Among the abuses outlined at Wednesday's hearing were:
A NPWC employee who used her card to buy $11,551 worth of personal items and Christmas presents. The woman, who was not prosecuted, was later given a promotion and a pay raise. She now works in an Army finance office at the Pentagon.
A Defense Department employee in Jacksonville, Fla., who used his card to pay for a $4,000 breast implant operation for his girlfriend, who was a waitress at a local Hooters restaurant.
Low-ranking NPWC employees who used cards 34 times to rent luxury automobiles, including Lincoln Town Cars, which are to be reserved only for four-star admirals.
SPAWAR employees who used cards to buy more than $33,000 worth of Louis Vuitton calendar holders, at $225 each, along with designer leather briefcases and other accessories.
A SPAWAR employee who used his card to buy four Lego Mindstorm robot kits at $200 each as learning tools for employees, but kept the items for himself.
None of the employees reimbursed the government for the unauthorized purchases highlighted during the hearing, officials said.
The abuses were uncovered by the General Accounting Office, the government's in-house investigative agency, and by the Project on Government Oversight, a private watchdog group based in the nation's capital.
Deidre Lee, the Pentagon's director of defense procurement, said the agency is moving to stop credit card abuses and recently suspended all purchase cards held by SPAWAR employees, pending a full review.
Recently appointed commanding officers of the two targeted Navy installations also said they have launched reforms by limiting the number of card holders and carefully reviewing all credit card purchases.
Sen. Charles Grassley, R-Iowa, who also testified before the subcommittee, declared that the entire Pentagon credit card system, including 205,500 purchase cards and 1.4 million cards used by employees in a separate program for official travel, was out of control.
"The potential for abuse and fraud is unlimited," he said.
Grassley noted that the travel card program has racked up $62 million in bad debts by 46,572 employees, despite a Pentagon program to garnish wages for unpaid bills. Bank of America, which administers the travel card operation, has threatened to cancel it March 25 unless abuses and losses are brought under control.
Both Grassley and Horn also decried lax efforts to prosecute credit card cheats. Grassley produced a list of 713 deadbeat military officers that he plans to turn over to Defense Secretary Donald Rumsfeld.
"A person who holds up a liquor store and gets $500 cash can go to jail for 15 years," said Grassley. "If you use DOD plastic to steal $12,000, you get a promotion."
Told by the GAO and other officials that the Justice and Defense departments have been reluctant to indict or court martial accused credit-card thieves, Horn said, "What do they have to do, steal at least $2 million?"
[end of transcript]
PENTAGON PORN CHARGED TO TAXPAYERS
Thieving Pentagon Employee Promoted
Note: Tanya Mays
Key Lawmaker Warns DOD Headed For Financial Disaster In Five Years
Let's Roll Em'