Travel Cards
Control Weaknesses Leave Navy Vulnerable to Fraud and Abuse Gao ID: GAO-03-148T October 8, 2002This testimony discusses the Department of the Navy's internal controls over the government travel card program. The Navy's average delinquency rate of 12 percent over the last 2 years is nearly identical to the Army's, which has the highest delinquency rate in the Department of Defense, and 6 percentage points higher than that of federal civilian agencies. The Navy's overall delinquency and charge-off problems, which have cost the Navy millions in lost rebates and higher fees, are primarily associated with lower-paid, enlisted military personnel. In addition, lack of management emphasis and oversight has resulted in management failure to promptly detect and address instances of potentially fraudulent and abusive activities related to the travel card program. During fiscal year 2001 and the first 6 months of fiscal year 2002, over 250 Navy personnel might have committed bank fraud by writing three or more nonsufficient fund checks to Bank of America, while many others abused the travel card program by failing to pay Bank of America charges or using the card for inappropriate transactions such as for prostitution and gambling. However, because Navy management was often not aware of these activities, disciplinary actions were not consistently taken against these cardholders. GAO also found a significant relationship between travel card fraud, abuse, and delinquencies and individuals with substantial card history problems. Many cardholders whose accounts were charged off or put in salary offset had bankruptcies and accounts placed in collection prior to receiving the card. The Navy's practice of authorizing a travel card to be issued to virtually anyone who asked for it compounded an already existing problem by giving those with a history of bad financial management additional credit. Although GAO found that Navy management had taken some corrective actions to address delinquencies and misuse, additional preventive solutions are necessary if Navy is to effectively address these issues.
GAO-03-148T, Travel Cards: Control Weaknesses Leave Navy Vulnerable to Fraud and Abuse
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United States General Accounting Office:
GAO:
Testimony:
Before the Subcommittee on Government Efficiency, Financial Management
and Intergovernmental Relations, Committee on Government Reform, House
of Representatives:
For Release on Delivery:
Expected at 2 p.m.:
Tuesday, October 8, 2002:
Travel Cards:
Control Weaknesses Leave Navy Vulnerable to Fraud and Abuse:
Statement of Gregory D. Kutz:
Director, Financial Management and Assurance:
John J. Ryan:
Assistant Director, Office of Special Investigations:
GAO-03-148T:
Mr. Chairman, Members of the Subcommittee, and Senator Grassley:
Thank you for the opportunity to discuss the Department of the Navy‘s
(including the United States Marine Corps) internal controls over the
government travel card program. This subcommittee held a hearing in May
2001 that identified substantial delinquencies and charge-offs related
to the Department of Defense (DOD) travel card. As a result of your
hearing and our work on internal control over purchase card
transactions at two Navy sites,[Footnote 1] and continuing concern
about fraud, waste, and abuse in DOD‘s use of both travel and purchase
cards, you requested more comprehensive audits of both programs. We
previously testified on the Army travel card program in July 2002.
[Footnote 2] This written statement discusses the results of our Navy
travel card program audit. We plan to follow up on this testimony and
issue a detailed report with recommendations on the results of our
audit. We will report to you separately on the results of our Air Force
travel card audit.
The intent of the travel card program, which is administered by a
contractor (Bank of America), was to improve convenience for the
traveler and to reduce the government‘s costs of administering travel.
During fiscal year 2001, the Navy had about $510 million in travel card
charges and about 395,000 individually billed travel card accounts at
the end of fiscal year 2001. [Footnote 3] The individually billed
travel card program is significantly different from the purchase card
program in that cardholders are directly responsible for all charges
incurred on their travel cards and the monthly bill is sent to the
cardholder for payment. The cardholder is responsible for submitting a
properly documented voucher and is reimbursed by the Navy for all valid
expenses related to official government travel. In contrast, all
purchase card charges are billed directly to the government for monthly
payment.
Today, I will provide my perspective on (1) the reported magnitude and
impact of delinquent and charged-off Navy travel card accounts for
fiscal year 2001 and the first 6 months of fiscal year 2002, along with
an analysis of related causes, (2) potentially fraudulent and abusive
activity related to the Navy travel card during the same period, (3)
whether abusive activity associated with the travel card is effectively
linked to disciplinary actions and security clearances, (4) the
effectiveness of the overall control environment and key internal
controls for the Navy‘s travel program, and (5) the status of DOD and
Navy corrective actions. Details on our scope and methodology are
included in appendix I.
In summary, the Navy‘s average delinquency rate of about 12 percent over
the last 2 years is nearly identical to the Army‘s, which has the
highest delinquency rate in DOD, and about 6 percentage points higher
than that of federal civilian agencies. The Navy‘s overall delinquency
and charge-off problems, which have cost the Navy millions in lost
rebates and higher fees, are primarily associated with lower-paid,
enlisted military personnel. In addition, lack of management emphasis
and oversight has resulted in management failure to promptly detect and
address instances of potentially fraudulent and abusive activities
related to the travel card program. For example, during fiscal year
2001 and the first 6 months of fiscal year 2002, over 250 Navy
personnel might have committed bank fraud by writing three or more
nonsufficient fund (NSF) checks to Bank of America, while many others
abused the travel card program by failing to pay Bank of America
charges and/or using the card for inappropriate transactions such as
for prostitution and gambling. However, because Navy management was
often not aware of these activities, disciplinary actions were not
consistently taken against these cardholders. We also found a
significant relationship between travel card fraud, abuse, and
delinquencies and individuals with substantial credit history problems.
For example, many cardholders whose accounts were charged off or put in
salary offset [Footnote 4] had bankruptcies and accounts placed in
collection prior to receiving the card. The Navy‘s practice of
authorizing a travel card to be issued to virtually anyone who asked
for it compounded an already existing problem by giving those with a
history of bad financial management additional credit. While we found
that Navy management had taken some corrective actions to address
delinquencies and misuse, additional preventive solutions are necessary
if Navy is to effectively address these issues.
Travel Card Delinquencies and Charge-offs:
Most Navy cardholders properly used their travel cards and paid amounts
owed to Bank of America in a timely manner. However, as shown in
figure 1, the Navy‘s average delinquency rate was nearly identical to
the Army‘s, which, as we have previously testified, is the highest
delinquency rate in the government. The Navy‘s quarterly delinquency
rate fluctuated from 10 to 18 percent, and on average was about 6
percentage points higher than that of federal civilian agencies. As of
March 31, 2002, over 8,400 Navy cardholders had $6 million in
delinquent debt.
Figure 1: Navy/Marine Corps v. Army, Other DOD, and Non-DOD Civilian
Agencies‘ Travel Card Delinquency Rates for the 2 Year Period Ending
March 31, 2002:
[See PDF for image]
The figure is a multiple line graph representing travel card
delinquency rates for four entities for the two year period ending
March 31, 2002. The vertical axis of the graph represents percent from
0 to 100. The horizontal axis of the graph represents fiscal year
quarters from FY 2000 third quarter through FY2002 second quarter.
The four entities depicted are:
Navy/Marine Corps;
Army;
Other DOD;
Non-DOD civilian.
Source: Bank of America and General Services Administration data.
[End of figure]
We also found substantial charge-offs of Navy travel card accounts.
Since the inception of the travel charge card task order between DOD
and Bank of America on November 30, 1998, Bank of America has charged
off over 13,800 Navy travel card accounts with $16.6 million of bad
debt. Recent task order modifications allow Bank of America to
institute a salary offset against DOD military personnel members whose
travel card accounts were previously charged off or are more than 120
days past due. As a result, as of July 31, 2002, Bank of America had
recovered $5.2 million in Navy government travel card bad debts. The
high level of delinquencies and charge-offs have also cost the Navy
millions of dollars in lost rebates, higher fees, and substantial
resources spent pursuing and collecting past due accounts. For example,
we estimate that in fiscal year 2001, delinquencies and charge-offs
cost the Navy $1.5 million in lost rebates, and will cost about $1.3
million in increased automated teller machines (ATM) fees [Footnote 5]
annually.
As shown in figure 2, the travel cardholder‘s rank or grade [Footnote
6] (and associated pay) is a strong predictor of delinquency problems.
We found that the Navy‘s overall delinquency and charge-off problems
are primarily associated with young, low- and mid-level enlisted
military personnel with basic pay levels ranging from $12,000 to
$27,000.
Figure 2: Navy Delinquent and Total Outstanding Travel Card Balances
for Military and Civilian Employees as of September 30, 2001:
[See PDF for image]
This figure is a bar graph that illustrates Navy delinquent and total
outstanding travel card balances for military and civilian employees as
of September 30, 2001. The vertical axis of the graph represents
dollars in millions from 0 to 25. The horizontal axis of the graph
represents rank or grade. The following data is depicted (amounts are
approximated):
E1-3:
Delinquent: $1 million;
Total outstanding balances: $2 million.
E-4-6:
Delinquent: $4 million;
Total outstanding balances: $20 million.
E7-9:
Delinquent: $1 million;
Total outstanding balances: $6 million.
W01-05:
Delinquent: $0.
Total outstanding balances: $1 million.
O1-3:
Delinquent: $0.5 million;
Total outstanding balances: $1 million.
O4-8:
Delinquent: $0.5 million;
Total outstanding balances: $6 million.
O7-10:
Delinquent: $0;
Total outstanding balances: $0.3 million.
Civilian:
Delinquent: $1 million;
Total outstanding balances: $15 million.
Source: GAO analysis of Bank of America data.
