“Preventing Fraud, Waste, And Abuse In The Wake Of Hurricane Katrina”

Federal assistance programs are vital to many who are victims of natural disasters.  The critical nature of this assistance makes reports of waste, mismanagement, and outright fraud particularly disturbing.  We cannot sweep such allegations under the rug; we must face them head-on to preserve public confidence in these programs.  I recently chaired a hearing of the Senate Committee on Homeland Security and Governmental Affairs that examined the mounting evidence of fraudulent claims, wasteful spending, and ineffective management in the FEMA disaster assistance programs triggered by Hurricane Katrina.    Witnesses who testified at our hearing provided many shocking examples of absent safeguards and wasted tax dollars.  To date, FEMA has distributed more than $6 billion in financial and housing assistance to nearly 1.5 million individuals.  These dollars are critical to the true victims of Hurricane Katrina.  However, according to a GAO report released by my committee, some of the money desperately needed by victims has gone to people who were nowhere near Hurricane Katrina and were in no way harmed by it.  In other cases, this emergency aid, which is available on a one-time basis, was collected multiple times by people taking advantage of the system.  The emergency aid program that the GAO investigated was provided to individuals and families through the form of checks, debit cards, and direct bank deposits.  GAO investigators found that some debit cards had been used for such items as a tattoo, gambling, and a diamond ring when they were intended for necessities such as food and shelter.  Investigators also discovered that more than 2,000 people used Social Security numbers that were completely bogus or that belonged to deceased individuals.   According to the Inspector General, which is examining cases of fraud, rental assistance was provided with no inspections of the recipients’ homes to verify damage, and no instructions were given on the proper use of these funds.  This “pay first, ask questions later” approach was an invitation to the unscrupulous. FEMA paid for hotel rooms that were left unused or used simply as storage units for personal goods.  Some of these rooms were at expensive hotels and resorts charging an outrageous $400 per night when less expensive rooms were readily available.   But the problem goes far deeper than excessive prices or individuals getting money to which they were not entitled.  The real problem is that, once again, FEMA failed to adequately plan for the very type of disaster that occurs virtually every year.  One of the most egregious examples of this failure to plan is the purchase of 25,000 manufactured homes, at a cost of approximately $850 million.  A significant number of these will likely go unused because FEMA cannot install them in a flood plain, exactly the terrain in Mississippi and Louisiana where they are needed.   In the absence of effective pre-disaster planning for essential services, FEMA awarded many contracts without competition – such as four no-bid contracts, each with an original ceiling of $100 million that later ballooned to $500 million. The government made numerous other purchases at retail prices and without government discounts for needed supplies that could have been obtained before the crisis began. This lack of preparation is a recipe for wasteful spending.   Perhaps most troubling are the cases of contractor fraud and allegations of bribery.  Nothing is more offensive than this abrogation of the public trust.   These cases of fraud can not be allowed to go unpunished.  The Hurricane Katrina Fraud Task Force is to be commended for its unprecedented efforts to deter and prosecute criminal offenses.  This multi-agency task force was established by the Attorney General just one week after Katrina hit, and it is committed to deterring, investigating, and prosecuting hurricane-related fraud.  The task force is enforcing the Administration’s pledge to prosecute every case of fraud against the government and the American taxpayers.    But these measures, though highly commendable, are primarily reactive.  We can not continue to clean up waste, fraud, and abuse after disasters.  We must do more to prevent the mess from occurring in the first place.   No one contests the need for the federal government to provide swift and compassionate assistance to the victims of natural disasters.  But when scarce resources are wasted, fraudulent claims are paid, and safeguards are ignored, there are new victims: the taxpayers.  And it is a false choice to say that we cannot protect taxpayers while responding effectively to the urgent needs of disaster victims.  It is my sincere hope—in fact, my expectation—that we will no longer talk about longstanding problems that remain unaddressed.  It is time to talk about the progress being made.