Published July 17, 2002
WASHINGTON – At least 200 Army personnel used their government charge cards to obtain hundreds of dollars in cash at strip clubs near military bases, a congressional investigation has found.
Sen. Charles Grassley, R-Iowa, said the individuals spent the money "on lap dancing and other forms of entertainment," running up a total bill of $38,000. Grassley disclosed the results of the General Accounting Office probe in testimony Wednesday before a House government operations subcommittee.
GAO also found that Army charge cards were used for fraudulent purchases of more than $100,000 of computers and other electronic equipment; for fine china, cigars, wine and a $2,250 tree for planting on Earth Day; for cruises and a trip to Las Vegas; and for two pictures of Elvis Presley purchased at his Graceland mansion in Memphis.
In addition, investigators said government charge cards were used for a $30,000 purchase of 80 palm pilots at the Pentagon's top procurement office. An internal e-mail said there was a need "to get enough goodies for everyone."
Grassley said the e-mail sends a message that "we can splurge at the taxpayers' expense and not worry about it. It's unfortunate that such an attitude is being nurtured in the purchase card 'czar's' front office. It sends the wrong message to the troops in the field."
An Army spokesman did not immediately return a call seeking comment on the findings.
The GAO report is the latest volley in a two-year congressional probe of the Pentagon's credit card program. Last year, the 1.4 million defense employees used government travel cards for $2.1 billion in travel purchases; another 230,000 Defense Department workers used purchase cards for $6.1 billion in goods and services.
Defense Secretary Donald H. Rumsfeld created a special task force earlier this year to look into credit card abuses. The task force last month made 25 recommendations to tighten controls over cards and to increase prosecutions of those who abuse or misuse them.
The new GAO report is the first to focus on the Army, which has more than 430,000 travel cardholders and more than 100,000 purchase cards in use. The Army's charge bill last year totaled more than $3 billion. Investigators audited five major Army commands, including detailed work at one base in each command.
While working to maximize the use of credit cards for small purchases to save money through reduced procurement costs, the GAO said the Army "has not focused equal attention to internal control."
Auditors said they found that 40 percent to 86 percent of the monthly charge bills at the five bases had not been reviewed by managers to ensure that charges were properly documented.
The GAO also found that 1,200 Defense Department personnel had written bad checks to pay their government travel card bills. In examining the worst 105 cases, the GAO found that 40 of those cardholders hold secret, top secret or higher security classifications. Bank of America, which runs the Army charge card program, had to write off nearly $150,000 in bad debts on those 40 accounts.