[End of figure]
According to Navy officials, low- and mid-level enlisted military
personnel comprise the bulk of the operational forces and are generally
young, often deployed, and have limited financial experience and
resources. It is therefore not surprising to see a higher level of
outstanding balances and delinquent amounts due for these personnel.
Figure 2 also shows that, in contrast, the delinquency rate for
civilians employed by the Navy is substantially lower. As of September
30, 2001, the delinquency rate of low and mid-level enlisted personnel
was almost 22 percent, compared to a Navy civilian rate of slightly
more than 5 percent. This rate is comparable to the non-DOD civilian
delinquency rate of 5 percent.
The case study sites we audited exhibited this pattern. For example, at
Camp Lejeune, a principal training location for Marine air and ground
forces, over one-half of the cardholders are enlisted personnel.
Representative of the Navy‘s higher delinquency rate, Camp Lejeune‘s
quarterly delinquency rate for the 18-month period ending March 31,
2002, averaged over 15 percent and was close to 10 percent as of March
31, 2002. In contrast, at Puget Sound Navy Shipyard, where the mission
is to repair and modernize Navy ships, civilian personnel earning more
than $38,000 a year made up 84 percent of total government travel card
holders and accounted for 86 percent of total fiscal year 2001 travel
card transactions. This site‘s delinquency rate had declined to below 5
percent as of March 31, 2002.
In combination with these demographic factors, a weak overall control
environment, flawed policies and procedures, and a lack of adherence to
valid policies and procedures contributed to the significant
delinquencies and charge-offs. Further discussion of these breakdowns
is provided later in this testimony.
Potentially Fraudulent and Abusive Travel Card Activity:
Our work identified numerous instances of potentially fraudulent
[Footnote 7] and abusive activity [Footnote 8] related to the travel
card. During fiscal year 2001 and the first 6 months of fiscal year
2002, over 5,100 Navy employees wrote at least one nonsufficient fund
(NSF), or ’bounced“ check, to Bank of America as payment for their
travel card bills. Of these, over 250 [Footnote 9] wrote 3 or more NSF
checks, a potentially fraudulent act. [Footnote 10] Appendix III
provides a table summarizing 10 examples, along with more detailed
descriptions of selected cases in which cardholders might have
committed fraud by writing 3 or more NSF checks to Bank of America.
These 10 accounts were subsequently charged-off [Footnote 11] or placed
in salary offset or voluntary fixed payment agreements with Bank of
America.
We also found that the government cards were used for numerous abusive
transactions that were clearly not for the purpose of government
travel. As discussed further in appendix I, we used data mining tools
to identify transactions we believed to be potentially fraudulent or
abusive based upon the nature, amount, merchant, and other identifying
characteristics of the transaction. Through this procedure, we
identified thousands of suspect transactions. Table 1 illustrates a few
of the types of abusive transactions and the amounts charged to the
government travel card in fiscal year 2001 and the first 6 months of
fiscal year 2002 that were not for valid government travel. Government
travel cards were used for purchases in categories as diverse as
legalized prostitution services, jewelry, gentlemen‘s clubs, gambling,
cruises, and tickets to sporting and other events. The number of
instances and amounts shown includes both cases in which the
cardholders paid the bills and instances in which they did not pay the
bills.
Table 1:Examples of Navy-wide Abusive Travel Card Activity, Fiscal Year
2001 through March 31, 2002:
Category: Legalized brothels;
Examples of vendors: James Fine Dining, Chicken Ranch;
Number of transactions: 80;
Dollar amount: $13,250.
Category: Jewelry;
Examples of vendors: Kay Jewelers, Zales Jewelers;
Number of transactions: 199;
Dollar amount: 20,800.
Category: Gentlemen‘s clubs;
Examples of vendors: Spearmint Rhino, Mr. Magoo‘s Lounge, Cheetah‘s
Lounge;
Number of transactions: 247;
Dollar amount: 28,700.
Category: Gambling, including Internet;
Examples of vendors: www.proccy2, Seinpost Holding, GCA (cash advance);
Number of transactions: 80;
Dollar amount: 34,250.
Category: Cruises;
Examples of vendors: Carnival, Disney, Norwegian, Princess;
Number of transactions: 72;
Dollar amount: 38,300.
Category: Entertainment (sporting events, theatre, concerts);
Examples of vendors: NY Yankees, LA Lakers, Atlanta Braves, Phantom of
the Opera, other Ticketmaster purchases;
Number of transactions: 502;
Dollar amount: 71,400.
Source: GAO analysis of Bank of America data.
[End of table]
We found that 50 cardholders used their government travel card to
purchase over $13,000 in prostitution services from two legalized
brothels in Nevada. Charges were processed by these establishments‘
merchant bank, and authorized by Bank of America, in part because a
control afforded by the merchant category code (MCC), [Footnote 12]
which identifies the nature of the transactions and is used by DOD and
other agencies to block improper purchases, was circumvented by the
establishments. In these cases, the transactions were coded to appear
as restaurant and dining or bar charges. For example, the merchant
James Fine Dining, which actually operates as a brothel known as Salt
Wells Villa, characterizes its services as restaurant charges, which
are allowable and not blocked by the MCC control. According to one
assistant manager at the establishment, this is done to protect the
confidentiality of its customers. Additionally, the account balances
for 11 of the 50 cardholders purchasing services from these
establishments were later charged off or put into salary offset. For
example, one sailor, an E-2 seaman apprentice, charged over $2,200 at
this brothel during a 30-day period. The sailor separated from the
Navy, and his account balance of more than $3,600 was eventually
charged off.
We also found instances of abusive travel card activity where Navy
cardholders used their cards at establishments such as gentlemen‘s
clubs, which provide adult entertainment. Further, these clubs were
used to convert the travel card to cash by supplying cardholders with
actual cash or ’club cash“ [Footnote 13] for a 10 percent fee. For
example, we found that an E-5 second class petty officer circumvented
ATM cash withdrawal limits [Footnote 14] by charging, in a single
transaction, $2,420 to the government travel card and receiving $2,200
in cash. Subsequently, the club received payment from Bank of America
for a $2,420 restaurant charge. Another cardholder, an E-7 chief petty
officer, obtained more than $7,000 in cash from these establishments.
For fiscal year 2001 and through March 2002, 137 Navy cardholders made
charges totaling almost $29,000 at these establishments.
These transactions represented abusive use of the travel cards that were
clearly unrelated to official government travel. There should be no
misunderstanding by Navy personnel that personal use of the card is not
permitted. In fact, the standard government travel card used by most
Navy personnel is clearly marked ’For Official Government Travel Only“
on the face of the card. Additionally, upon receipt of their travel
cards, all Navy cardholders are required to sign a statement of
understanding that the card is to be used only for authorized official
government travel expenses.
However, as part of our statistical sampling results at the three sites
we audited, we estimated that personal use of the government travel card
ranged from almost 7 percent of fiscal year 2001 transactions at one
site to over 26 percent at another site. [Footnote 15] As shown in
appendix V, cardholders who abused the card but paid the bill also used
the government travel cards for the same transaction types discussed in
table 1.
Personal use of the card also increases the risk of charge-offs related
to abusive purchases, which are costly to the government and the
taxpayer. Our work found that charged-off accounts included both those
of (1) cardholders who were reimbursed by the Navy for official travel
expenses but failed to pay Bank of America for the related charges,
thus pocketing the reimbursement, and (2) those who used their travel
cards for personal purchases for which they did not pay Bank of
America. Appendix IV provides a summary table and supporting narrative
describing examples of abusive travel card activity where the account
was charged off or placed in salary offset or voluntary fixed payment
agreements with Bank of America.
Furthermore, as detailed by the 10 examples in appendix V, we also found
instances in which cardholders used their travel cards for personal
purposes, but paid their travel card bills when they became due. For
example, an E-5 second class petty officer reservist, whose civilian job
was with the U.S. Postal Service, admitted making phony charges of over
$7,200 to operate his own limousine service. In these transactions, the
sailor used the travel card to pay for bogus services from his own
limousine company during the first few days of the card statement cycle.
By the second day after the charges were posted, Bank of America would
have deposited funds”available for the business‘ immediate use”into the
limousine business‘ bank account. Then, just before the travel card bill
became due, the limousine business credited the charge back to the
sailor‘s government travel card and repaid the funds to Bank of America.
This series of transactions had no impact on the travel card balance,
yet allowed the business to have an interest-free loan for a period.
This pattern was continued over several account cycles. Navy officials
were unaware of these transactions until we brought them to their
attention and are currently considering what, if any, action should be
taken against the cardholder.
Abusive Travel Card Activity Not Consistently Linked to Disciplinary
Action and Security Clearances:
We did not always find documented evidence of disciplinary actions taken
by Navy commanders and supervisors against cardholders who wrote NSF
checks or had their accounts charged off or placed in salary offset. Of
the 57 cardholders fitting these categories that we selected through
data mining, we did not find any documented evidence that 37 had been
disciplined. For example, a lieutenant commander (O-4) with the Naval
Air Reserve used his travel card for personal purchases in California
and frequent personal trips to Mexico. The individual did not pay his
account when due and was placed in salary offset in October 2001.
Although the agency program coordinator (APC) responsible for program
oversight had apprised management of this officer‘s abuse of the travel
card, and had initiated actions to take away the cardholder‘s security
clearance, management had not taken any administrative action against
this cardholder. In addition, of the 10 individuals who abused the card
but paid their bills, only 1 was disciplined. Appendixes III, IV, and V
provide further details of the extent of disciplinary actions taken
against some of the cardholders we examined.
