Major Government, Military Corruption
Trillions Missing at Defense Department
" 'According to some estimates we cannot track $2.3 trillion in transactions,' Rumsfeld admitted. $2.3 trillion — that's $8,000 for every man, woman and child in America."
— CBS News, 1/29/02, U.S. Secretary of Defense raises evidence of government, military corruption
"A GAO report found Defense inventory systems so lax that the U.S. Army lost track of 56 airplanes, 32 tanks, and 36 Javelin missile command launch-units. When military leaders were scrambling to find enough chemical and biological warfare suits to protect U.S. troops, the department was caught selling these suits as surplus on the Internet 'for pennies on the dollar.' "
— San Francisco Chronicle, 5/18/03
"The Defense Department spent an estimated $100 million for airline tickets that were not used over a six-year period and failed to seek refunds even though the tickets were reimbursable."
— New York Times, 6/9/04
One of the most stunning underreported stories in the media is the well-established fact that at the very least hundreds of billions of dollars (if not trillions) are missing from the accounts of the U.S. Department of Defense (DOD). Secretary of Defense Donald Rumsfeld himself admitted that $2.3 trillion may be missing. Why hasn't this astounding evidence of major government and military corruption broadcast in headline news around the world? Why isn't anyone talking about it now?
As the media is failing so badly at getting this news out, excerpts from the few media articles and government documents which reported the problem have been compiled below. Click on the links provided for verification. To understand how the media is failing at its job on this and other critically important stories, read the two-page summary by top journalists at http://www.WantToKnow.info/mediacover-up. You can help to change this vastly irresponsible behavior by informing your friends and colleagues and calling on all of our media and elected representatives to address this critical problem. Together, we can and will build a brighter future.
The War On Waste
January 29, 2002, CBS News
On Sept. 10 , Secretary of Defense Donald Rumsfeld declared war. Not on foreign terrorists, "the adversary's closer to home. It's the Pentagon bureaucracy." He said money wasted by the military poses a serious threat. Rumsfeld promised change but the next day—Sept. 11—the world changed and in the rush to fund the war on terrorism, the war on waste seems to have been forgotten. Just last week President Bush announced, "my 2003 budget calls for more than $48 billion in new defense spending." More money for the Pentagon…while its own auditors admit the military cannot account for 25 percent of what it spends. "According to some estimates we cannot track $2.3 trillion in transactions," Rumsfeld admitted. $2.3 trillion—that's $8,000 for every man, woman and child in America. A former Marine turned whistle-blower is risking his job by speaking out…about the millions he noticed were missing from one defense agency's balance sheets. Jim Minnery, Defense Finance and Accounting Service…tried to follow the money trail, even crisscrossing the country looking for records. "The director looked at me and said 'Why do you care about this stuff?' It took me aback. My supervisor asking me why I care about doing a good job," said Minnery. He was reassigned and says officials then covered up the problem. The Pentagon's Inspector General "partially substantiated" several of Minnery's allegations.
Note: To see the three-minute CBS video clip of this shocking admission, click here. For another key four-minute clip, click here. Even though this news was originally not reported because of the overwhelming trauma of 9/11, why wasn't it broadcast loudly once it finally was reported? Why isn't this making media headlines now?
DOD Acquisition and Logistics Excellence Week
September 10, 2001, Department of Defense
http://www.defenselink.mil/speeches/2001/s20010910-secdef.html (DOD website)
Remarks as Delivered by Secretary of Defense Donald H. Rumsfeld, The Pentagon, September 10, 2001. The topic today is an adversary that poses a threat, a serious threat, to the security of the United States of America. This adversary is one of the world's last bastions of central planning. It governs by dictating five-year plans. From a single capital, it attempts to impose its demands across time zones, continents, oceans and beyond. With brutal consistency, it stifles free thought and crushes new ideas. It disrupts the defense of the United States and places the lives of men and women in uniform at risk. The adversary [is] the Pentagon bureaucracy. An average American family works an entire year to generate $6,000 in income taxes. Here we spill many times that amount every hour by duplication and by inattention. According to some estimates, we cannot track $2.3 trillion in transactions. This is not just about money. It's not about waste. It's about our responsibility to the men and women in uniform who put their lives at risk. It's about respect for taxpayers' dollars. A cab driver in New York City ought to be able to feel confident that we care about those dollars.
