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DoD Fights Government Credit Card Abuse

By Linda D. Kozaryn
American Forces Press Service

WASHINGTON, March 27, 2002 – Defense officials are on the trail of anyone who hasn't paid their government travel credit card bill and those who've misused government purchase cards.

Defense Secretary Donald H. Rumsfeld "is moving forcefully" to correct department travel and purchase credit card problems, "which he considers to be very serious," DoD Comptroller Dov S. Zakheim said in a Pentagon press briefing today. The department intends to have a package of remedies in the form of proposed legislation or administrative changes within 60 days, he added.

Zakheim said he set up a task force about a week ago made up of the DoD inspector general and Defense Criminal Investigative Service, and representatives from the Office of Personnel Management, Justice Department and Office of Management and Budget. The task force objectives are to investigate and punish wrongdoers, develop reforms, and improve training and senior management enforcement.

The Defense Department has issued about 1.4 million travel credit cards to individual employees and service members. Last year, cardholders charged some $3.4 billion using the cards. The department has also issued about 207,000 purchase cards to persons authorized to buy office supplies and equipment. Last year, $6.1 million was spent using DoD purchase cards.

Defense officials say users' current delinquency rate on travel cards is 11.7 percent and 3 percent for centrally billed purchase card accounts. Accounts are considered delinquent when payment is not made within 60 days. Punishment for card misuse, fraud and abuse include termination of DoD employment, imprisonment, probation, restitution, fines and demotion, officials said.

The Defense Criminal Investigative Service has 17 open investigations involving 90 persons allegedly involved in credit card fraud. Other completed cases have resulted in jail terms, probation and restitution. Examples:

  • A Florida man, for example, pleaded guilty to placing fraudulent charges on 13 government credit cards. He was sentenced to 18 months in jail and 36 months' probation, and ordered to pay $262,840 in restitution and other fees.
  • In another case, a Texas man pleaded guilty to using a government credit card to buy a television for personal use. He was fired and sentenced in federal court to a $3,000 fine and $1,400 in restitution.
  • A Virginia man must pay $400,200 in restitution after pleading guilty to bribing Joint Staff Supply Service employees to buy from his office supplies company using their government credit cards. He was sentenced to 27 months in jail and 36 months' probation.

"The point is we do prosecute," Zakheim stressed. "We do get convictions, and people do pay either in jail time or in money or both."

Zakheim called the credit card programs a major and essential part of DoD's efforts to improve its business practices. The cards cut costs, free up funds for critical requirements and create the potential for accountability.

"What we're looking for now is better ways of executing that," he said. "The issue is not to eliminate the cards -- that is going backward. What we've got to do is prevent misuse."

The problem is not widespread, Zakheim stressed. "I think sometimes people get the impression that there is this overwhelming degree of misuse. It is simply false." While the delinquency rate on the DoD cards is higher than for private sector cards, he noted, that doesn't mean the department thinks it's acceptable.

"No abuse is acceptable," he stressed. "No delinquency is acceptable."

Since April 2001, defense officials have taken steps to reduce misuse, fraud and abuse and have succeeded in cutting the total delinquent amount from $20 million to about $6.9 million, he said. Because of one step, for instance, employees can't transfer to another office or leave the department until delinquent credit card charges are addressed.

"In other words, you can't just skip town," Zakheim said.

Defense officials are looking at ways to make both individuals and supervisors responsible for fraudulent charges. "The best way to encourage people to do things properly is if they know it's ultimately going to come out of their pocket," he said.

Officials are also considering a way for the government to take some of the money out of an employee's pay and send it directly to the bank for the credit card bill. They're also looking at making credit card abuse a specific offense under the Uniform Code of Military Justice. They're looking at suspending employees' security clearances; increasing prosecution and possibly using state and local courts to prosecute; accelerating electronic billing for purchase cards; and improving training.

"You have to convince people that this is a major concern," Zakheim said. "The kind of money that can be lost this way is money that can be spent on bombs, bullets, readiness -- whatever. It's not that people do not want to be responsible. It's sometimes that they need to be trained how to be responsible."

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Related Sites:
DoD News Transcript: Under Secretary Zakheim Briefs on Government Credit Card Use, March 27, 2002


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