In addition, we found that 27 of these same 57 travel cardholders we
examined whose accounts were charged off or placed in salary offset as
of March 31, 2002, still had active secret or top-secret security
clearances in August 2002. Some of the Navy personnel holding security
clearances who have had difficulty paying their travel card bills may
present security risks to the Navy. DOD rules provide that an
individual‘s finances are one of the factors to be considered in
whether an individual should be entrusted with a security clearance.
However, we found that Navy security officials were unaware of these
financial issues and consequently could not consider their potential
effect on whether these individuals should continue to receive a
security clearance. We have referred cases identified from our audit to
the U.S. Navy Central Adjudication Facility (commonly referred to as
Navy CAF) for its continued investigation.
Key Internal Control Breakdowns:
For fiscal year 2001, we identified significant breakdowns in key
internal controls over individually billed travel cards. The breakdowns
stemmed from a weak overall control environment, a lack of focus on
oversight and management of the travel card program, and a lack of
adherence to valid policies and procedures. These breakdowns
contributed to the significant delinquencies and charge-offs of Navy
employee account balances and potentially fraudulent and abusive
activity related to the travel card. In contrast, one Navy unit we
audited with a low average delinquency rate (4 percent) attributed its
relative success to constant monitoring of delinquencies and to some
monitoring of inappropriate travel card use.
We found that in fiscal year 2001, management at the three case study
locations we audited focused primarily on reducing delinquencies. In
general, management placed little emphasis on controls designed to
prevent, or provide for early detection of, travel card misuse. In
addition, we identified two key overall control environment weaknesses:
(1) the lack of clear, sufficiently detailed Navy travel card policies
and procedures and (2) limited internal travel card audit and program
oversight. First, the units we audited used DOD‘s travel management
regulations (DOD Financial Management Regulation, volume 9, chapter 3)
as the primary source of policy guidance for management of Navy‘s
travel card program. In many areas, the existing guidance was not
sufficiently detailed to provide clear, consistent travel management
procedures to be followed. Second, as recognized in the DOD Inspector
General‘s March 2002 summary report [Footnote 16] on the DOD travel
card program, ’[b]ecause of its dollar magnitude and mandated use, the
DOD travel card program requires continued management emphasis,
oversight, and improvement by the DOD. Independent internal audits
should continue to be an integral component of management controls.“
However, no internal review report had been issued since fiscal year
1999 concerning the Navy‘s travel card program.
We found that this overall weak control environment contributed to
design flaws and weaknesses in a number of management control areas
needed for an effective travel card program. For example, many problems
we identified were the result of ineffective controls over issuance of
travel cards. Although DOD‘s policy allows an exemption from the
requirement to use travel cards for certain groups or individuals with
poor credit histories, we found that the Navy‘s practice was to
facilitate Bank of America issuing travel cards”with few credit
restrictions”to all applicants regardless of whether they have a
history of credit problems. For the cases we reviewed, we found a
significant correlation between travel card fraud, abuse, and
delinquencies and individuals with substantial credit history problems.
The prior and current credit problems we identified for Navy travel
card holders included charged-off credit cards, bankruptcies,
judgments, accounts in collections, and repeated use of NSF checks.
Also, a key element of internal control, which, if effectively
implemented, may reduce the risk and occurrence of delinquent accounts,
is frequent account monitoring by the APC. However, some APCs, who have
the key responsibility for managing and overseeing travel card holders‘
activities, were essentially set up to fail in their duties. Some were
assigned APC responsibilities as collateral duties and given little
time to perform these duties, while other full-time APCs had
responsibilities for a large number of cardholders. When an APC is
unable to focus on managing travel card usage because of the high
number of cardholders or the extent of other duties, the rate of
delinquency and potentially abusive and fraudulent transactions is
adversely affected. For example, at Camp Lejeune, where the delinquency
rate was over 15 percent, the six APCs we interviewed were given the
role as ’other duty as assigned,“ with most spending less than 20
percent of their available time to perform their APC responsibilities.
In addition, a lack of management focus and priority on ensuring proper
training for APCs resulted in some APCs being unfamiliar with the
capabilities of Bank of America‘s credit card database that would help
them to manage and oversee the travel card program. For example, one
APC did not know that she could access reports that would help identify
credit card misuse and thus enable the responsible supervisors or
commanders to counsel cardholders before they became delinquency
problems. With the large span of control, minimal time allotted to
perform this duty, and lack of adequate training, we found that APCs
generally were ineffective in carrying out their key travel card
program management and oversight responsibilities.
In contrast, a Navy unit we visited”Patuxent River”showed that constant
monitoring of delinquency by a knowledgeable APC contributed to a lower
delinquency rate. The APC at this unit had responsibility for
approximately 1,200 to 1,500 active travelers monthly, but APC duties
were her only responsibility. The APC informed us that she constantly
monitored the government travel card program. For example, she reviewed
delinquency reports several times a month to identify and promptly
alert cardholders and supervisors about the status of delinquent
accounts. She also told us that less frequently, but still on a monthly
basis, she monitored transactions in the Bank of America database for
improper and abusive uses of the card and sent out notices to the
cardholders and the cardholders‘ supervisors if such transactions were
identified. She also emphasized the use of the split disbursement
payment process [Footnote 17] (split disbursements) whenever possible.
Consequently, the delinquency rate for this unit was consistently lower
than the Navy-wide rate and the civilian agency rate.
Another area of weakness in internal controls relates to the process
over the cancellation and/or deactivation of cards in case of death,
retirement, or separation from the service. These ineffective controls
allowed continued use of the government travel card for personal
purposes, which in some instances led to charge-offs, thereby
contributing to increased costs to the government. For example:
* In one Navy unit, a cardholder died in October 1999. However,
ineffective controls over the notification process resulted in the APC
not being aware that this had occurred. Therefore, the APC did not take
actions to cancel this individual‘s government travel card account.
Consequently, in October 2000, when the old card was about to expire,
Bank of America mailed a new card to the address of record. When the
card was returned with a forwarding address, the bank remailed the card
and the personal identification number used to activate the card to the
new address without performing other verification procedures. The card
was activated in mid-December 2000, and within a month, 81 fraudulent
transactions for hotel, food, and gas totaling about $3,600 were
charged to the card. In January 2001, in the course of her monthly
travel card monitoring, the APC noticed suspicious charges in the
vicinity of the cardholder‘s post-of-duty. The APC took immediate
action to deactivate the card, thus preventing additional charges from
occurring. Upon learning of the cardholder‘s death from further
discussion with the cardholder‘s unit, the APC immediately reported the
case to a Bank of America fraud investigator. Investigations revealed
that a family member of the cardholder might have made these charges.
No payment was ever made on this account, and the entire amount was
subsequently charged off. We referred this case to the U.S. Secret
Service Credit Card Task Force for further investigation and
potential prosecution.
* A chief warrant officer (W-3) at Naval Air Systems Command Atlantic
repeatedly used his travel card after his retirement on December 1,
2000. The cardholder currently works for a private company. The
cardholder used the government travel card, since his retirement, to
make charges totaling $44,000 for hotels, car rentals, restaurants, and
airline tickets. In a number of instances, the cardholder was able to
obtain the government rate”which can be substantially lower than the
commercial rate”for lodging in San Diego, Philadelphia, and Cincinnati.
Because the Navy does not routinely monitor cardholders‘ transaction
reports for abusive activity and because this particular account was
always paid in full, they did not detect the abusive activity. Bank of
America data showed that the cardholder‘s account was still open in
early September 2002 and thus available for further charges.
* In another instance, a mechanic trainee at the Puget Sound Naval
Shipyard was convicted of a felony conviction for illegal possession of
a firearm in October 2000 and placed on indefinite suspension by his
employer in November 2000. However, neither the security office, which
took action against the employee, nor the office where the individual
worked notified the APC to cancel or deactivate the cardholder‘s
government travel card account. Following his suspension, the
cardholder used the government travel card to make numerous cash
withdrawals and gas purchases totaling almost $4,700. The APC was not
aware of these abusive charges until the monthly delinquency review
identified the account as being delinquent. The account balance of
$1,600 was subsequently charged off in January 2002. Although security
officers at the Puget Sound Naval Shipyard referred the case to Navy
CAF in October 2000, our work indicated as of August 2002, the
suspended employee continued to maintain a secret clearance, despite
the account charge-off and felony conviction.
Table 2 summarizes our statistical tests of four key control activities
related to basic travel transaction and voucher processing at three Navy
locations. We concluded that the control was effective if the projected
failure rate was from 0 to 5 percent. If the projected failure rate was
from 6 to 10 percent, we concluded that the control was partially
effective. We considered controls with projected failure rates greater
than 10 percent to be ineffective.
Table 2: Results of Testing of Key Internal Controls:
Navy unit: Camp Lejeune, U.S. Marine Forces Atlantic;
Travel orders are approved prior to travel (Percentage of failure): 11;
Travel voucher reimbursements are accurate (Percentage of failure): 33;
Travel vouchers are submitted within 5 days of travel completion
(Percentage of failure): 11;
Travel vouchers are paid within 30 days of submission (Percentage of
failure): 3.
Navy unit: Patuxent River Air Station, Air Systems Command;
Travel orders are approved prior to travel (Percentage of failure): 3;
Travel voucher reimbursements are accurate (Percentage of failure): 35;
Travel vouchers are submitted within 5 days of travel completion
(Percentage of failure): 36;
Travel vouchers are paid within 30 days of submission (Percentage of
failure): 1.
