Good examples of fraud and waste in government
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It's become a political cliche if not a punch line: How do you cut the budget? Don't cut programs; just get rid of the waste, fraud and abuse.
You'll look in vain for a Department of Waste, Fraud and Abuse to close. But if the government wants to reduce fraud, it can start by punishing those who have been convicted of it.
It's not that those who commit fraud against the government are never caught. In 1997, for instance, Columbia/HCA, a national for-profit company that operated hospitals and health care systems, was charged with massive Medicare fraud. It agreed to pay a $600 million fine, admitting that it billed the government for marketing costs, filed false information, inflated diagnoses and made sweetheart deals for kickbacks from physicians and home health agencies, among other offenses.
The fine set a record, but that's as far as the accountability went. HCA changed its name, but it is still a thriving enterprise. When the fraud was discovered, its CEO, Rick Smith, was forced to resign. However, he took with him a $10 million severance agreement and $350 million in HCA stock. You might say he landed on his feet -- last November he was elected governor of Florida.
Then there's the Pentagon budget. A report issued last week by the Defense Department listed more than 100 military contractors found to have committed civil or criminal fraud between 2007 and 2009. The report, compiled at the request of Sen. Bernie Sanders, I-Vt., found 30 contractors that were caught defrauding the government and were paid more than $285 billion in Defense contracts. Even the companies that had been convicted of criminal fraud received $680 million in new work.
One egregious example cited was AEY Inc. of Miami, which was awarded a $300 million contract to provide ammunition for Afghan security forces despite a record of poor performance. That contract was terminated after it was discovered AEY was purchasing banned ammunition from the Chinese military and repackaging it to look like it came from Albania.
The Pentagon and its contractors have friends in Congress who resist all budget cuts in the name of national security. But with the deficit now projected to hit $1.5 trillion, there's no excuse to exempt the Defense budget from scrutiny.
At the very least, Congress and the administration should make it clear to every contractor that those who defraud the taxpayers will face not only fines and jail time, but will lose forever their biggest customer.