- The Washington Times - Wednesday, May 10, 2006


The government is at risk of squandering significantly more money in a Gulf Coast rebuilding effort that has wasted hundreds of millions of taxpayer dollars, federal investigators said yesterday.

Prosecutors and inspectors general from five agencies addressed a House subcommittee on Katrina rebuilding and pledged stronger oversight to combat waste. They cautioned that some of the biggest fraud may be yet to come as some of the larger government contracts are awarded.

“As the bigger dollars start flowing into the area for the major reconstruction projects, we expect that we may see a greater number of procurement fraud cases developing,” Alice Fisher, assistant attorney general in charge of the Justice Department’s Criminal Division, said in testimony.

“A lack of confidence in the integrity of the process could dry up donations and undermine taxpayer confidence,” she said.

The government is preparing for the next phase of the Katrina recovery in the coming months and years, when big-ticket spending items to rebuild roads, bridges, hospitals and power lines are awarded. The next hurricane season begins June 1.

Congress is scrutinizing contracts and audits showing the government wasted hundreds of millions of dollars — much of it on major contracts awarded to large, politically connected companies — in the initial days after the Aug. 29 storm.

Last week, the Senate passed a little-noticed provision in its $109 billion Iraq and hurricane-relief bill that would block the government from entering into no-bid contracts in excess of $500,000. The provision was prompted by numerous reports of bloated Katrina-related contracts.

“Now that we are in the rebuilding phase, controls are more important than ever,” said Rep. Todd R. Platts, Pennsylvania Republican and chairman of the House Government Reform subcommittee on management, finance and accountability.

During the hearing, investigators:

• Identified poor data-sharing among agencies as a major barrier to stemming fraud. Collaboration among Homeland Security, the Social Security Administration, the Internal Revenue Service and the Postal Service, for instance, would allow the government to verify names and addresses of aid applicants.

• Noted that 261 persons have had fraud, theft and other charges filed against them in connection with hurricane-related scams, and 44 have been convicted. Many of the defendants were Federal Emergency Management Agency employees accused of soliciting bribes from contractors in exchange for higher government payments; or people fraudulently obtaining emergency aid.

In the months since the Aug. 29 storm, the government has appropriated about $85 billion for Katrina rebuilding, and the Senate last week approved an additional $28 billion. Of the $85 billion, agencies have awarded about 6,665 contracts worth $9.7 billion.

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