Navy unit: Puget Sound Naval Shipyard, Sea Systems Command;
Travel orders are approved prior to travel (Percentage of failure):
49[A];
Travel voucher reimbursements are accurate (Percentage of failure): 40;
Travel vouchers are submitted within 5 days of travel completion
(Percentage of failure): 34;
Travel vouchers are paid within 30 days of submission (Percentage of
failure): 1.
Note: The numbers in the table represent point estimate percentages for
the number of failures in the population based on our sampling tests.
The confidence intervals for our sampling estimates are presented in
appendix I of this testimony.
[A] The high failure rate is attributable to management‘s failure to
maintain copies of the original signed travel orders, which were sent
to the travelers.
Source: GAO analysis.
[End of table]
Although we found significant failure rates at all three case study
sites for the requirement that vouchers be filed within 5 working days
of travel completion, this did not have an impact on these units‘
delinquency rates. However, we found substantial errors in travel
voucher processing that resulted in both overpayment and underpayment
of the amount that cardholders should have received for their official
travel expenses. At times, these errors were substantial in comparison
with the total voucher amounts. For example, we found data entry errors
that resulted, in one case, in an overpayment of more than $1,700 to
the traveler. In another case, failure to carefully scrutinize
supporting documentation resulted in an overpayment to a traveler of
more than $1,000 for cell phone calls, for which the traveler did not
submit detailed documentation to support what were claimed to be calls
made for business purposes. As a result of our work, the Navy unit has
taken actions to recover these overpayments.
Corrective Actions:
DOD has taken a number of actions focused on reducing delinquencies.
For example, the Department of the Navy had established a goal of a
delinquency rate of no more than 4 percent. [Footnote 18] Beginning in
November 2001, DOD implemented a system of wage and retirement payment
offset for many employees. It also began encouraging the use of split
disbursements”a payment process by which cardholders elect to have all
or part of their reimbursements sent directly to Bank of America. This
payment method is a standard practice of many private sector employers.
Although split disbursements have the potential to significantly reduce
delinquencies, this payment process is strictly voluntary at DOD.
According to Bank of America, split disbursements accounted for 30
percent of total payments made by Navy employees in June 2002. This rate
represented a large increase over fiscal year 2001, when only 16
percent of Navy payments were made through split disbursements. As a
result of these actions, the Navy experienced a significant drop in
charged-off accounts in the first half of fiscal year 2002.
The Navy has also initiated actions to improve the management of travel
card usage. The Navy has a three-pronged approach to address travel card
issues: (1) provide clear procedural guidance to APCs and travelers,
available on the Internet, (2) provide regular training to APCs, and (3)
enforce proper use and oversight of the travel card through data mining
to identify problem areas and abuses. Further, to reduce the risk of
card misuse, the Navy has also begun to deactivate cards while
travelers are not on travel status and close a number of inactive
cards, and plans to close inactive cards semi-annually to eliminate
credit risk exposure. The Navy is also pursuing the use of ’pre-funded“
debit or stored value cards for high-risk travelers”funds would be
available on the cards when travel orders were issued in an amount
authorized on the order.
Further, the DOD Comptroller created a DOD Charge Card Task Force to
address management issues related to DOD‘s purchase and travel card
programs. We met with the task force in June 2002 and provided our
perspectives on both programs. The task force issued its final report on
June 27, 2002. To date, many of the actions that DOD has taken primarily
address the symptoms rather than the underlying causes of the problems
with the program. Specifically, actions to date have focused on dealing
with accounts that are seriously delinquent, which are ’back-end“ or
detective controls rather than preventive controls. To effectively
reform the travel program, DOD and the Navy will need to work to prevent
potentially fraudulent and abusive activity and severe credit problems
with the travel card. We are encouraged that the DOD Comptroller
recently took action to deactivate the travel cards of all cardholders
who have not been on official government travel within the last 6
months. However, additional preventive solutions are necessary if DOD
is to effectively address these issues.
To that end, we will be issuing a related report in this area with
specific recommendations, including a number of preventive actions
that, if effectively implemented, should substantially reduce
delinquencies and potentially fraudulent and abusive activity related
to Navy travel cards. For example, we plan to include recommendations
that will address actions needed in the areas of exempting individuals
with histories of financial problems from the requirement to use a
travel card; providing sufficient infrastructure to effectively manage
and provide day-to-day monitoring of travel card activity related to
the program; deactivating cards when employees are not on official
travel; taking appropriate disciplinary action against employees who
commit fraud or abuse of the travel card; ensuring that information on
travel card fraud or abuse of cardholders with secret or top-secret
security clearances is provided to appropriate security officials for
consideration in whether such clearances should be suspended or
revoked; and moving towards mandating use of the split disbursement
payment process. The defense authorization bill for fiscal year 2003
passed by the Senate reflected a move in this direction. This bill
would change the voluntary use of split disbursements by authorizing
the Secretary of Defense to require that any part of an employee‘s
travel allowance be disbursed directly to the employee‘s travel card
issuer for payment of official travel expenses. The defense
authorization bill for fiscal year 2003 passed by the House does not
contain comparable authority. As of September 12, 2002, the bill (H.R.
4546) was in conference.
Mr. Chairman, Members of the Subcommittee, and Senator Grassley, this
concludes my prepared statement. I would be pleased to respond to any
questions that you may have.
Contact and Acknowledgments:
For further information regarding this testimony, please contact Gregory
D. Kutz at (202) 512-9505 or kutzg@gao.gov or John J. Ryan at (202) 512-
9587 or ryanj@gao.gov.
[End of section]
Appendix I: Scope and Methodology:
We used as our primary criteria applicable laws and regulations,
including the Travel and Transportation Reform Act of 1998, [Footnote
19] the General Services Administration‘s Federal Travel Regulation,
[Footnote 20] and the DOD Financial Management Regulations, Volume 9,
Travel Policies and Procedures. We also used as criteria our Standards
for Internal Control in the Federal Government [Footnote 21] and our
Guide to Evaluating and Testing Controls Over Sensitive Payments.
[Footnote 22] To assess the management control environment, we applied
the fundamental concepts and standards in our internal control
standards to the practices followed by management at our three case
study locations.
To assess the magnitude and impact of delinquent and charged-off
accounts, we compared the Navy‘s delinquency and charge-off rates to
those of other DOD services and agencies and federal civilian agencies.
We also analyzed the trends in the delinquency and charge-off data from
the third quarter of fiscal year 2000 through the first half of fiscal
year 2002. In addition, we obtained and analyzed Bank of America data
to determine the extent to which Navy travel card holders wrote NSF
checks to pay their travel card bills. We also obtained documented
evidence of disciplinary action against cardholders with accounts that
were in charge-off or salary offset status or had NSF checks written in
payment of those accounts. We accepted hard copy file information and
verbal confirmation by independent judge advocate general officials as
documented evidence of disciplinary action.
We also used data mining to identify Navy individually billed travel
card transactions for audit. Our data mining procedures covered the
universe of individually billed Navy travel card activity during fiscal
year 2001 and the first 6 months of fiscal year 2002, and identified
transactions that we believed were potentially fraudulent or abusive.
However, our work was not designed to identify, and we did not
determine, the extent of any potentially fraudulent or abusive activity
related to the travel card.
To assess the overall control environment for the travel card program
at the Department of the Navy, we obtained an understanding of the
travel process, including travel card management and oversight, by
interviewing officials from the Office of the Undersecretary of Defense
(Comptroller), Department of the Navy, Defense Finance and Accounting
Service (DFAS), Bank of America, and the General Services
Administration, and by reviewing applicable policies and procedures and
program guidance they provided. We visited three Navy units to ’walk
through“ the travel process, including the management of travel card
usage and delinquency, and the preparation, examination, and approval
of travel vouchers for payment. We also assessed actions taken to
reduce the severity of travel card delinquencies and charge-offs.
Further, we contacted one of the three largest U.S. credit bureaus to
obtain credit history data and information on how credit scoring models
are developed and used by the credit industry for credit reporting.
To test the implementation of key controls over individually billed Navy
travel card transactions processed through the travel system”including
the travel order, travel voucher, and payment processes”we obtained and
used the database of fiscal year 2001 Navy travel card transactions to
review random samples of transactions at three Navy locations. Because
our objective was to test controls over travel card expenses, we
excluded credits and miscellaneous debits (such as fees) from the
population of transactions used to select a random sample of travel
card transactions to audit at each of the three Navy case study units.
Each sampled transaction was subsequently weighted in the analysis to
account statistically for all charged transactions at each of the three
units, including those that were not selected.
We selected three Navy locations for testing controls over travel card
activity based on the relative amount of travel card activity at the
three Navy commands and at the units under these commands, the number
and percentage of delinquent accounts, and the number and percentage of
charged-off accounts. Each of the units within the commands was selected
because of the relative size of the unit within the respective command.
Table 3 presents the sites selected and the universe of fiscal year 2001
transactions at each location.[Footnote 23]:
Table 3: Universe of Fiscal Year 2001 Travel Transactions at Navy Units
Tested:
Navy unit tested: Camp Lejeune, U.S. Marine Forces Atlantic;
Number of fiscal year 2001 travel transactions[A]: 14,209;
Dollar value of fiscal year 2001 travel transactions[A]: $1,747,316.
Navy unit tested: Patuxent River Air Station, Air Systems Command;
Number of fiscal year 2001 travel transactions[A]: 179,547;
Dollar value of fiscal year 2001 travel transactions[A]: $20,335,864.
