Lousiana’s Disaster Relief Frauds

An L.L. Bean briefcase and raincoat. Professional dues and charitable contributions. A trip to Germany. Video equipment. A 2002 Ford Crown Victoria.

According to two federal audits, those are just some of the items that Louisiana state emergency officials improperly bought with some of the $228 million in U.S. disaster funds they received in recent years.

The audits also found that the Louisiana Office of Homeland Security and Emergency Preparedness ignored federal rules for overseeing contractors, doling out more than $15 million in aid without keeping any records to show what 97 percent of the money was spent on, according to a report by the inspector general’s office of the U.S. Department of Homeland Security.

“Significant internal controls weaknesses and noncompliance situations were identified during the audit,” said the Nov. 4 review of Louisiana’s disaster assistance spending from 1998 to 2003.funds.

Those dry words ring loud now to watchdog groups concerned that the state’s share of the $80 billion in federal taxpayers cash funneling into Louisiana since Hurricane Katrina will similarly disappear, mostly unmonitored.

“The more you spend, the more opportunity there is for fraud, and they’re spending a lot of money,” said Thomas Schatz, president of Citizens Against Government Waste.

Officials at the state agency could not be reached for comment. But Louisiana state treasurer John Kennedy told reporters in Baton Rouge this week that he wants to establish a review process to make sure the money will be used properly before it is handed out. The state’s storied reputation as a pit of public corruption no doubt means scrutiny of Katrina relief spending will be strict.

He and other state leaders said they are beefing up their staffs, which have been too lean in the past. In response to the Nov. 4 inspector general’s audit and one released Feb. 25, state officials said they had been overwhelmed by a series of disasters during the five years studied, but subsequently had added staff and inspectors to handle the load.

Two minimal hurricanes, three tropical storms, two winter storms, and the aftermath of the 2003 Space Shuttle Columbia disaster strained the state over that period, Louisiana officials told the auditors.

Wary of a boondoggle in the making, the Homeland Security inspector general’s office said Tuesday it is dispatching 30 investigators and auditors to Louisiana, Mississippi and Alabama to oversee the payments to state and local agencies, private contractors and, to a lesser extent, individuals.

“We’re going to be efficient,” Homeland Security Secretary Michael Chertoff said Tuesday in announcing the oversight team.

A look at the violations uncovered by the audits shows inefficiencies have abounded in the past:

  • Louisiana personnel failed to perform dozens of final inspections to make sure relief and recovery projects were completed properly.
  • Of the $15.4 million paid to contractors on 19 projects sampled, auditors found paperwork showing where the money went, and for what, for just $495,000 of the spending.
  • Poor record-keeping resulted in some recipients getting duplicate checks, with $1.7 million in total overpayments estimated to have resulted.

(Contact Lisa Hoffman at HoffmanL(at)shns.com)