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Floor Speech
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Mr. GRASSLEY. Mr. President, every so often, I come to the Senate floor to bring my colleagues up to date on the lack of financial management system in the Department of Defense.
I am here again to address what I consider a festering bureaucratic sore. The Pentagon can't keep track of the taxpayers' money. And as I just indicated, I speak about this many times. In 30 years of watchdogging, little or nothing has happened.
Internal controls over the taxpayers' money remain weak or nonexistent at the Department of Defense. And I am here today to speak specifically about a recent inspector general's audit, driving home that point. Specifically, auditors discovered $1.1 billion in undocumented payments by the Pentagon using funds Congress provided to assist Ukraine.
They examined 479 transactions for the calendar year 2022, totaling $2.1 billion dollars. The auditors determined that 65 percent of the transactions could not be verified for a lack of documentation.
If the sample were doubled in size, the inspector general estimated a staggering 94 percent would be unsupported.
Now, we all agree that is unacceptable; or if we don't agree that that is unacceptable, there is something wrong with our thinking.
The rules are crystal clear. Supporting documentation is required when paying bills. Proper documentary support should include a contract, travel authorization, invoice, receipts, payment voucher, or things like that.
And I don't mean you have to have all those available to pay a bill, but you ought to have at least one of them or more before you spend the taxpayers' money.
Now, taken together, these records form an audit trail essential for payment verification and fraud detection.
If the documents match up, a bill is ready to pay. So $1.1 billion went out the door, and there is no documentation to back it up.
I want to make very clear: That is an audit report, not Chuck Grassley saying that. So we don't know how that money was used. Was it spent to assist Ukraine as required, or was it misused or stolen? We simply don't know.
Clearly, unsupported payments leave the door wide open to fraudsters. Paying bills without documentation shows neglect and indifference. It is reckless and should not be tolerated.
These undocumented expenditures occurred on the watch of Chief Financial Officer--or as we know him CFO Mike McCord. Though Mike McCord has departed the Department, he and his deputies are accountable. They failed to exercise due diligence over the public's money.
Such gross mismanagement is made worse by the Pentagon's pitiful accounting system--or as I said in my opening, the lack of a financial management system.
Top managers turned a blind eye to this problem as well, just like a long line of their predecessors. Instead of modernizing, they kept pouring out billions down a rathole to upgrade ancient systems that belong on the junk heap.
Why did such smart, experienced managers go down that rabbit hole? Why did they fail to acquire modern systems that could produce reliable information, effective controls, or clean opinions? Why has this problem not been fixed?
There once was a bravehearted watchdog in the Air Force's Comptroller's who claimed to know the answer. Ernie Fitzgerald was that person's name. I knew him in the 1980s. He worked in the Defense Department until he retired maybe 20 years ago, and he probably died about 3 or 4 years ago.
He had this to say:
Leaders in the Pentagon don't want to fix it. Sloppy accounting gives them flexibility to hide their shenanigans.
When there is no audit trail to follow, it is easy to make sneaky accounting adjustments to cover your backside. Pentagon managers have some explaining to do, and I am all ears. I want to give you just one recent example, and I am following up with the inspector general in the Pentagon to get some answers on this.
Over a period of 6 years, until earlier last year when she pleaded guilty to--can you believe this--stealing $106 million out of the Defense Department. She was buying all kinds of homes and all kinds of expensive cars, and I don't have a long list of where $106 million went, but can you believe over a period of 5 years, there was nobody in the Defense Department who caught it? Eventually, after 6 years, the IRS discovered it, but she got away with it for 6 years. Now, she is prosecuted and 15 years in prison. She wasn't prosecuted--she pled guilty.
But so I write to the IG to get an explanation of how come they have a financial management system--or a lack thereof--that doesn't catch somebody stealing $106 million. So I sent along, with those questions I am asking the IG, a report that I put out in 1998 that was a report of people stealing money at the Air Force base in Dayton, where they had this check-writing machine, and we found out that the person managing that check-writing machine could make checks out to people in his family. And there was about $5 million stolen at that particular time.
And so we went to Dayton to study what was wrong, and what was wrong is exactly what this audit report shows today, they were writing checks without invoices.
Now, you see, we pointed something out, what, 26 years ago or something like that, that was wrong with financial management in the Defense Department, and I--so I guess you could say the Defense Department has learned nothing in the last 26 years.
And I just hope that they would take my report of 1998 and what is wrong with Janet Mello stealing $106 million and try to change the system.
Now, we, in the Congress, with our power of oversight, or as you study in high school government, checks and balances of government, we appropriate money, we pass laws, but we don't enforce those laws. We have a constitutional responsibility to point out when the executive branch of government or the people in the executive branch of government aren't faithfully executing the laws that we pass or properly appropriate spending the money the way we appropriated.
So we don't enforce the laws; we make the laws. We have oversight.
But what do you do? You come to the floor of the U.S. Senate and try to raise Cain about it and get some changes made. But the Defense Department is a little bit different than any other Agency of the Federal Government because they are the only Agency of the Federal Government that has never had a clean audit.
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