- The Washington Times - Wednesday, October 9, 2002

Navy personnel bought jewelry, attended ball games and even hired prostitutes at Nevada brothels with government funds, congressional investigators have found in the latest examples of abuses in the Pentagon credit-card program.
Despite increased Defense Department efforts to control misuse of the travel cards, a General Accounting Office report showed the abuses continued at least through last March long after investigators first reported on the problem in the summer of 2001.
From October 2000 through March 2002, the new survey found 1,180 Navy transactions for personal items totaling $206,700. Lower-paid enlisted personnel earning between $12,000 and $27,000 were the biggest abusers but the Navy bears responsibility for failure to monitor the travel-card program, the GAO said in the report obtained Monday.
The Pentagon has stepped up its efforts to control use of the cards. Some 400,000 inactive accounts unused during the previous year have been canceled. Those who abused the cards have had money involuntarily deducted from their paychecks.
Officials who grant security clearances now are notified when a card holder comes under investigation. And the military has promised to step up civil and criminal prosecutions.
Last summer, the GAO found that some 200 Army personnel had used the cards to get $38,000 in cash they spent on lap dances and other forms of entertainment at strip clubs near military bases.
The new Navy study found additional use of the cards to obtain cash at adult clubs, normally used to tip dancers, waitresses and bartenders.
"Once again the bottom line is the same: no controls, extensive abuse and no accountability," said Sen. Charles E. Grassley, Iowa Republican.
Mr. Grassley, referring to the use of credit cards in two legal Nevada brothels, added, "This time around there was a new twist. The GAO found abuse taken to new depths."
The brothel payments were disguised as restaurant and dining bar charges.
In testimony prepared for a House Government Reform subcommittee chaired by Rep. Steve Horn, California Republican, GAO officials Gregory Kutz and John Ryan sharply criticized the Navy's lack of scrutiny.
"The Navy's practice of authorizing a travel card to be issued to virtually anyone who asked for it compounded an already existing problem by giving those with a history of bad financial management additional credit," the officials said.
During the fiscal year that began Oct. 1, 2000, the Navy had about $510 million in travel-card charges and about 395,000 individually billed travel-card accounts.
After the Pentagon began docking the pay of soldiers and defense workers with unpaid credit-card debts last year, the average bad debt write-off dropped from $1.7 million a month to $300,000 a month.
The Navy report said there were 80 transactions totaling $13,250 at the two Nevada brothels; 199 purchases for $20,800 at two jewelry stores; 247 transactions totaling $28,700 at three adult clubs; 80 gambling transactions for $34,250; 72 cruises for $38,300; and 502 purchases of tickets, worth $71,400, to entertainment events, including "The Phantom of the Opera," New York Yankees and Atlanta Braves baseball games and Los Angeles Lakers basketball games.
The Navy's delinquency rate from the cards fluctuated from 10 percent to 18 percent, about 6 percent higher than for federal civilian agencies, the report said.
As of March 31 this year, more than 8,400 Navy cardholders owed $6 million, the report said.
Employees with travel cards charge expenses for official trips, get reimbursed by their agencies and then must pay the bill. The government isn't liable for its employees' failure to pay.
The GAO said some personnel holding security clearances had difficulty paying their travel bills and could be security risks because of their financial situations. Despite this, Navy security officials were unaware of these financial problems and could not consider their potential effects in determining whether to grant a security clearance.

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