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KATRINA'S AFTERMATH
Louisiana Officials Indicted Before Katrina Hit
Federal audits found dubious expenditures by the state's emergency preparedness agency, which will administer FEMA hurricane aid.
By Ken Silverstein and Josh Meyer
Times Staff Writers
September 17, 2005
WASHINGTON Senior officials in Louisiana's emergency planning agency already were awaiting trial over allegations stemming from a federal investigation into waste, mismanagement and missing funds when Hurricane Katrina struck.
And federal auditors are still trying to track as much as $60 million in unaccounted for funds that were funneled to the state from the Federal Emergency Management Agency dating back to 1998.
In March, FEMA demanded that Louisiana repay $30.4 million to the federal government.
The problems are particularly worrisome, federal officials said, because they involve the Louisiana Office of Homeland Security and Emergency Preparedness, the agency that will administer much of the billions in federal aid anticipated for victims of Katrina.
Earlier this week, federal Homeland Security officials announced they would send 30 investigators and auditors to the Gulf Coast to ensure relief funds were properly spent.
Details of the ongoing criminal investigations come from two reports by the inspector general's office in the U.S. Department of Homeland Security, which oversees FEMA, as well as in state audits, and interviews this week with federal and state officials.
The reports were prepared by the federal agency's field office in Denton, Texas, and cover 1998 to 2003. Improper expenditures previously identified by auditors include a parka, a briefcase and a trip to Germany.
Much of the FEMA money that was unaccounted for was sent to Louisiana under the Hazard Mitigation Grant program, intended to help states retrofit property and improve flood control facilities, for example.
The $30.4 million FEMA is demanding back was money paid into that program and others, including a program to buy out flood-prone homeowners. As much as $30 million in additional unaccounted for spending also is under review in audits that have not yet been released, according to a FEMA official.
One 2003 federal investigation of allegedly misspent funds in Ouachita Parish, a district in northern Louisiana, grew into a probe that sprawled into more than 20 other parishes.
Mark Smith, a spokesman for the Louisiana emergency office, said the agency had responded to calls for reform, and that "we now have the policy and personnel in place to ensure that past problems aren't repeated."
He said earlier problems were largely administrative mistakes, not due to corruption.
But federal officials disagreed. They said FEMA for years expressed concerns over patterns of improper management and lax oversight throughout the state agency, and said most problems had not been corrected.
They point to criminal indictments of three state workers as evidence the problem was more than management missteps. Two other state emergency officials also were identified in court documents as unindicted co-conspirators.
"The charges were made after some very extensive reviews by FEMA investigators and other authorities, who identified issues they felt were of the severity and magnitude to refer them to the U.S. attorney's office," said David Passey, the spokesman for FEMA's regional office in Texas.
Passey, while acknowledging that the state had made some administrative changes, said it had not completed the kind of overhaul FEMA said was needed.
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[Todd Zywicki, September 16, 2005 at 6:05pm] 3 Trackbacks / Possibly More Trackbacks
Priorities and Katrina:
Andrew Samwick, late of President Bush's Council of Economic Advisors, asks the right questions about President Bush's speech last night:
Where to begin?
I'll start by noting for the benefit of the folks working on the President's speeches that the sentence, "It's going to cost whatever it costs," gives the audience no confidence in the next statement, "We're going to be wise about the money we spend."
I was a fan of cutting other government spending before Katrina, and I am a fan of it now. I hope that the President is right that "we can handle it." The President will have to sort that out with the Republican leadership on the Hill, who seem to believe (quite counterfactually) that there is no more fat to trim. Leave that aside for the moment, and let's ask the following question:
If we can handle it now, why weren't we handling it before?
He adds:
If we have decided that rebuilding New Orleans to the tune of $200 billion is a national objective (and I haven't seen nearly enough debate on that subject in the Capitol), then we ought to fund it by reducing our consumption of everything else. The simplest way to do that would be to impose an income tax surcharge that funds the rebuilding over a given period.
***
Taxes may be bad, but deficits are surely worse. What's the explanation for why future generations should have to pay for this one, too?
One can raise legitimate questions in principle about whether this is the type of activity for which it is appropriate to engage in deficit spending. I think a case can be made that this may be, because of the "lumpiness" and unexpected nature of the liability, that may be appropriate to smooth over a period of time (like fighting a war or investing in capital projects).
But a larger point implied here seems like a sound one to me--one problem with running chronic deficits during ordinary times or on ordinary pork-barrel spending is that it makes it more difficult to justify additional deficits in times where deficit spending is appropriate (arguably such as fighting a war or rebuilding one of the nation's most important cities and ports). To paraphrase Spinal Tap, if you are already on "10" for deficit spending what do you do when you need that extra "push over the cliff"?
In related news, it is reported that Senator Coburn has already proposed paying for at least some of it through cuts from the highway bill:
Mr. Coburn said it was a "ludicrous claim" House Majority Leader Tom DeLay made earlier this week that he hasn't seen ways to offset the spending with cuts elsewhere.
In his weekly briefing, Mr. DeLay said it was appropriate to borrow money to pay for hurricane relief, and that the billions of dollars in transportation earmarks should be maintained.
"My answer to those that want to offset the spending is sure, bring me the offsets, I will be glad to do it, but no one has been able to come up with any yet," he said.
Mr. Coburn said he would "be happy to have that debate with Mr. DeLay."
He said he has identified $74 billion in cutting room and that one place to start is the $315 million the highway bill spent for a bridge in Alaska that will reach a community of several dozen people, "who have a wonderful ferry system right now."
