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One year after Katrina, the government is still squandering tens of millions of dollars in wasted disaster aid, including $17 million in bogus rental payments to people who had already received free trailers and apartments, federal investigators said Wednesday (Dec. 6).
The Associated Press reported that in addition the Federal Emergency Management Agency (FEMA) has recovered less than 1% of the $1 billion it wasted on fraudulent hurricane assistance after the August 2005 storm, highlighting a need for stronger controls the next time a major hurricane strikes.
The report by the Government Accountability Office (GAO) paints a picture of an agency still struggling — at substantial taxpayer expense — to find the balance between distributing quick aid to those in need while guarding against substantial abuse.
Last week, a federal judge in Washington ordered the Bush administration to resume housing payments for thousands of people displaced by Katrina, criticizing FEMA for a convoluted application process. FEMA is appealing that ruling.
The GAO audit found that numerous aid applicants received duplicate rental aid, with FEMA in one case providing free apartments to 10 people in Plano, Texas, while sending them $46,000 to cover out-of-pocket housing expenses.
Another $20 million was wasted on thousands of individuals who claimed the same property damage from both hurricanes Katrina and Rita. FEMA also paid at least $3 million to more than 500 ineligible foreign students in the stricken Gulf Coast, the report said.
“Ineffective preventive controls have resulted in substantial fraudulent and improper payments,” said GAO investigator Gregory Kutz. “The additional examples of potentially fraudulent and improper payments in our testimony today show that our estimate of $1 billion in improper and/or fraudulent payments is likely understated.”
Responding to the audit, FEMA spokesman Pat Philbin said the agency has sought to eliminate waste in the past year by upgrading the registration process to prevent duplicate payments and strengthening the process for verifying names and addresses.
“FEMA continues to focus our rebuilding efforts to greatly improve our reliability, accuracy and response in providing aid to disaster victims,” Philbin said. “The agency will consider and evaluate any new findings that can assist in improving our processes and procedures.”
Among the audit’s findings:
• Fraud detection is inadequate. Even though GAO found at least $1 billion in disaster aid waste, FEMA has identified about $290 million in improper payments and recouped just $7 million.
• Control procedures remain weak. FEMA was unable to locate dozens of laptops, printers and other items that federal employees purchased with government-issued credit cards for Katrina disaster work. In one case, FEMA purchased 20 flat-bottom boats, but could not find two of them and lacked titles to any of them.