-Caveat Lector-
Cooking the Books at Education
By Cliff Kincaid
Accuracy in Media
Saturday, June 9, 2001
In Washington, during congressional debate over President Bush's "Leave
no child behind" education initiative, Republicans have been arguing for
an increase of 11 percent in spending by the Department of Education,
while Democrats have been arguing for a 35-50 percent increase. The
department currently operates on a budget of $44.5 billion a year. But
the sad truth, which has escaped the attention of most of the major
media, is that there is no real guarantee that any of this money will
actually get to the students that may need it. This is because the
Department of Education has been so mismanaged that it can't
account for the money it is spending.
The amount of missing, mismanaged or stolen money reaches $6 billion.
Outright looting and embezzlement of Education Department funds by
agency officials in the Clinton administration cannot be ruled out, as
there was no security over the obligation and disbursement of federal
funds. Officials of the agency may have conspired to "cook the books"
and spend more money than Congress had appropriated. This would be a
violation of the federal anti-deficiency act, which bars federal
agencies from disbursing more funds than authorized by Congress.
Stories about government waste, fraud and abuse are common, but the
scandal at the Department of Education has reached a new and
unprecedented level. This is an agency out of control. Yet the story
remains largely untold. Recognizing the dimensions of the problem,
Rep. Charles Norwood of Georgia has suggested the department be shut
down until the problems are solved.
Revelations of the limited investigations conducted so far include 21
Department of Education employees who wrote a total of 19,000 checks in
one year, without getting approval from any other official, totaling $23
million; employees using agency credit cards to buy items such as
computers, software, cell phones and Internet service that may have been
diverted to personal use; and $1.9 million of Department of Education
grants intended for two school districts in South Dakota diverted to buy
real estate and luxury sport utility vehicles.
Ignoring a Whistleblower
At a recent background briefing in Washington, D.C., a member of the
leadership of the House of Representatives was asked about the case of
John Gard, the whistleblower from the Department of Education who has
sparked the numerous investigations into the department's finances. The
congressman had never heard of Gard. He was also not aware that the
Department of Education had failed three straight audits and that the
new secretary of education, Rod Paige, has expressed the hope that it
may be able to pass an audit in about 18 months.
This is the agency that Congress and the administration plan to give
billions more dollars. It makes no sense.
John Gard has not sought the attention of the media. However, this is
no excuse for ignoring his sensational charges, which have been the
subject of congressional hearings and an Office of Special Counsel (OSC)
investigation. The OSC determined that his allegations of "gross
mismanagement" to the tune of billions of dollars are true. When the
OSC report was issued on Jan. 31, the Associated Press ran a good story
about Gard and some of his charges. But it was published back on page
21 of the Washington Post. This is typical of how the agency's problems
have been covered.
Whistleblower Talks to AIM
Gard was recently interviewed by Accuracy in Media, which has championed
the cause of whistleblowers in the federal government. As damning as
the OSC report was, Gard said it amounted to a whitewash because it
failed to reveal the extent of the corruption.
He told a harrowing story of how he battled to expose waste, fraud and
abuse in the department only to be made the target of reprisal and
retaliation, eventually being escorted from agency property by armed
federal security guards.
Gard was a systems accountant in the Office of the Chief Financial
Officer. He exposed serious problems in the department's Grants
Administration and Payment System (GAPS), under which dozens of agency
employees were potentially able to funnel education department funds to
their personal bank accounts or their friends and associates without
being caught. The system was such that it was impossible for the
department to monitor who was tapping into the money and how much was
being diverted.
It may be a stretch to say that all $6 billion was funneled out of the
department in this way. Some may have been wasted or mismanaged. On
the other hand, Gard asks the central question, "Where did the money
go?" The system was so open to abuse that it may be impossible to
determine how much money was stolen and by whom.
In one sensational incident, Gard found unsecured checks lying on top of
an employee's desk and reported the matter to the Office of the
Inspector General of the department. These checks could have been
cashed by the employee for personal use.
For blowing the whistle, Gard said he was attacked by the then-chief
financial officer, Donald Rappaport, as a "spy" who could not be
trusted.
