ChoicePoint Inc.

Third Government Report Confirms that Millions of Dollars that Katrina Victims Really Needed Were Wasted

We need to preposition fraud control, just as urgently as we need to preposition emergency food and water,

says Garrett

Washington, D.C., February 24, 2006 – On the heels of last week’s scathing reports by the General Accounting Office (GAO) and a bipartisan House Select Committee, the Bush Administration has released its own report of lessons learned from our Katrina response and recovery efforts. That report, like the others, indicated a national failure in safeguarding taxpayer-funded aid to the Gulf State victims.

Congressman Scott Garrett (R-Sussex), who supported the initial $10.5 billion in emergency aid to the Gulf Coast, was one of 11 House Members who voted against a second aid package of $52 billion destined for the Gulf State hurricane victims because of a lack of accountability in the bill. Garrett released the following statement on the combined audits that have condemned Federal recovery efforts.

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Regrettably, as three independent reports have now demonstrated beyond a shadow of a doubt, Congress’ Katrina recovery efforts last September have missed the mark. As a result, Katrina victims lost out on hundreds of millions of dollars that could have been used to help them put their lives back together after the storm. And, taxpayers footed the bill for millions of dollars of easily avoidable waste, fraud, and abuse.

A study released by the Bush Administration on Thursday, February 23rd, identified 125 specific recommendations for improving our nation’s emergency preparedness and disaster response. Included in those recommendations are several changes aimed at providing prompt aid to disaster victims, but with appropriate and adequate mechanisms for accountability.

Last week’s report by a bipartisan House panel and an audit by the General Accounting Office (GAO) found extraordinary waste, fraud, and abuse in the emergency aid provided in the weeks following Katrina’s landfall. The GAO cited ‘weak or non-existent controls in the process that FEMA used to approve assistance payments that leaves the federal government vulnerable to fraud and abuse.’

Some of the waste is almost understandable – our nation needed and wanted to respond quickly and compassionately to the families who lost loved ones, homes, treasured personal possessions, livelihoods, and hope in the brutal hurricanes that devastated the Gulf Coast states. In our haste to provide aid and comfort to these victims, there were bound to be glitches in the system and duplicated efforts.

But, what these reports have confirmed is that the fraud went far beyond these honest mistakes. The GAO report found such glaring errors as an expenditure of $8 million to refurbish an old Army base for emergency housing that was shortly thereafter determined to be inappropriate for that purpose. In the end, only about 20 people were housed there. That means that American taxpayers spent $400,000 to house each of those individuals. I shudder to think about the hundreds of New Orleans families that didn’t get the aid they needed because so much was wasted on that project alone.

And, that’s just the tip of the iceberg. I met last week with three of the auditors who investigated and wrote that GAO report. The stories they shared with me about how easy it was to defraud the Federal Emergency Management Agency (FEMA) were astonishing – taxpayer-footed bills for $400 massages, $450 tattoos, and other similarly obvious abuses of the emergency aid. We may never even know the extent of these abuses as many who received the aid literally used the debit cards they were given by FEMA as ATM cards and there are no requirements for record-keeping for these cash expenditures.

Furthermore, some of the inefficiencies of government boggle the mind. For example, FEMA used a private identification and credential verification company called ChoicePoint as a fraud check for some of its aid disbursement. ChoicePoint purchased data to fulfill its obligations – the same data already owned by the Social Security Administration. Inflexible stove piping within the Federal government prevented FEMA and the Social Security Administration from cutting out the expensive middleman and working together in a much more efficient manner.

Perhaps what struck me most in my discussions with the GAO investigators was how unsurprised they were at what they found. Long before Katrina made landfall, there were numerous credible government assessments and studies that demonstrated mismanagement and a lack of accountability endemic to the institutional culture at FEMA. For instance, one study found that 28,500 residents of Cleveland received financial assistance for a storm that caused minor damage to 72 homes. As much as $21.6 million was spent on clothing losses in that instance alone. And, FEMA itself sought to reclaim over $30 million in duplicate payments to 7,600 individuals following the Florida hurricanes of 2004.

Last fall, I introduced legislation to establish the Hurricane Oversight Board, a multi-agency commission that would oversee the disbursement of emergency hurricane relief assistance in the Gulf States. The Board is modeled on the Airline Transportation Stabilization Board, which successfully administered the 2001 airline bailout. A GAO assessment commended the Airline Transportation Stabilization Board as an example of efficiently performing its duties while safeguarding taxpayer dollars from waste, fraud, and abuse. The Hurricane Oversight Board would be an effective tool for ensuring that we really do learn from the lessons of Katrina and make sure that the victims of future disasters get the help they need.

Last weekend, I visited New Orleans. I toured some of the most devastated areas on foot, by bus, and by helicopter. I spoke to business, civic, and government leaders. I explored the problems of red tape encountered by the contractors who are working to physically rebuild New Orleans and other Gulf Coast cities. There is no doubt that there is a lot of work still to be done – both in meeting the needs of the victims of Katrina and in rebuilding the infrastructure of the region. But we must make certain that the money that Congress sends to help these victims rebuild their lives actually gets to the people who need it most. Simply pouring money into the region without any controls for accountability and oversight helps no one.

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