Navy unit tested: Puget Sound Naval Shipyard, Sea Systems Command;
Number of fiscal year 2001 travel transactions[A]: 80,583;
Dollar value of fiscal year 2001 travel transactions[A]: $11,025,669.
[A] Transactions represent charges for sales and cash advances and
exclude credits and fees.
Source: GAO analysis based on Bank of America data.
[End of table]
We performed tests on statistical samples of travel card transactions at
each of the three case study sites to assess whether the system of
internal control over the transactions was effective, as well as to
provide an estimate, by unit, of the percentage of transactions that
were not for official government travel. For each transaction in our
statistical sample, we assessed whether (1) there was an approved
travel order prior to the trip, (2) the travel voucher payment was
accurate, (3) the travel voucher was submitted within 5 days of the
completion of travel, and (4) the travel voucher was paid within 30
days of the submission of an approved travel voucher. We considered
transactions not related to authorized travel to be abuse and incurred
for personal purposes. The results of the samples of these control
attributes, as well as the estimate for personal use”or abuse”related
to travel card activity, can be projected to the population of
transactions at the respective test case study site only, [Footnote 24]
not to the population of travel card transactions for all Navy
cardholders. Table 4 shows the results of our test of the key control
related to the authorization of travel (approved travel orders were
prepared prior to dates of travel).
Table 4: Estimate of Fiscal Year 2001 Transactions That Failed Control
Tests for Approved Travel:
Navy unit tested: Camp Lejeune;
Approved travel order, Number of failed Transactions: 11 of 96;
Approved travel order, Estimated failure rate (95% confidence
interval): 11.5% (5.9%, 19.6%).
Navy unit tested: Patuxent River Air Station;
Approved travel order, Number of failed Transactions: 3 of 96;
Approved travel order, Estimated failure rate (95% confidence
interval): 3.1% (0.6%, 8.9%).
Navy unit tested: Puget Sound Naval Shipyard;
Approved travel order, Number of failed Transactions: 47 of 96;
Approved travel order, Estimated failure rate (95% confidence
interval): 49.0% (38.6%, 59.4)%.
Source: GAO analysis.
[End of table]
Table 5 shows the results of our test for effectiveness of controls in
place over the accuracy of travel voucher payments.
Table 5: Estimate of Fiscal Year 2001 Transactions that Failed Control
Tests for Accurate Travel Voucher Payments:
Navy unit tested: Camp Lejeune;
Effective voucher review and accurate reimbursement to traveler, Number
of failed transactions: 14 of 43;
Effective voucher review and accurate reimbursement to traveler,
Estimated failure rate (95% confidence interval): 32.6% (19.1%, 48.5%).
Navy unit tested: Patuxent River Air Station;
Effective voucher review and accurate reimbursement to traveler, Number
of failed transactions: 34 of 96;
Effective voucher review and accurate reimbursement to traveler,
Estimated failure rate (95% confidence interval): 35.4% (25.9%, 45.8%).
Navy unit tested: Puget Sound Naval Shipyard;
Effective voucher review and accurate reimbursement to traveler, Number
of failed transactions: 38 of 96;
Effective voucher review and accurate reimbursement to traveler,
Estimated failure rate (95% confidence interval): 39.6% (29.8%, 50.1%).
Source: GAO analysis.
[End of table]
Table 6 shows the results of our tests of two key controls related to
timely processing of claims for reimbursement of expenses related to
government travel”timely submission of the travel voucher by the
employee and timely approval and payment processing.
Table 6: Estimate of Fiscal Year 2001 Transactions that Failed Control
Tests for Timely Submission and Processing of Travel Vouchers:
Navy unit tested: Camp Lejeune;
Timely voucher submission by employee (5-day rule),Number of failed
transactions: 11 of 96;
Timely voucher submission by employee (5-day rule),Estimated failure
rate (95% confidence interval): 11.5% (5.9%, 19.6%);
Timely reimbursement to the traveler (30-day rule), Number of failed
transactions: 3 of 96;
Timely reimbursement to the traveler (30-day rule), Estimated failure
rate (95% confidence interval): 3.1% (0.6%, 8.9%).
Navy unit tested: Patuxent River Air Station;
Timely voucher submission by employee (5-day rule),Number of failed
transactions: 35 of 96;
Timely voucher submission by employee (5-day rule),Estimated failure
rate (95% confidence interval): 36.5% (26.9%, 46.9%);
Timely reimbursement to the traveler (30-day rule), Number of failed
transactions: 1 of 96;
Timely reimbursement to the traveler (30-day rule), Estimated failure
rate (95% confidence interval): 1.0% (0.03%, 5.7%).
Navy unit tested: Puget Sound Naval Shipyard;
Timely voucher submission by employee (5-day rule),Number of failed
transactions: 33 of 96;
Timely voucher submission by employee (5-day rule),Estimated failure
rate (95% confidence interval): 34.4% (25.0%, 44.8%);
Timely reimbursement to the traveler (30-day rule), Number of failed
transactions: 1 of 96;
Timely reimbursement to the traveler (30-day rule), Estimated failure
rate (95% confidence interval): 1.0% (0.03%, 5.7%).
Source: GAO analysis.
[End of table]
To determine if cardholders were reimbursed within 30 days, we used
payment dates provided by DFAS. We did not independently validate the
accuracy of these reported payment dates.
We briefed DOD managers, Navy managers, including the Assistant
Secretary of the Navy (Financial Management and Comptroller) officials,
unit commanders, and APCs; and Bank of America officials on the details
of our audit, including our findings and their implications. We
incorporated their comments where appropriate. We did not audit the
general or application controls associated with the electronic data
processing of Navy travel card transactions. We conducted our audit work
from January 2002 through September 2002 in accordance with U.S.
generally accepted government auditing standards, and we performed our
investigative work in accordance with standards prescribed by the
President‘s Council on Integrity and Efficiency. Following this
testimony, we plan to issue a report, which will include
recommendations to DOD and the Navy for improving internal controls
over travel card activity.
[End of section]
Appendix II: Navy Personnel Grade, Rank, and Associated Basic Pay
Rates:
Tables 7, 8, and 9 show the grade, rank (where relevant), and the
associated basic pay rates for fiscal year 2001 for the Navy‘s and
Marine Corp‘s military personnel and civilian personnel.
Table 7: Navy Military Grades, Ranks, and Associated Basic Pay Rates
for Fiscal Year 2001:
Military grade, Enlisted personnel: E-1 to E-3;
Military rank: Seaman recruit to seaman;
Fiscal year 2001 pay: $11,976 to $14,973.
Military grade, Enlisted personnel: E-4 to E-6;
Military rank: Petty officer 3rd class to 1st class;
Fiscal year 2001 pay: $17,931 to $26,860.
Military grade, Enlisted personnel: E-7 to E-9;
Military rank: Chief petty officer to master chief petty officer;
Fiscal year 2001 pay: $31,739 to $45,514.
Military grade, Officers[A]: WO-2 to WO-4;
Military rank: Warrant officer;
Fiscal year 2001 pay: $37,722 to $53,514.
Military grade, Officers[A]: O-1 to O-3;
Military rank: Ensign to lieutenant;
Fiscal year 2001 pay: $27,398 to $44,649.
Military grade, Officers[A]: O-4 to O-6;
Military rank: Lieutenant commander to captain;
Fiscal year 2001 pay: $54,476 to $83,982.
Military grade, Officers[A]: O-7 to O-10;
Military rank: Admiral;
Fiscal year 2001 pay: $98,257 to $127,695.
[A] Officers‘ ranks include warrant officers (denoted by WO) and
commissioned officers (denoted by O).
Source: U.S. Navy.
[End of table]
Table 8: Marine Corp Military Grades, Ranks, and Associated Basic Pay
Rates for Fiscal Year 2001:
Military grade, Enlisted personnel: E-1 to E-3;
Military rank: Private to lance corporal;
Fiscal year 2001 pay: $11,871 to $15,093.
Military grade, Enlisted personnel: E-4 to E-6;
Military rank: Corporal to staff sergeant;
Fiscal year 2001 pay: $17,675 to $26,018.
Military grade, Enlisted personnel: E-7 to E-9;
Military rank: Gunnery sergeant to sergeant major or master gunnery
sergeant;
Fiscal year 2001 pay: $31,533 to $46,646.
Military grade, Officers[A]: WO-2 to WO-4;
Military rank: Warrant officer;
Fiscal year 2001 pay: $32,098 to $59,587.
Military grade, Officers[A]: O-1 to O-3;
Military rank: 2nd lieutenant to captain;
Fiscal year 2001 pay: $25,653 to $45,120.
Military grade, Officers[A]: O-4 to O-6;
Military rank: Major, lieutenant colonel, and colonel;
Fiscal year 2001 pay: $56,951 to $85,628.
Military grade, Officers[A]: O-7 to O-10;
Military rank: General;
Fiscal year 2001 pay: $98,484 to $130,200.
[A] Officers‘ ranks include warrant officers (denoted by WO) and
commissioned officers (denoted by O).
Source: U.S. Navy.
[End of table]
Table 9: Navy Civilian Grades and Associated Basic Pay Rates for Fiscal
Year 2001:
Civilian grade, General schedule employees: GS-1 to GS-3;
Fiscal year 2001 pay: $16,181 to $20,093.
Civilian grade, General schedule employees: GS-4 to GS-5;
Fiscal year 2001 pay: $22,559 to $25,241.
Civilian grade, General schedule employees: GS-6 to GS-8;
Fiscal year 2001 pay: $28,131 to $34,625.
