- The Washington Times - Wednesday, December 6, 2006

ASSOCIATED PRESS

More than one year after Hurricane Katrina, the government is still squandering tens of millions of dollars in wasted disaster aid, including $17 million in bogus rental payments to people who had already received free trailers and apartments, federal investigators said yesterday.

At the same time, the Federal Emergency Management Agency (FEMA) has recovered less than 1 percent of the $1 billion it wasted on fraudulent hurricane assistance after the August 2005 storm, highlighting a need for stronger controls the next time a major hurricane strikes.

The report by the Government Accountability Office (GAO) paints a picture of an agency still struggling — at significant taxpayer expense — to find the balance between distributing quick aid to those in need while guarding against substantial abuse.

Last week, a federal judge in the District ordered the Bush administration to resume housing payments for thousands of people displaced by Katrina, criticizing FEMA for a convoluted application process. FEMA is appealing that ruling.

The GAO audit found that numerous aid applicants received duplicate rental aid, with FEMA in one case providing free apartments to 10 persons in Plano, Texas, while sending them $46,000 to cover out-of-pocket housing expenses.

An additional $20 million was wasted on thousands of individuals who claimed the same property damage from both hurricanes Katrina and Rita. FEMA also paid at least $3 million to more than 500 ineligible foreign students in the stricken Gulf Coast, the report said.

“Ineffective preventive controls have resulted in substantial fraudulent and improper payments,” GAO investigator Gregory Kutz said in a Senate hearing. “The additional examples of potentially fraudulent and improper payments in our testimony today show that our estimate of $1 billion in improper and/or fraudulent payments is likely understated.”

He described FEMA’s approach of “shooting money out the door” and recouping bogus payments later as severely misguided because only pennies on the dollar are typically recovered. He estimated that tens of thousands of people sought to defraud the government after Katrina and Rita.

“I hope FEMA has learned the costly lesson,” Mr. Kutz said.

Responding to the audit, FEMA spokesman Pat Philbin said the agency has sought to eliminate waste in the past year by upgrading the registration process to prevent duplicate payments and strengthening the process for verifying names and addresses.

“The agency will consider and evaluate any new findings that can assist in improving our processes and procedures,” Mr. Philbin said.

Among the audit’s findings:

• Fraud detection is inadequate. Even though GAO found at least $1 billion in disaster aid waste, FEMA has identified about $290 million in improper payments and recouped just $7 million.

• Control procedures remain weak. FEMA was unable to locate dozens of laptops, printers and other items that federal employees purchased with government-issued credit cards for Katrina disaster work. In one case, FEMA purchased 20 flat-bottom boats, but could not find two of them and lacked titles to many of them.

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