Note: Is it possible that this is more than just problems with a bureaucracy? When we are talking about trillions of dollars, I strongly suspect that major corruption at very high levels may be involved. For a couple striking examples of major corruption not adequately covered by the media from highly respected sources, see the fascinating accounts at http://www.WantToKnow.info/mediacover-up#levine.
Fiscal mess awaits new defense chief: Gates inherits 'worst-managed' federal agency
December 13, 2006, San Francisco Chronicle (San Francisco's leading newspaper)
Robert Gates will face … the enormous task of cleaning up the Pentagon's tangled finances, which outside auditors lambaste as so chaotic that no one knows how much money is being spent on defense at any given time. The White House's Office of Management and Budget believes the Pentagon's financial management systems are in such a mess "that independent auditors still cannot certify the accuracy of the financial statements." David Walker, the U.S. Comptroller General, issued a devastating assessment of the Pentagon's finances, which include an annual budget of over $500 billion. The Pentagon's financial problems "are pervasive, complex, long-standing and deeply rooted in virtually all business operations throughout the department," Walker told the Senate Armed Services Committee. Financial problems like the Pentagon's "would put any civilian company out of business," said Kwai Chan, a former GAO auditor … and author of a report entitled "Financial Management in the Department of Defense: No One is Accountable." Winslow Wheeler, a former national security expert for the Senate Budget Committee, called the Defense Department "the worst-managed agency in the federal government, (that) can't account for the half-trillion dollars it spends each year, and seeks to produce weapons that are irrelevant or ineffective, or both." Rep. Ike Skelton, D-Mo., the incoming chairman of the House Armed Services Committee, also has promised greater oversight … by resurrecting an oversight and investigations subcommittee, which the GOP dissolved after winning control of Congress in 1994.
Sustained Improvement in Federal Financial Management Is Crucial to Addressing Our Nation's Financial Condition and Long-term Fiscal Imbalance
March 1, 2006, Government Accountability Office (formerly Government Accounting Office)
http://www.gao.gov/highlights/d06406thigh.pdf – Official .pdf version of 2005 report summary on GAO website
http://www.gao.gov/docsearch/abstract.php?rptno=GAO-06-406T – Non-.pdf version
GAO is required by law to annually audit the consolidated financial statements of the U.S. government. Until the problems discussed in GAO's audit report on the U.S. government's consolidated financial statements are adequately addressed, they will continue to…hinder the federal government from having reliable financial information to operate in an economical, efficient, and effective manner. For the ninth consecutive year, certain material weaknesses in internal control and in selected accounting and financial reporting practices resulted in conditions that continued to prevent GAO from being able to provide the Congress and American people an opinion as to whether the consolidated financial statements of the U.S. government are fairly stated in conformity with U.S. generally accepted accounting principles. Major impediments to an opinion on the consolidated financial statements continued to be (1) serious financial management problems at the Department of Defense. The federal government's fiscal exposures now total more than $46 trillion, representing close to four times gross domestic product (GDP) in fiscal year 2005 and up from about $20 trillion or two times GDP in 2000.
Defense Department drops $100M on unused airline tickets
June 9, 2004, USA Today/New York Times/Associated Press
The Defense Department spent an estimated $100 million for airline tickets that were not used over a six-year period and failed to seek refunds even though the tickets were reimbursable, congressional investigators say. The GAO estimated that between 1997 and 2003, the Defense Department bought at least $100 million in tickets that were not used or used only partially by a passenger who did not complete all legs of a flight. The waste went undetected because the department relied on individuals to report the unused tickets. They did not do so. "The millions of dollars wasted on unused airline tickets provides another example of why DOD financial management is one of our high-risk areas, with DOD highly vulnerable to fraud, waste and abuse," the GAO said. Two of the three lawmakers who asked for the study were Republicans, and both were highly critical of the Pentagon's lack of financial control. Sen. Charles Grassley, R-Iowa, said, "It's outrageous that the Defense Department would be sending additional federal tax dollars to the airlines by way of unused passenger tickets." While one GAO report focused on the unused tickets, the second investigation found potential fraud. It said the department paid travelers for tickets the department already bought and reimbursed employees for tickets that had not been authorized. It is a crime for a government employee knowingly to request reimbursement for goods and services he or she did not buy. To demonstrate how easy it was to have the Pentagon pay for airline travel, the investigators posed as Defense employees, had the department generate a ticket and showed up at the ticket counter to pick up a boarding pass.