Civilian grade, General schedule employees: GS-9 to GS-12;
Fiscal year 2001 pay: $38,240 to $55,455.
Civilian grade, General schedule employees: GS-13 to GS-15;
Fiscal year 2001 pay: $65,949 to $91,667.
Civilian grade, Senior executive service: ES-01 to ES-06;
Fiscal year 2001 pay: $111,650 to $125,700.
Note: Basic pay rates shown are the midpoint of the range of pay for
each grade and does not factor in locality pay received in geographic
areas with higher cost-of-living.
Source: Office of Personnel Management.
[End of table]
[End of section]
Appendix III: NSF Checks Written to Bank of America:
Table 10: Examples of Cases in Which Cardholders Wrote Three or More
NSF Checks During Fiscal Year 2001 and the First 6 Months of Fiscal
Year 2002 and Accounts Were Subsequently Charged Off or Referred to
Salary Offset or Voluntary Fixed Pay Terms:
Cardholder: 1;
Total amount (number) of NSF checks: $61,004 (12)
Total amount charged-off (CO), in salary offset (SO) or voluntary fixed
pay (FP): SO ” $20,535;
Grade: E-5;
Unit: U.S. Pacific Fleet, Honolulu;
Credit history problems: Multiple bankruptcies and numerous charge-offs
prior to card issuance;
Documented disciplinary action: Administrative counseling/warning.
Cardholder: 2;
Total amount (number) of NSF checks: 37,150 (15);
Total amount charged-off (CO), in salary offset (SO) or voluntary fixed
pay (FP): FP ” $4,094;
Grade: E-6;
Unit: Naval Recruiting, Omaha;
Credit history problems: Multiple judgments and merchandise repossession
prior to card issuance;
Documented disciplinary action: None.
Cardholder: 3;
Total amount (number) of NSF checks: 23,894 (9);
Total amount charged-off (CO), in salary offset (SO) or voluntary fixed
pay (FP): SO ” $11,310;
Grade: E-6;
Unit: U.S. Marine Corps, Marine Aircraft Group 12, Japan;
Credit history problems: Charged-off and referral to collection prior
to card issuance; one account in collection and one charged off prior
to card issuance;
Documented disciplinary action: Dishonorable discharge for misconduct
directly related to travel card misuse.
Cardholder: 4.
Total amount (number) of NSF checks: 22,873 (11);
Total amount charged-off (CO), in salary offset (SO) or voluntary fixed
pay (FP): CO ” $2,579;
Grade: E-4;
Unit: U.S. Transportation Command, Illinois;
Credit history problems: None prior to card issuance;
Documented disciplinary action: Prosecution pending for travel card
misuse and absence without leave.
Cardholder: 5;
Total amount (number) of NSF checks: 20,052 (9);
Total amount charged-off (CO), in salary offset (SO) or voluntary fixed
pay (FP): CO ” $4,589; account in SO;
Grade: E-5;
Unit: Mobile Inshore Undersea Warfare, San Jose;
Credit history problems: Charged-off account prior to card issuance;
delinquencies since card issuance;
Documented disciplinary action: None; promotion to E-6 after charge-off;
pending investigation for desertion, theft and issuance of NSF checks.
Cardholder: 6;
Total amount (number) of NSF checks: 18,148 (13);
Total amount charged-off (CO), in salary offset (SO) or voluntary fixed
pay (FP): CO ” $7,229;
Grade: GS-11;
Unit: Navy Inventory Control Point – Mechanicsburg;
Credit history problems: Bankruptcies and charge-offs prior to card
issuance; delinquencies since card issuance;
Documented disciplinary action: None; cardholder retired.
Cardholder: 7;
Total amount (number) of NSF checks: 10,908 (16);
Total amount charged-off (CO), in salary offset (SO) or voluntary fixed
pay (FP): CO ” $1,381;
Grade: E-5;
Unit: Navy Seals, San Diego;
Credit history problems: None prior to card issuance; delinquencies
since card issuance;
Documented disciplinary action: Administrative action related to travel
card abuse; honorable discharge.
Cardholder: 8;
Total amount (number) of NSF checks: 8,231 (6);
Total amount charged-off (CO), in salary offset (SO) or voluntary fixed
pay (FP): SO ” $4,530; account paid off Sept. 2002;
Grade: E-8;
Unit: U.S. Marine Corps, Camp Lejeune;
Credit history problems: Charged-off account prior to card issuance;
Documented disciplinary action: Counseling; article 15 pending for
credit card misuse.
Cardholder: 9;
Total amount (number) of NSF checks: 5,785 (4);
Total amount charged-off (CO), in salary offset (SO) or voluntary fixed
pay (FP): CO ” $4,923l
Grade: E-4;
Unit: Navy and Marine Corps Reserve Center, Bessemer;
Credit history problems: Bankruptcies and judgment prior to card
issuance; serious delinquencies since card issuance;
Documented disciplinary action: None.
Cardholder: 10;
Total amount (number) of NSF checks: 3,250 (12);
Total amount charged-off (CO), in salary offset (SO) or voluntary fixed
pay (FP): CO ” $5,347; account in FP;
Grade: E-4;
Unit: Naval Air Warfare Center, Patuxent River;
Credit history problems: Bankruptcy and charged-off account prior to
card issuance; delinquencies since card issuance;
Documented disciplinary action: None.
Note: NSF includes those accounts with nonsufficient funds, closed
accounts, stop payment orders, and those accounts not located.
Source: GAO analysis.
[End of table]
The 10 cardholders in table 10 wrote a total of 107 checks that were
returned by Bank of America because they were NSF, drawn on closed
accounts, and/or had payments stopped for other reasons. These checks
totaled over $211,000. Eight of the 10 cardholders had significant
credit problems prior to card issuance, such as charged-off multiple
bankruptcies, charged-off credit card accounts, accounts in collection,
and serious delinquencies. Two of the cardholders did not have credit
problems prior to card issuance, one of which, experienced serious
financial problems after issuance of the Bank of America travel card.
The following provides detailed information on some of these cases.
* Cardholder #1 was a petty officer second class with the U.S. Pacific
Fleet in Honolulu. The cardholder wrote 12 NSF checks totaling more than
$61,000 for payment on his Bank of America travel card account. These
checks were written partly to cover charges incurred while on official
travel, but records showed that the cardholder made many more charges
at convenience stores, restaurants, gas stations, and travel agencies
in the vicinity of his hometown. An examination of the cardholder‘s
credit history also revealed that, prior to receiving his government
travel card in May 2000, the cardholder filed multiple bankruptcies and
had multiple charge-offs. Despite his financial history, the cardholder
was issued a standard card, with a credit limit of $5,000, instead of a
restricted card with a lower credit limit.
From March 2001 through December 2001, the cardholder wrote about one
NSF check a month, with three of these NSF checks totaling more than
$12,500 written in the month of December 2001 alone. Industry
regulations require that an account be credited immediately upon
receipt of a check. Consequently, when Bank of America posted the NSF
checks, the accounts appeared to have been paid, which provided credit
to the cardholder to make additional purchases. Thus, by writing NSF
checks, and submitting NSF payments over the phone, which Bank of
America had to credit to his travel card account, the petty officer was
able to, in effect, increase his credit limit to more than $20,000”a
practice known as ’boosting.“ He used each of these successive
increases in his effective credit limit to charge additional items on
his travel card. However, despite the repeated NSF checks written
throughout 2001, the individual was able to continue making charges
through December 2001.
Bank of America subsequently notified the cardholder‘s APC of the NSF
check problems. Because the cardholder was considered a good sailor, he
was given administrative counseling for potential fraud and abuses
related to his travel card. The terms of the administrative counseling
specified that the cardholder would face a court-martial and be
separated from the Navy in case of continued abuse of the credit card
or any other misconduct.
* Cardholder #5 is a petty officer (E-05) assigned to the Naval Reserve
Forces in San Jose. Prior to receiving the Bank of America travel card
in June 2000, the individual had a number of unpaid accounts with other
creditors. The individual was given a restricted card with a credit
limit of $2,000, which should have been issued in ’inactive“ status and
only activated when needed for travel. However, records showed that the
cardholder was able to make about 130 separate purchases and ATM
transactions in the vicinity of his hometown while not on official
travel. These transactions totaled more than $5,000. In addition, from
September 2000 through December 2001, the cardholder wrote eight NSF
checks and one stop payment check totaling $20,051 to Bank of America.
During fiscal year 2001, not a single valid payment was made to the
Bank of America for this account. The cardholder had an unpaid balance
of $4,922 at the time his account was charged off in July 2002. The
cardholder also had three other unrelated charge-offs in July 2002.
We found no documentation that disciplinary actions had been taken
against the cardholder. The APC assigned to the cardholder told us that
he had received little training for his APC responsibility, which is a
collateral duty. He recalled advising the cardholder once to pay off
his travel card balance. Although a Bank of America official informed
us that access to NSF check information had been available to APCs
since 2000, the APC said he was not aware of the NSF checks written by
the cardholder. The APC also informed us that he was not aware that the
cardholder‘s account was charged off until he was notified by Bank of
America. Despite having his Bank of America account charged-off and
other financial problems, the cardholder was recently promoted from
petty officer second class (E-5) to petty officer first class (E-6).
[Footnote 25] His account had been referred to salary offset.
