October 04,2005

Grassley releases recommendation on accounting for Katrina dollars

WASHINGTON – Sen. Chuck Grassley today released a recommendation that says the best model to prevent waste, fraud and abuse in Hurricane Katrina spending is the current federal inspectors general structure augmented by additional resources.

In a letter, the vice-chairmen of the President's Council on Integrity (PCIE) and Efficiencyand Executive Council on Integrity and Efficiency (ECIE) said the inspector general communityhad established a Homeland Security working group to handle to audit and inspection matters,and named Richard Skinner, the inspector general for the Department of Homeland Security, aschairman several months before Hurricane Katrina . The working group model was based on theexperiences of the PCIE and ECIE in coordinating oversight of multiple agencies following 9/11.The vice-chairmen write that the Homeland Security working group has put 300 auditors,investigators and inspectors to work on Katrina operations and that a Hurricane Katrina fraudhotline is yielding results.

The PCIE and ECIE vice-chairmen also say that an additional $30 million would beneeded for oversight efforts in addition to the $15 million already appropriated to the inspectorgeneral for the Department of Homeland Security. An additional $5 million for inspectorsgeneral who are reviewing federal spending on hurricane assistance is included in a bipartisanhealth and welfare relief bill for hurricane victims (S.1716) sponsored by Grassley and Sen. MaxBaucus. That legislation is pending in the Senate.

“This letter documents the work that has begun by the inspectors general to safeguardfederal dollars directed to hurricane relief,” Grassley said. “Congress should continue watchingthe watchdogs to make sure the system that’s set up works as well as intended. Any dollar lost towaste, fraud and abuse is a dollar that doesn’t go to assist a hurricane victim or rebuild destroyedareas.”

A copy of the letter from the PCIE and ECIE vice-chairmen is attached to this message ina pdf file. The letter is a response to an inquiry made on Sept. 23 by Grassley and Baucus.

For Immediate Release
Friday, Sept. 23, 2005

Grassley, Baucus Seek Major Inspector General Role in Policing Katrina Spending

WASHINGTON – Sen. Chuck Grassley, chairman of the Committee on Finance, and Sen.Max Baucus, ranking member, today urged federal government inspectors general to weigh incomprehensively on the best way to prevent fraud, waste and abuse in Hurricane Katrina spending.Grassley and Baucus are requesting both the President’s Council on Integrity and Efficiency (PCIE)and Executive Council on Integrity and Efficiency (ECIE) to provide recommendations on the bestway to prevent fraud, waste and abuse of spending for relief and reconstruction following HurricaneKatrina.

Grassley and Baucus noted that there are a number of proposals drafted in Congress, yet noone has asked the inspectors general what is the best model to get the job done. The PCIE and ECIEare government councils created by executive order to provide discussion amongst the variousinspectors general, representing every government agency. Grassley and Baucus sent a letter to theinspectors general who lead those councils. The text follows.

September 23, 2005

The Honorable Greg Friedman
Vice Chair President’s Council on Integrity and Efficiency
Inspector General
Department of Energy
1000 Independence Ave. S.W,
Washington, DC 20585

The Honorable Barry Snyder
Vice Chair, Executive Council on Integrity and Efficiency
Inspector General
Federal Reserve Board
20th and Constitution Ave. N.W., Room 1054
Washington, DC 20573

Dear Inspector General Friedman and Inspector General Snyder:

As senior members of the United States Senate and as Chairman and Ranking Member of the SenateFinance Committee, it is our duty under the Constitution to conduct oversight into the activities andexpenditures of Executive branch agencies. During our time in the Senate, we have both beenoutspoken critics of fraud, waste and abuse of taxpayer dollars and have fought long and hard toensure that taxpayer dollars are spent wisely. Taxpayers deserve to know that monies appropriatedby the Federal government are spent in a manner consistent with the mission of the project.

The recent catastrophic events surrounding Hurricane Katrina and the massive Federal response tothe destruction and devastation represent a relief and reconstruction project of an unprecedentedlevel. While no official cost estimates are available yet, it is likely that the final cost will totalhundreds of billions of dollars. These dollars will be spread across multiple government programsand will be administered by a multitude of Federal agencies. This formula—multiple programs,many agencies and billions of dollars—could easily turn into a recipe for fraud, waste and abuse oftaxpayer dollars if proper safeguards are overlooked.

Recent media accounts have discussed the various agencies which will be involved in thereconstruction and have questioned whether there will be sufficient oversight of the monies whichhave been and will be appropriated. More specifically, The Boston Globe reported earlier this weekthat a host of competing proposals exists and range from “creating an independent inspectorgeneral…to creating a stand-alone government agency modeled after New Deal programs.” Thereport by the Boston Globe hits the point correctly, there are currently no less than ten differentoversight models being promoted on Capitol Hill. Senator Grassley has backed one of theseproposals to create a chief financial officer (CFO) to oversee the distribution of the funds, which hebelieves will help control wasteful spending. However, this proposal, while providing somesafeguards, does not answer the billion-dollar question we have been asking – which model providesthe best option for preventing fraud, waste and abuse of relief and reconstruction funding?

Hurricane relief appropriations present an opportunity for fraud, waste and abuse at unprecedentedlevels. In your capacity as Vice Chairmen of both the President’s Council on Integrity and Efficiency(PCIE) and the Executive Council on Integrity and Efficiency (ECIE) we ask that you seek thepositions of the impacted Inspectors General as to what oversight models they believe would be mosteffective. Further, we ask that you provide us with a copy of an oversight model that would bebacked by the affected Inspectors General as well as any resources that may be required.

Congress ultimately holds the power to legislate in this arena, however, it is important to hear therecommendations of those who are in the field fighting fraud, waste and abuse on a daily basis. Boththe PCIE and ECIE played an integral role following the tragic events of 9/11 by forming a workinggroup among affected Inspectors General. The recommendations of the PCIE and the ECIE areparamount to creating a coordinated and effective system to prevent fraud, waste and abuse ofHurricane Relief dollars.

Thank you in advance for your immediate attention to this matter. We would appreciate your writtenresponse no later than September 30, 2005. As we are all aware, any dollar that is lost to fraud, wasteor abuse is one dollar that does not reach those who most desperately need the assistance to rebuildtheir communities and lives in the wake of Hurricane Katrina.

Sincerely,

Charles E. Grassley 
Chairman

Max Baucus
Ranking Member


Cc: The Honorable Clay Johnson III
Deputy Director for Management
Executive Office of the President
Office of Management and Budget
725 17th Street NW
Washington, DC 20503