In a filing with the OSC, which is part of the public record in the
case, Gard's lawyers also say that agency employees who helped cover up
the agency's "mismanagement, waste of funds and potential fraud
activity" were rewarded with "enhanced job assignments, promotions,
awards, recognition or enhanced office space."
Gard said his concern all along has been that the agency obey the laws
of the United States. He believes agency employees have violated
several federal laws on financial record keeping and other related
matters.
He is still being paid, but he has no assigned duties. He spent most of
his time on his lawsuit against the department. He is willing to return
to the department under the Bush administration and try to help solve
the problems which have plagued the agency. But his offer to do so has
been ignored
Gard emphasizes that he is not advocating the elimination of the
department but wants to see the funds that are disbursed recorded
properly and accounted for. He has said, however, that the problems are
so large that the department should be placed under the supervision of a
special master appointed by a federal court or put into receivership.
This has been done in the past with grossly mismanaged agencies of the
Washington, D.C. city government.
Paige Turns the Page
The corruption problem is so massive that Secretary Paige was forced to
hold a press conference on April 20 specifically on fraud and
mismanagement in the department. Putting a happy face on the problem,
it was at this event that he said his hope was that the agency could
pass an audit in 18 months.
Paige also announced that Deputy Secretary-designate Bill Hansen and
Undersecretary-designate Gene Hickok would head a reform effort. Hansen
has been approached by one of Gard's lawyers about Gard helping try to
clean up the mess. Gard said he hasn't heard anything back from Hansen.
At the press conference, Paige suggested the problem in the agency
involved the mismanagement or loss of only $450 million, and that $250
million of that had been recovered. The $450 million figure was put
forward at an April 3 congressional hearing, where the agency's
inspector general testified.
The hearing was covered by the Associated Press, the Washington Times on
page 6, and the Washington Post back on page 21. This event also
featured a discussion of the agency's failure to pass three consecutive
audits. However, the evening news programs of the three major networks
completely ignored the hearing.
But Gard emphasizes that this $450 million figure is far too low. The
AP and the Washington Post have noted a discrepancy with the Department
of Treasury's accounting of what the Department of Education has spent
that amounts to $6 billion over the last three years under Secretary
Richard W. Riley.
Gard believes this is a more accurate figure reflecting the true amount
of how much money is missing or unaccounted for. Again, this is because
there was no security over the disbursement of federal funds when the
agency implemented GAPS. Gard says that, despite the change in
administrations, there's still a reluctance to tell the American people
about the full extent of the problem because both major parties want to
spend more on education.
Officials at Paige's news conference claimed that financial problems are
going to be addressed through the installation of a new software
program, Oracle Federal Financials. Gard told us that this would not
solve the GAPS disbursement and security problems.
Gard said the Oracle software may resolve some accounting problems if it
is installed correctly. He said he knew of one federal agency that had
used it properly. Ironically, it had been installed at the Corporation
for National Service by one of his former associates at the Department
of Education, after he had been relieved of his duties. The Department
of Education has been without a chief financial officer for two years
and it is apparent that the agency has had a very difficult time finding
a new one. The agency has been without an assistant secretary for
management for five years. This suggests the problems are simply too
large to be addressed and that the agency may not be salvageable
Honor Gard
President Bush has called upon federal employees to "disclose waste,
fraud, abuse and corruption to the appropriate authorities." Gard did
just that and has suffered for it. He is suing the Department of
Education.
Gard should be compensated for the damage to his career. President Bush
should restore Gard to his previous position or even promote him. If
Secretary Paige wants to make sure that Department of Education money is
used to "teach children," he should take the initiative himself and
immediately put Gard back to work.
But Gard's name was never raised during Paige's news conference. That's
a strange way of encouraging employers to expose corruption. Yet,
without Gard back at the department, it will be hard to have any
confidence that the financial problems will be solved.
The only reporter at the press conference who seemed familiar with the
extent of the corruption was George Archibald of the Washington Times,
who produced a page two story for that paper. Archibald has an
understanding of the agency, having worked there under the president,
Ronald Reagan, who wanted to abolish it.
Reprinted with permission of Accuracy in Media (www.aim.org) from its
AIM Report #9.
=======================================================
Kadosh, Kadosh, Kadosh, YHVH, TZEVAOT
FROM THE DESK OF:
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The Best Way To Destroy Enemies Is To Change Them To Friends
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