[End of section]
Appendix IV: Abusive Travel Card Activity Where Accounts Were Charged
Off or Placed in Salary Offset:
Table 11: Examples of Abusive Travel Card Activity Where Accounts Were
Charged-Off or Placed in Salary Offset:
Cardholder: 1;
Grade: E-5;
Unit: U.S. Marine Corps Reserve, Camp Lejeune;
Total amount charged-off (CO) or in salary offset (SO): CO – $19,971;
Transactions contributing to chargeoff or salary offset: Did not use
reimbursement to pay travel card charges; numerous large cash
withdrawals;
Credit history problems: Account charge-offs, referral to collection
agency, and other account delinquency prior to card issuance;
Documented disciplinary action: None; courtmartial being considered.
Cardholder: 2;
Grade: E-7;
Unit: Naval Shore Intermediate Maintenance Activity, Mayport;
Total amount charged-off (CO) or in salary offset (SO): SO – 11,190;
Transactions contributing to chargeoff or salary offset: ATM
withdrawals totaling $15,000 from October 2000 through July 2001;
nearly $7,000 in cash and other expenses at Platinum Plus and Mr. Magoo
gentlemen‘s clubs;
Credit history problems: Bankruptcy, account charge-offs and serious
credit card delinquency prior to card issuance;
Documented disciplinary action: None.
Cardholder: 3;
Grade: E-4;
Unit: LeMoore Naval Air Station;
Total amount charged-off (CO) or in salary offset (SO): CO – 8,036;
Transactions contributing to chargeoff or salary offset: Over $6,250 of
computer equipment from Best Buy and other Web sites;
Credit history problems: Numerous unpaid accounts prior to card
issuance and charge-off on the American Express card;
Documented disciplinary action: Administrative discharge in lieu of
court-martial for misuse of the travel card and other offenses.
Cardholder: 4;
Grade: O-5;
Unit: Naval and Marine Corps Reserve Center, Washington, D.C.
Total amount charged-off (CO) or in salary offset (SO): SO – 5,678;
Transactions contributing to chargeoff or salary offset: Over $700
worth of candles and cookware; over $1,400 charged to D.B.
Entertainment, which owns Baby Dolls and other adult entertainment
clubs;
Credit history problems: Numerous account charge-offs, delinquencies,
and bankruptcy prior to card issuance;
Documented disciplinary action: None.
Cardholder: 5;
Grade: E-3;
Unit: Marine Forces Reserve, San Diego;
Total amount charged-off (CO) or in salary offset (SO): CO – 4,041;
Transactions contributing to chargeoff or salary offset: $3,800 at
local restaurants and $1,400 in ATM withdrawals over a 2-month period;
Credit history problems: Serious delinquencies, unpaid accounts, and
referrals to collection agencies prior to card issuance;
Documented disciplinary action: Court-martialed for misuse of the
government travel card; appeal ongoing.
Cardholder: 6;
Grade: O-6;
Unit: Naval and Marine Corps Reserve Center, Washington, D.C.
Total amount charged-off (CO) or in salary offset (SO): CO – 3,511;
Transactions contributing to chargeoff or salary offset: $2,000 in cash
withdrawals and nearly $1,500 at local grocery and drug stores;
Credit history problems: None;
Documented disciplinary action: None.
Cardholder: 7;
Grade: WS-10[A];
Unit: Puget Sound Naval Shipyard, Naval Sea Systems Command;
Total amount charged-off (CO) or in salary offset (SO): CO - 3,243;
Transactions contributing to chargeoff or salary offset: Numerous
personal charges, including groceries, gasoline, cash advances, and
$150 at Bethel Animal Hospital;
Credit history problems: None prior; serious credit card delinquencies
and mortgage foreclosure in 2001 and 2002;
Documented disciplinary action: Removal from employment due to
unauthorized absence and travel card misuse.
Cardholder: 8;
Grade: GS-12;
Unit: Naval Air Systems Command, Patuxent River;
Total amount charged-off (CO) or in salary offset (SO): SO – 1,202;
Transactions contributing to chargeoff or salary offset: Airline
tickets totaling $608;
Credit history problems: Serious delinquencies, account charge-offs,
mortgage foreclosure in 2000, bankruptcies prior to and since card
issuance;
Documented disciplinary action: None.
Cardholder: 9;
Grade: O-05;
Unit: Marine Forces Reserve, New Orleans;
Total amount charged-off (CO) or in salary offset (SO): SO – 1,674;
Transactions contributing to chargeoff or salary offset: Car rental
transactions and numerous charges at local restaurants;
Credit history problems: Serious delinquencies prior to and since card
issuance;
Documented disciplinary action: None.
Cardholder: 10;
Grade: E-06;
Unit: U.S. Marine Corps, Camp Lejeune;
Total amount charged-off (CO) or in salary offset (SO): CO – 672;
Transactions contributing to chargeoff or salary offset: Unauthorized
use of card for charges associated with permanent change of station
move;
Credit history problems: Serious delinquency and bad debts at the time
of card issuance;
Documented disciplinary action: None.
[A] Wage supervisors designation used to denote supervisory workers on
hourly salary.
Source: GAO analysis.
[End of table]
Eight of the 10 cardholders included in table 11 had significant credit
problems prior to card issuance, such as charged-off credit card
accounts, mortgage foreclosures, bankruptcies, serious delinquencies,
unpaid accounts, and referrals to collection agencies. One cardholder
had similar problems subsequent to issuance of the Bank of America
travel card.
* Cardholder #1 was a sergeant (E-05) with the U.S. Marine Corps Reserve
assigned at Camp Lejeune. Despite a history of credit problems, which
included several charged-off and delinquent commercial credit accounts,
Bank of America issued the cardholder a standard card, with a credit
limit of $10,000, in March 2000. The cardholder was deployed to Europe
in August 2000 and his credit limit was increased to $20,000. Within a
month of his deployment, the cardholder had charged $10,700 to the card,
including $8,500 in ATM withdrawals. Although the cardholder received
reimbursements for his travel expenses, he failed to settle his account
in full. In December 2000, the cardholder informed the APC that his
account was 30 days past due and promised to pay the full outstanding
balance. He again failed to do so and his account balance of $11,467
went delinquent in January 2001. The APC did not deactivate the travel
card account but put the cardholder in ’mission critical“ status and
raised the credit limit to $25,000 so the cardholder would have access
to funds to return to the United States. Consequently, when the account
was closed on February 8, 2001, the outstanding balance had increased
to $19,971. The APC admitted to us that he failed to carefully monitor
this account. No disciplinary action was taken against the cardholder,
who had returned to civilian life; however, judicial action against the
cardholder is pending. We have referred this matter to the DOD‘s Office
of Inspector General for appropriate action.
In addition, our review indicated that the cardholder might have filed a
fraudulent travel voucher in January 2001. This travel voucher claimed
reimbursement for expenses in Germany over the holiday period from late
December 2000 to early January 2001, allegedly for official purposes.
However, Bank of America data showed that the government travel card
belonging to this cardholder was used to make transactions in the
vicinity of the traveler‘s hometown during this holiday period. It
appeared that the cardholder might have returned to the United States
for the holiday, yet continued to claim expenses as if he was still in
Germany, a potentially fraudulent act.
* Cardholder #3 was a petty officer third class assigned to the LeMoore
Naval Air Station in California. Our review indicated that the
cardholder had numerous unpaid cable, medical, and communication
accounts and serious delinquency of more than $5,000 on his personal
credit card account prior to receiving the travel card. The unit to
which the cardholder was assigned had a policy of activating the
government travel card only when a cardholder travels. However, from
February through April 2001, while not on travel, the cardholder
purchased over $6,250 worth of electronic and computer equipment from
Best Buy and various Web sites using the government travel card. The
cardholder did not pay his balance and thus came to the attention of
the APC when his name appeared in the delinquency report. Upon
determining that the cardholder was able to use the card when not on
travel, the APC contacted Bank of America, which was unable to inform
the APC as to who had activated the account. The cardholder‘s balance
of more than $8,000 was charged off, and he was granted an
administrative separation in lieu of a court-martial for offenses
unrelated to the travel card misuse, including absence without leave,
making false statements, and stealing government property of less
than $100.
* Cardholder #4 was a commander (O-05) with the Naval Reserves assigned
to the Naval and Marine Corps Reserve Center in Washington, D.C. Our
review showed that Bank of America issued the cardholder a standard
card in May 2000, although the cardholder‘s credit history indicated
serious financial problems before and at the time of card issuance. For
example, in October 1998, the cardholder filed Chapter 7 bankruptcy with
only $37,169 in assets against $542,063 in liabilities. Further, in
January 2000, right before the Bank of America card was issued, an
account with a balance of more than $30,000 was charged off. This high-
ranking Navy officer continued, since the issuance of the government
travel card, a pattern of delinquencies on numerous accounts, and in
one instance had merchandise repossessed for nonpayment.
During fiscal year 2001 and the first 3 months of fiscal year 2002, the
cardholder used the government travel card to make numerous personal
transactions. Transactions included more than $1,400 to D.B.
Entertainment, which owns Baby Dolls Saloon, a gentlemen‘s club in
Dallas, and more than $700 to Wearever cookware and Partylite Gifts, a
manufacturer of candles and candle accessories. A delinquency letter was
sent to the cardholder on August 9, 2002, when the account was 120 days
past due; however, no documentation existed to indicate that any action
was taken prior to this date. Although the cardholder had been placed in
salary offset, no other disciplinary action had been taken against the
cardholder.
[End of section]
Appendix V: Abusive Travel Card Activity Where Cardholders Paid the
Bills:
Table 12 shows cases of travel card use for personal expenses where the
cardholder paid the bill.
