Government Credit Cards

Who knew that anyone could do this?

Lingerie, iPods on government credit cards

• GAO: Federal employees charged millions to government credit/debit cards
  
• The charges include: Internet dating services, iPods, expensive clothing, lingerie
  
• The audit also found agencies could not account for nearly $2 million worth of items
  
• Nearly half of transactions made in the 2006 fiscal year were improper
  

WASHINGTON Federal employees charged millions of dollars to government credit or debit cards, according to a Government Accountability Office study released Wednesday.

Those charges include Internet dating services, iPods, expensive clothing, a $13,500 dinner and lingerie to be worn during jungle training in Ecuador, the study said.

The audit also found that government agencies could not account for nearly $2 million worth of items, which included computer servers, laptop computers, iPods and digital cameras.

Nearly half of transactions made in the 2006 fiscal year with government credit or debit cards -- referred to as "purchase cards" -- were improper, the study found, and the audit condemned the government-wide "rate of failure" as "unacceptably high."

The improper purchases were either not authorized or did not meet the government's requirements for using purchase cards, the study said.

Sens. Norm Coleman, R-Minnesota, and Carl Levin, D-Michigan, initiated the investigation into the use of government cards.

"Too many government employees have viewed purchases cards as their personal line of credit. It's time to cut up their cards and start over," Coleman said in a news release about the GAO study.

"The basic rules for authorizing purchases and accounting for goods and services are not that difficult: Use the card for legitimate purchases, not to cover the costs of buying yourself an iPod," he added.

The study used scientific sampling to examine spending across federal agencies, and mined data from purchases made from July 1, 2005, through September 30, 2006. The study categorizes the inappropriate purchases as "fraudulent," "abusive," or "improper."

In the fraudulent category, the most egregious case involved a Forest Service employee writing about 180 credit-card-linked checks worth $642,000 to an individual with whom the employee shared living quarters and a bank account.

"All transactions were undetected by the agency," the report said.

After an investigation initiated by a tip from a whistle-blower, the employee was indicted and pleaded guilty in June 2007 to embezzlement and tax fraud, the study said.

The employee was sentenced to 21 months of prison and was required to pay over $642,000 in restitution.

In another fraudulent case, a postmaster used a government credit card to subscribe to two Internet dating sites, the study said, and the employee also used a government computer to access pornographic sites.

The postmaster racked up $1,100 in charges for the dating services, it said, and "the activity went unnoticed" by U.S. Postal Service for a full year.

After an investigation, the employee paid back the $1,100, the study said. He was also removed from his position.

In a case characterized as abusive, four Department of Defense employees purchased $77,000 in clothing and accessories for service members from high-end clothing and sporting goods stores, including stores such as Brooks Brothers, Talbots and Johnston Murphy, the study said.

The DOD purchased the items to provide service members with civilian clothing while they worked at American embassies, the cardholders said, according to the study.

However, the purchases far exceeded the maximum allowance of $860 per person for civilian attire, the study noted.

In another case, USPS spent $13,500 on a dinner at Ruth Chris Steakhouse for employees who were attending a national postal forum in Orlando, Florida.

The dinner included more than 200 appetizers and the agency paid for about $3,000 of alcoholic drinks, including more than 40 bottles of wine and top-shelf liquor, the study said. It deemed the dinner as an "excessive cost."

Another case, described as a "questionable government need," involved a State Department employee who spent $360 on women's underwear and lingerie to wear during jungle training by "trainees of a drug enforcement program in Ecuador."

A State Department official agreed that the charge, for items purchased from Seduccion Boutique, was "questionable" and said it should not have been approved.

About 300,000 government employees use purchase cards, the study said. The purchase card system, which was established in the late 1980s, was designed to streamline federal purchasing, and the cards are typically are intended for purchases of $2,500 or less.

All purchases are to follow federal guidelines, which include proper authorization and independent receipt and acceptance.