The Center for Public Integrity

Without proper oversight or enforcement by the Department of Education, the $85 billion student loan industry became tainted in scandal. In 2007, New York Attorney General Andrew Cuomo revealed widespread unethical relationships between schools and lenders, with colleges and universities accepting gifts and other inducements from loan companies. In turn, financial aid officers would steer students toward lenders on their “preferred lender lists,” often at inflated prices at the students’ expense. This gave a few loan companies a substantial advantage. Cuomo launched his investigation after receiving a complaint from a new lender that felt it could not fairly compete. Meanwhile, the Education Department remained conspicuously absent. In testimony before the House Committee on Education and Labor, Cuomo accused the department of being “asleep at the switch” and urged congressional action. Representative George Miller, chairman of the Committee on Education and Labor, called on Education Secretary Margaret Spellings to put an end to lender bribes and require full disclosure of school-lender relationships. Spellings responded that the focus of Cuomo’s investigation pertained to the private loan industry, an area outside her department’s jurisdiction, but she conceded that the practices conducted by the institutions were unacceptable. In the midst of the revelations, Theresa Shaw, head of Education’s student loan office, resigned after five years in the position, but told Spellings, “I had accomplished all that had been asked of me including . . . ensuring that proper financial management and internal controls were in place.” Thousands of students suffered as a result.

A generous tax cut was not the only boon wealthy individuals and large corporations received from the Bush administration’s time in office: In recent years, the Internal Revenue Service (IRS) has given their tax returns less and less scrutiny — even as it has stepped up its audit rates among the poor. In 2007, in what the Syracuse University-based Transactional Records Access Clearinghouse (TRAC) calls a “historic collapse,” only 26 percent of corporations holding at least $250 million in assets were audited (compared to more than 70 percent in 1990). Likewise from 1996 to 2006, audit rates of those earning over $100,000 fell by more than one-half, down to 1.3 percent. One contributing factor behind the trend is a slump in IRS staffing: Over the past decade, the number of agents performing audits has fallen by more than 30 percent. Another factor is a 1998 congressional reform bill directing the IRS to focus its audits on those who apply for the Earned Income Tax Credit (EITC) — a credit designed to assist the working poor. By 2006, audits of EITC recipients had risen to account for 40 percent of all investigations. While EITC fraud is a real concern, at a maximum, such fraud accounts for roughly 3 percent of the estimated $300 billion gap between paid and owed taxes. Meanwhile, lighter scrutiny on large corporations and the wealthy — who have the most non-cash income and leeway to game the system — means that those who owe the most also have the best chance of getting away without paying their due. IRS officials have not disputed TRAC’s numbers, but have said they were focusing harder on where noncompliance occurs, especially in private partnerships corporations use to avoid paying taxes.

Calling them “wildly off mark,” Deputy Secretary of Defense Paul Wolfowitz dismissed the assessments of his own Army chief of staff, General Eric Shinseki, and a 1999 Department of Defense (DOD) war game scenario, both of which predicted the need for hundreds of thousands of troops to secure post-invasion Iraq — far more than the 148,000 who were eventually assigned the job. According to an official U.S. Army history of the conflict in Iraq, “The military means employed were sufficient to destroy the Saddam regime; they were not sufficient to replace it with the type of nation-state the United States wished to see in its place.” A 2005 unclassified study for the Army by the RAND Corporation, which was suppressed until media reports and congressional pressure brought it to light, said that the chaotic security situation after Saddam Hussein’s regime was toppled were “conditions [that] enabled the insurgency to take root, and the Army and Marine Corps have been battling the insurgents ever since.” Though there were some strategies for securing post-invasion Iraq, “few if any made it into the serious planning process,” according to the RAND report. These ideas were “held at bay, in the most general sense, by two mutually reinforcing sets of assumptions that dominated planning . . . at the highest levels” — that few armed forces would be necessary after the invasion and that the military would not be an occupying force. Just days before the war began, Vice President Cheney said, “My belief is we will, in fact, be greeted as liberators.”

An under-the-radar Department of Defense (DOD) office produced highly politicized intelligence assessments and promulgated one of the most inaccurate justifications for U.S. invasion of Iraq: that the Iraqi government under Saddam Hussein had a working relationship with Al Qaeda. The Office of Special Plans, part of the Office of the Under Secretary of Defense for Policy led by Douglas Feith, created and provided these assessments to senior U.S. officials. Though neither illegal nor unauthorized, these assessments were, in the view of the DOD inspector general, “inappropriate” and “did not clearly show the variance with the consensus of the Intelligence Community.” A Senate Intelligence Committee report found not only that the work of other intelligence agencies, such as the Central Intelligence Agency, was ignored, but also suggested that the Office of Special Plans shaped intelligence to fit the desires of policymakers — a cardinal sin in the intelligence world. According to several Democratic senators on the intelligence committee, “[C]riticism of the CIA’s analysis was sent by Under Secretary for Policy Feith to Deputy Secretary Paul Wolfowitz and Secretary [Donald] Rumsfeld.” W. Patrick Lang, the former chief of Middle East intelligence at the Defense Intelligence Agency, told investigative journalist Seymour M. Hersh, “The Pentagon has banded together to dominate the government’s foreign policy, and they’ve pulled it off.” The 9-11 Commission would later conclude that it found "no credible evidence that Iraq and Al Qaeda cooperated on attacks against the United States." A study conducted by a DOD-funded think tank, after a review of captured Iraqi government documents, also found no "direct connection" between Al Qaeda and Iraq under Saddam Hussein. Trumpeted by the White House as a key reason to invade Iraq, the much touted close “relationship” between Al Qaeda and Iraq simply did not exist.