Note: Isn't it interesting how both the New York Times and the Washington Post omitted the above statement in bold from their reports of this Associated Press article?
Military waste under fire: $1 trillion missing
May 18, 2003, San Francisco Chronicle (San Francisco's leading newspaper)
The Department of Defense, already infamous for spending $640 for a toilet seat…couldn't account for more than a trillion dollars in financial transactions, not to mention dozens of tanks, missiles and planes. The nonpartisan General Accounting Office has raised the volume of its perennial complaints about the financial woes at Defense, which recently failed its seventh audit in as many years. "Overhauling DOD's financial management operations represent a challenge that goes far beyond financial accounting," GAO chief David Walker told lawmakers. Recent government reports suggest the Pentagon's money management woes have reached astronomical proportions. A GAO report found Defense inventory systems so lax that the U.S. Army lost track of 56 airplanes, 32 tanks, and 36 Javelin missile command launch-units. When military leaders were scrambling to find enough chemical and biological warfare suits to protect U.S. troops, the department was caught selling these suits as surplus on the Internet "for pennies on the dollar," a GAO official said. "We are overhauling our financial management system," said Dov Zakheim, the Pentagon's chief financial officer. "The Pentagon has failed to address financial problems that dwarf those of Enron," said Rep. Henry Waxman, D-Los Angeles. Gregory Kutz, director of GAO's financial management division [said] "I've been to Wal-Mart. They were able to tell me how many tubes of toothpaste were in Fairfax, Va. And DOD can't find its chem-bio suits." Opposition to defense spending is portrayed as unpatriotic. Legislators are often more concerned about winning Pentagon pork than controlling defense waste.
Note: For an intriguing Online Journal article exposing possible deep corruption on the part of the Pentagon's former CFO (Chief Financial Officer) Dov Zakheim, click here.
Congressional Testimony of DOD Inspector General
May 8, 2001, Department of Defense Inspector General
http://www.dodig.osd.mil/Audit/reports/fy01/01-120.pdf – Report No. D-2001-120
Statement of Robert J Lieberman, Deputy Inspector General, Department of Defense, Before the Subcommittee on Governmental Efficiency, Financial Management and Intergovernmental Relations, House Committee on Government Reform of Defense Financial Management. The extensive DoD efforts to compile and audit the FY 2000 financial statements, for the Department as a whole and for the 10 subsidiary reporting entities like the Army, Navy and Air Force General Funds, could not overcome the impediments caused by poor systems and unreliable documentation of transactions and assets. Some examples of the problems in these year-end statements follow. Department-level accounting adjustment entries used to compile the financial statements were $4.4 trillion, with $1.1 trillion of those unsupported by reliable explanatory information and audit trails. This is an improvement from FY 1999, when $7.6 trillion of adjustments were made with $2.3 trillion unsupported, but remains a good indication of the need for wholesale changes to the financial data reporting systems. Accurate reporting of inventory and property remains a continuing challenge for each of the Military Departments and Defense Logistics Agency because of problems in logistics and other feeder systems. Although the DoD has put a full decade of effort into improving its financial reporting, it seems that everyone involved-—the Congress, the Office of Management and Budget, the audit community, and DoD managers—-have been unable to determine or clearly articulate exactly how much progress has been made.
Note: Why didn't these reports become headline news? Why isn't anyone being assigned to seriously investigate these continually unresolved core issues and report to the public that the largest, most powerful country in the world is a long way from being able to track its own finances. For lots more major media articles on major government corruption, click here. And for the deeper reasons behind these issues, a top U.S. general's explanation is available here. You can help to build a better world by sharing this vital information with your friends and colleagues and contacting members of the media and your government representatives asking them to address this pervasive problem. Thanks for caring.
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