Federal workers abuse credit

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Federal employees used government credit cards to purchase Luis Vuitton briefcases, a mounted deer head and three global-positioning systems for a manager who routinely got lost, as card expenditures increased by $15 billion in nine years, an audit released yesterday showed.

Created in 1989 as a red-tape-cutting measure, the purchase-card program is being abused by employees who can buy directly from vendors without going through contracts or purchase orders, according to the General Accounting Office (GAO) audit.

"A weak overall control environment and substantial breakdowns in internal control left agencies vulnerable to fraudulent, improper and abusive charges," the report said.

Defense Department officials, including David Steensma, assistant inspector general, told the Senate Governmental Affairs Committee yesterday that a 2001 review of 1,357 cardholders found that 182 employees had used the cards "inappropriately or fraudulently and spent about $5 million in scarce resources by doing so."

From 1994 to 2003, the use of government purchases on the credit cards increased from $1 billion to $16 billion, and the number of employees allowed to use the cards peaked in September 2002 at 500,000 -- nearly 16 percent of all government employees, the GAO report said.

Sen. Susan Collins, Maine Republican and committee chairman, said the panel is conducting oversight of credit-card spending because the government faces enormous fiscal pressures and a growing deficit.

"We must assure taxpayers that the federal government is shopping carefully, wisely and honestly," she said

At the Information Technology Center in New Orleans, "questionable" purchases included 10 pairs of binoculars for nearly $2,000 to watch for terrorists on Lake Ponchartrain, six bicycles for nearly $2,400 to be used by interns from New Orleans University in a nonexistent intern program, and the global-positioning systems for the center's directionally challenged director that cost more than $1,700, the report said.

The GAO audit was of the departments of Defense, Veterans Affairs, Agriculture, Justice, Interior and Transportation; however, the report focused almost entirely on Pentagon spending.

The government encouraged use of the cards for small and routine purchases, but the GAO says use has "dramatically increased."

In 2003, more than 325,000 employees used the credit cards to make 26.5 million transactions for more than $16 billion in goods and services.

Other questionable purchases include buying personal items such as jewelry, designer leather goods, clothing, stereo equipment, food, wine and cigars, also for gambling online and accessing pornographic Web sites.

Vendors also exploited the credit-card program and submitted false bills and engaged in kickback schemes.

One vendor schemed with his sister who directed the Graphics and Presentation Division, Real Estate and Facilities Division to charge $1.7 million on the card to his fictitious firm, the report said. She was sentenced to 37 months in jail, and he received 48 months in jail.

One cardholder made 59 fraudulent purchases totaling $130,000, including two cars, a motorcycle and cosmetic surgery.

The deer head was purchased to educate federal employees about local deer populations, the report said.