When victims of Hurricane Katrina said goodbye to their homes in 2005, they didn’t realize their health might be next. A 2008 examination by the House Committee on Oversight and Government Reform found that thousands of trailers purchased by the Federal Emergency Management Agency (FEMA) for those displaced by Katrina emitted levels of formaldehyde high enough to cause coughing, chest tightness, nausea, skin rashes, and other adverse effects. The thousands of American families forced into these temporary homes were being exposed to what the Occupational Safety and Health Administration calls “a suspected human carcinogen that is linked to nasal cancer and lung cancer.” And according to the committee chairman, California Democrat Henry Waxman, field staff alerted FEMA to the problem, but the agency refused to conduct tests.

A FEMA attorney instructed: “Do not initiate any testing. . . . Once you get results and should they indicate some problem, the clock is running on our duty to respond.” FEMA officials feared that authorizing testing would shift the burden of responsibility to the agency itself, according to the oversight committee. Gulf Stream Coach Inc. won $500 million alone in FEMA contracts within days of the storm and quickly began work on 50,000 trailer homes using low quality engineered-wood products manufactured with formaldehyde, according to published reports. One trailer resident informed Gulf Stream by e-mail in March 2006: “It burns my eyes and I am getting headaches every day. I have tried many things, but nothing seems to work.” In response to a request for comment, a FEMA spokeswoman sent a statement that read, “FEMA neither knowingly, nor willingly, purchased manufactured units from dealerships and manufacturers that contained levels of formaldehyde above existing construction standards, nor did FEMA’s specifications encourage non-compliance with such standards.”

Keeping weapons of mass destruction (WMD) out of the hands of terrorists is cited as the top priority for America’s national security, but efforts to prevent WMD proliferation have not met the challenge, according to government and nonprofit watchdogs. The 9/11 Commission wrote that “the greatest danger of another catastrophic attack in the United States will materialize if the world’s most dangerous terrorists acquire the world’s most dangerous weapons.” In 2005, in a follow-up progress report, WMD nonproliferation programs scored a “D” on the report card released by the 9/11 Public Discourse Project, led by 9/11 Commission chairs Thomas H. Kean and Lee Hamilton. “Preventing terrorists from gaining access to weapons of mass destruction must be elevated above all other problems of national security because it represents the greatest threat to the American people,” the report warned. In 2008, the Partnership for a Secure America, a bipartisan national security group supported by the 9/11 Commission leaders, followed up on the work of the Public Discourse Project. The partnership’s overall grade for “WMD Terror Prevention” was a “C.” The weakest spots in WMD prevention, according to the report: integration of U.S. programs to prevent nuclear terrorism and the uncertain long-term prospects for those programs; U.S. efforts to recognize chemical threats; detection of covert bioterrorism preparations and U.S. disengagement from the international Biological Weapons Convention. As part of its package implementing the 9/11 Commission recommendations, Congress created a senior White House position with the title coordinator for the prevention of weapons of mass destruction proliferation and terrorism. But the Bush administration has yet to appoint someone to the position. Experts say that the threat of terrorists obtaining WMD is very real.

American weaponry intended for Iraqi security forces may have ended up in the hands of insurgents attacking U.S. troops in Iraq, due largely to oversights at the Department of Defense (DOD), according to government auditors. At least 190,000 AK-47 assault rifles and pistols disappeared between 2004 and 2005, some 30 percent of all weapons the United States distributed to Iraqi forces during that time, reported the Government Accountability Office (GAO) in an August 2007 study. While security assistance programs are traditionally operated by the State Department, the Pentagon — as it has in operations throughout the Iraq war— asserted control of the program early on, saying that it could provide greater flexibility. Until December 2005, neither the Pentagon nor Multinational Force-Iraq maintained any central record of equipment distributed during Iraqi security force training (then led by General David Petraeus). The GAO also found that 135,000 pieces of body armor and 115,000 helmets went missing during that time. A subsequent New York Times investigation found that Kassim al-Saffar, an Iraqi businessman Americans entrusted to supply Iraqi police cadets, turned the U.S. armory into a “private arms bazaar” selling weapons to anyone with cash in hand — meaning more U.S. resources wasted in Iraq and greater danger for American troops serving there.