Table 12: Examples of Abusive Travel Card Activity Where the
Cardholders Paid the Bills:
Cardholder: 1;
Unit: PEO Theatre Air and Surface, Naval Sea Systems Command,
Washington D.C.
Grade: GS-15;
Vendor: Seinpost Holdings;
Amount: Over $23,000 in charges;
Nature of transaction: 35 transactions for Internet gambling;
Documented disciplinary action: Written reprimand.
Cardholder: 2;
Unit: Mobile Inshore Undersea Warfare, Newport;
Grade: E-5;
Vendor: Cardholder‘s Limousine Service;
Amount: $8,622;
Nature of transaction: Bogus charges of $7,222 to cardholder‘s own
limousine company;
Documented disciplinary action: None.
Cardholder: 3;
Unit: Portsmouth Naval Shipyard;
Grade: WG-10[A];
Vendor: Herbal Life;
Amount: $6,758;
Nature of transaction: 17 purchases of vitamins and health supplements;
Documented disciplinary action: None.
Cardholder: 4;
Unit: Naval Undersea Warfare Center, Newport;
Grade: ND-05[B];
Vendor: Carnival Cruise;
Amount: $3,790;
Nature of transaction: Alaskan cruise for 2 for 7 nights;
Documented disciplinary action: None.
Cardholder: 5;
Unit: U.S. Naval Academy, Annapolis
Grade: MIDN[C];
Vendor: Best Buy;
Amount: $2,442;
Nature of transaction: Home electronics;
Documented disciplinary action: None.
Cardholder: 6;
Unit: U.S. Marine Corps, Camp Pendleton;
Grade: E-07;
Vendor: United Vacation;
Amount: $1,326;
Nature of transaction: United Airlines plane ticket for cardholder‘s
spouse;
Documented disciplinary action: None.
Cardholder: 7;
Unit: U.S. Marine Corps, Camp Pendleton;
Grade: E-06;
Vendor: DeAngelo Tax Service;
Amount: $800;
Nature of transaction: For preparation of 1997 through 2000 tax
returns;
Documented disciplinary action: None.
Cardholder: 8;
Unit: Naval Reserves Forces Command, Virginia;
Grade: E-07;
Vendor: Ticketmaster;
Amount: $460;
Nature of transaction: 4 concert tickets to the Backstreet Boys;
Documented disciplinary action: None.
Cardholder: 9;
Unit: Norfolk Naval Air Station;
Grade: E-04;
Vendor: Fredricks of Hollywood;
Amount: $184;
Nature of transaction: Women‘s lingerie;
Documented disciplinary action: None.
Cardholder: 10;
Unit: Naval Medical Research Center, San Antonio;
Grade: E-4;
Vendor: GTEAir;
Amount: $148;
Nature of transaction: Airplane telephone call;
Documented disciplinary action: None.
[A] Wage grade system used for workers who are on hourly salary.
[B] Scientific and engineering career path equivalent to GS-14 to GS-
15.
[C] Midshipmen are cadets in training to become Navy officers. They may
receive stipends while in college.
Source: GAO analysis.
[End of table]
[End of section]
Footnotes:
[1] U.S. General Accounting Office, Purchase Cards: Control Weaknesses
Leave Two Navy Units Vulnerable to Fraud and Abuse, GAO-01-995T
(Washington, D.C.: July 30, 2001); Purchase Cards: Control Weaknesses
Leave Two Navy Units Vulnerable to Fraud and Abuse, GAO-02-32
(Washington, D.C.: Nov. 30, 2001); and q Purchase Cards: Continued
Control Weaknesses Leave Two Navy Units Vulnerable to Fraud and Abuse,
GAO-02-506T (Washington, D.C.: Mar. 13, 2002).
[2] U.S. General Accounting Office, Travel Cards: Control Weaknesses
Leave Army Vulnerable to Potential Fraud and Abuse, GAO-02-863T
(Washington, D.C.: July 17, 2002).
[3] The travel card program includes both individually billed
accounts”that is, accounts held by and paid by individual cardholders
based on reimbursement of expenses incurred while on official
government travel”and centrally billed accounts that are used to
purchase transportation or for the travel expenses of a unit and are
paid directly by the government. This testimony covers transactions
charged to individually billed accounts only.
[4] This program, similar to a garnishment, allows DOD to collect
amounts owed by payroll deduction.
[5] For each cash withdrawal at ATMs, cardholders are charged a fee of
a set amount or percentage of the amount of the withdrawal.
[6] A more detailed explanation of each of these grades along with
their associated basic pay rates is provided in appendix II.
[7] We considered any scheme or pattern of activity related to the use
of the travel card, in apparent violation of federal or state criminal
code, as a potentially fraudulent activity.
[8] We considered abusive travel card activity to include (1) personal
use of the card”any use other than for official government
travel”regardless of whether the cardholder paid the bill and (2) cases
in which cardholders were reimbursed for official travel and then did
not pay Bank of America, thus benefiting personally. In both types of
activities in which the cardholder did not pay the bill, we considered
abuses to include those situations in which cardholders‘ accounts were
eventually charged off by Bank of America, or referred to salary offset
or a fixed pay agreement. Some of the travel card activity that we
categorized as abusive would be potentially fraudulent if it can be
established that the cardholder violated any element of federal or
state criminal code.
[9] Of the over 250 cardholders who wrote 3 or more NSF checks, 100 had
accounts that were eventually charged off or put in salary offset.
[10] Knowingly writing checks against closed accounts or writing three
or more NSF checks is potential bank fraud under 18 U.S.C. 1344.
Further, it is a violation of the Uniform Code of Military Justice
article 123a when a soldier makes, draws, or utters (verbally
authorizes) a check, draft, or order without sufficient funds and does
so with intent to defraud.
[11] Some cardholders whose accounts were charged off have since been
referred to the salary offset program or entered into fixed payment
agreement with Bank of America.
[12] MCCs are established by the banking industry for commercial and
consumer reporting purposes. Currently, about 800 category codes are
used to identify the nature of the merchants‘ businesses or trades,
such as airlines, hotels, ATMs, jewelry stores, casinos, gentlemen‘s
clubs, and theatres.
[13] Club cash is used to tip dancers, waitresses, and bartenders, but
cannot be exchanged for currency.
[14] Typically, the ATM limit for a 1-month cycle is set at $500 for a
standard card and $200 for a restricted card.
[15] We considered personal use to include (1) any transaction charged
to the government travel card that was not supported by a valid travel
order and (2) any transaction for which the Navy was unable to provide
supporting documentation. The following are the personal use estimates
for the 3 case study locations: Camp Lejeune, U.S. Marine Forces
Atlantic, 26.6 percent; Patuxent River Air Station, Air Systems
Command, 10.8 percent; and Puget Sound Naval Shipyard, Sea Systems
Command, 6.6 percent.
[16] Department of Defense Office of Inspector General , Acquisition:
Summary of DOD Travel Card Program Audit Coverage, D-2002-065
(Washington, D.C.: Mar. 18, 2002).
[17] Split disbursement is a payment method by which cardholders elect
to have all or part of their reimbursements sent directly to Bank of
America.
[18] For this delinquency rate calculation, the Navy is using the
number of delinquent accounts compared to the total number of active
accounts. The dollar amount method we used to calculate delinquency
rates is the industry standard and was also used by the DOD Charge Card
Task Force.
[19] Travel and Transportation Reform Act of 1998 (Public Law 105-264,
Oct. 19, 1998) includes requirements that federal employees use federal
travel charge cards for all payments of expenses of official government
travel and that employees be reimbursed within 30 days of submitting
proper travel vouchers. The act also allows for the offset of pay for
employees with undisputed travel card charge delinquencies in an amount
up to 15 percent of the amount of disposable pay of the employee for a
pay period.
[20] Federal Travel Regulation, 41 Code of Federal Regulations,
chapters 300-304, issued by the Administrator of General Services,
governs travel and transportation allowances and relocation allowances
for federal civilian employees.
[21] Standards for Internal Control in Federal Government (GAO/AIMD-00-
21.3.1) was prepared to fulfill our statutory requirement under 31
U.S.C. 3512 (c), (d), the Federal Managers‘ Financial Integrity Act, to
issue standards that provide the overall framework for establishing and
maintaining internal control and for identifying and addressing major
performance and management challenges and areas at greatest risk of
fraud, waste, abuse, and mismanagement.
[22] Guide to Evaluating and Testing Controls Over Sensitive Payments
(GAO/AFMD-8.1.2) provides a framework for evaluating and testing the
effectiveness of internal controls that have been established in
various sensitive payment areas.
[23] The universes from which we selected our samples included some
transactions that were not supported by travel orders or vouchers, such
as personal charges made by a cardholder. We excluded such transactions
from our selections used to test travel order, voucher, and payment
process controls. However, we included such transactions to project the
percentage of personal use transactions.
[24] At Camp Lejeune, we found that 38 of 143 transactions appeared to
be personal (projecting to an estimated 26.6 percent with a 95 percent
confidence interval from 19.5 percent to 34.6 percent). At Patuxent
River Air Station, we found that 13 of 120 transactions appeared to be
personal (projecting to an estimated 10.8 percent with a 95 percent
confidence interval from 5.9 percent to 17.8 percent). At Puget Sound
Naval Shipyard, we found that 8 of 121 transactions appeared to be
personal (projecting to an estimated 6.6 percent with a 95 percent
confidence interval from 2.9 percent to 12.6 percent).
[25] Subsequent to his promotion, the cardholder did not report to
duty. His command is taking action to declare him a deserter. He is
also a subject of law enforcement agencies‘ investigations.
[End of section]
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