There appears to be a flourishing culture of financial misconduct at the Environmental Protection Agency (EPA). This culture has been perpetuated by a lack of administrative oversight leading to millions of taxpayer dollars being wasted. At a time when D.C.’s fiscal climate is characterized by a national debt that is spiraling out of control, there is no excuse for any government organization to be lacking financial accountability.
A report released this month by the EPA Inspector General (IG) found EPA employees improperly used federal charge cards to purchase everything from gym memberships to gift cards. The report indicated over 90 percent of the sampled transactions were for prohibited, improper, or erroneous purchases, all paid for by American taxpayers. Ironically, Senate Democrats this week carried on an all-night filibuster in hopes of generating even more power and funding for the EPA.
In compiling the report, the IG’s office obtained a spreadsheet of 67,000 EPA transactions from Fiscal Year (FY) 2012, and randomly selected 69 transactions. They also selected 11 transactions that seemed inappropriate because of the merchant involved. For instance, some transactions were with merchants listed as dance halls, child care organizations, music venues and theatres. Of the 80 transactions sampled, 75 were for prohibited, improper, or erroneous purchases.
The IG’s report outlined nine specific internal control oversight issues, ranging from the approval of prohibited transactions to the outright failure to maintain transaction records. Some specific instances of misconduct were so egregious they are worth mentioning. In three instances, cardholders purchased gym memberships totaling $2,867. Two of those purchases were not even for EPA employees but for family members. According to the report, cardholders further violated EPA guidelines regarding inappropriate food purchases:
“Although light refreshments are defined as those that do not include portions of food typical of a meal, in one of our samples, light refreshments included all elements of a meal for an awards ceremony. Four different appetizers, chicken tenderloin, fresh fruit, pasta salad, large cookies, soft drinks and punch were purchased at a cost of $2,900. Meals are not an allowable expense for an awards recognition ceremony.”
The report also found the purchase of gift cards by EPA cardholders was a problem in seven transactions. For example, in one transaction 20 American Express gift cards were purchased totaling $1,588. Additionally, the report highlighted instances where EPA employees violated records keeping requirements:
“Two transactions totaling $26,152 could not be located despite instructions to maintain supporting documentation. The EPA’s policy requires the retention of documentation for 3 years on a fiscal year basis. Cardholders were not attentive to this basic requirement. In two cases, the cardholders left their positions and no arrangements were made to retain the records. In another transaction the cardholder stated that records were not kept because of privacy concerns. This lack of documentation increases the risk that purchases could be fraudulent, improper or abusive.”
It must be noted the report focused on only 80 transactions out of 67,000. Over 90 percent of those transactions were prohibited or improper. For FY 2012, the EPA had 1,370 cardholders that transacted more than $29 million in purchases. The EPA also had 309 convenience check writers who wrote more than 1,000 checks totaling over $500,000. It’s likely the 80 transactions sampled are the tip of an iceberg characterized by improper and wasteful spending of federal funds.
The ultimate irony is a similar report conducted in 2008 found the exact same internal control weaknesses as those from the most recent report. The IG’s report isn’t the only example of EPA administrative failures, lest we forget the saga of John Beale that played out from the early 90’s to 2012.
Beale was a former EPA employee whose fraud cost taxpayers almost a million dollars. Beale was one of the highest paid EPA employees, due in part to his receipt of a fraudulent retention bonus. A 2014 report by the Institute for Energy Research (IER) titled “Dirty Business at the EPA” also found that from 2000-2012 Beale was absent from work over 600 days, often citing the outlandish excuse he was conducting CIA missions.
The kicker is that at the height of Beale’s fraud from 2009-2012, his direct supervisor was then OAR Assistant Administrator Gina McCarthy. IER’s report found in just three years under McCarthy, Beale committed fraud totaling $373,799, almost as high as the amount of his three previous supervisors combined.
One would predict that after Beale’s decade long fraud heads would have rolled at the EPA. Instead, Gina McCarthy is now the Administrator of the EPA. To quote directly from the IER’s report, “if McCarthy’s oversight of employees is so lax that someone can get paid without showing up for work for over a year then how can the American people trust the other pronouncements from McCarthy’s EPA?”
The IG’s recent report evidences an ongoing culture of financial misconduct at the EPA. It’s doubtful this culture will change given the current EPA Administrator failed to notice the greatest fraud in EPA history was being committed on her watch. Thus in years to come, Americans could again find themselves footing the bill for EPA employees’ gym memberships and fictitious CIA missions.