Weak internal controls have led to numerous cases of fraud and embezzlement in the Pentagon office responsible for handling billions of dollars in contracts every year, according to two congressional reports issued Monday.
The reports from the General Accounting Office, the investigative wing of Congress, cited more than a dozen cases of fraud this decade involving the Defense Finance and Accounting Service.The findings were the subject of Senate hearings Monday chaired by Sen. Charles Grassley, R-Iowa.
The schemes included creating or altering documents, forging signatures and setting up false accounts for fictitious people. Those involved were able to receive funds by having checks sent to post office boxes or street addresses they controlled or by sending checks electronically to bank accounts.
In one of the largest cases, a retired Navy chief petty officer defrauded the Pentagon of more than $3 million over a three-year period by filing bogus invoices for materials supposedly supplied to the Military Sealift Command by a company that did not exist.
His fraud was uncovered when someone noted that shipments were going to decommissioned ships, and he was sentenced to more than seven years in prison.
One report noted that more than 1,800 DFAS and Air Force employees had access to the vendor payment computer system allowing them, with little outside control, to enter contract information and make modifications to invoices, delivery orders and remittance addresses.
"This level of access allows these employees to submit all the information necessary to create fraudulent and improper payments," one report to the Senate Judiciary Committee said.