Follow-up:
The DOD reports that it has developed various procedures to address the GAO’s concerns, including soldier-by-soldier collection of biometric data linked to serialized weapons, and weapons inventories conducted by the Multi-National Security Training Command and Iraq Ministries of Defense and Interior. In July 2008, the DOD’s inspector general completed a follow-up report that noted significant improvements in the weapons tracking systems. In the coming months, the GAO also plans to release a follow-up report on missing weapons in Afghanistan.

An eye-opening series of reports in fall 2008 by the Department of the Interior’s inspector general disclosed a stunning level of corruption at the Minerals Management Service (MMS), and a coziness with industry officials that included a “culture of substance abuse and promiscuity” at the agency. MMS is responsible for collecting royalties from companies for the right to produce oil and gas from federally controlled land and water; in 2007, MMS collected more than $9 billion in oil and gas royalties, making it one of the largest sources of income for the United States government. The agency also runs the Royalty-in-Kind program out of its Denver office, through which it takes delivery of oil and gas from energy firms in lieu of cash payments, and then sells it to refiners. The inspector general concluded that officials in the MMS Royalty-in-Kind program “frequently consumed alcohol at industry functions, had used cocaine and marijuana, and had sexual relationships with oil and gas company representatives.” The IG said that one-third of Royalty-in-Kind officials were taking bribes and gifts, and noted that former MMS officials received contracts from their friends still in the department. Out of 718 bid packages awarded by MMS between 2001 and 2006, 121 were modified by the agency — and all but three of the modifications benefited the oil companies. The inspector general said that these relationships have cost taxpayers $4.4 million in lapsed collection fees, but due to the sloppy administration at MMS, the real cost may go undiscovered. In a separate report, the Government Accountability Office (GAO) found that MMS is plagued by inefficiency in collecting royalties, and that there is no way to backtrack and figure out how much has actually been lost.

More than five years after its creation, the Department of Homeland Security (DHS) still suffers from a host of growing pains — growing pains that have attracted scrutiny from a variety of watchdog groups. Cobbled together in 2003 from 22 disparate agencies, the sprawling department oversees a budget that is creeping toward $50 billion. From the inception of DHS, the Government Accountability Office (GAO) categorized its implementation and transformation as a “high risk” item. “It represented an enormous undertaking that would require time to achieve in an effective and efficient manner,” then-Comptroller General David M. Walker told Congress in February 2008, adding that a successful transformation can take five to seven years. DHS has not exactly earned straight A’s, either. Despite repeated promptings from the GAO, the department had not created a comprehensive transformation strategy by its fifth birthday and has struggled to prioritize the most pressing risks to the country’s safety, both when allocating grants to state and local partners and when planning internal strategies. In its first two years, the department came under fire for its bureaucratic torpor, and as one of his first acts after taking office in 2005, Secretary Michael Chertoff commissioned a study that led to a departmental reorganization later that year. Although the department’s operations have improved in recent years, “DHS has made more progress in its mission areas than in its management areas,” Walker noted in his February testimony. In 2008, reports from the Center for Strategic and International Studies, the GAO, and the DHS inspector general shared concerns about several areas, including: contractor oversight, information technology, financial management, transportation security, and emergency preparedness. The GAO recently included “protecting the homeland” as one of 13 “urgent issues” requiring the attention of President-Elect Obama and the 111th Congress.

When the National Transportation Safety Board (NTSB) issued its original “Most Wanted” list of proposed safety improvements in September 1990, combating the role of human fatigue in transportation mishaps was included. Since then, not a lot has happened. So when the NTSB released its most recent “Most Wanted” list in 2008, human fatigue was still there. ”Human fatigue has been a persistent factor in far too many transportation accidents,” said NTSB Acting Chairman Mark V. Rosenker in September 2008. “And, if anything, the problem is growing, not shrinking.” The main target of NTSB scrutiny, the Federal Aviation Administration (FAA), continues to provide what the 2007 “Most Wanted” list called an “unacceptable response” to the problem. In 1995, the FAA proposed a rule to update the flight and duty regulations for airline pilots, but no action has been taken. Likewise, the FAA recognized as a result of its own 2000 study that a quarter of airline maintenance personnel were fatigued or exhausted at work, but nothing has happened on that front either. The NTSB cites accidents such as Corporate Airlines Flight 5966, which killed 13 people near Kirksville, Missouri, in 2004, in arguing that measures to reduce fatigue are “long overdue.” For decades the NTSB has also pushed other components of the Department of Transportation (DOT) to act on fatigue. For instance, the NTSB urged the DOT to consider mandating the use of on-board recorders in the trucking industry to enforce compliance with hours-of-service rules and reduce fatigue-related accidents — such as a 2005 I-94 Wisconsin crash that killed five and injured 35 others. The DOT responded through its Federal Motor Carrier Safety Administration (FMCSA), which proposed a rule be imposed only on carriers with a pattern of violation. NTSB believes the proposed rule, still pending, does not go far enough, but FMCSA said that the estimated costs imposed by a broader mandate would exceed its benefits.