The Sydney Morning Herald last Saturday had an extraordinary story of how local US telephone carriers shut down FBI wire taps because of late and no payments from the FBI with subsequent loss of sensitive intelligence. The report cites various US Department of Justice, Office of the Inspector General (OIG) audit investigations. In 2002 and again in 2004 the OIG also raised some difficult questions about missing guns and laptops.
As part of our audit, we analyzed 990 telecommunication surveillance payments made by 5 field divisions and found that over half of these payments were not made on time. We also found that late payments have resulted in telecommunications carriers actually disconnecting phone lines established to deliver surveillance results to the FBI, resulting in lost evidence including an instance where delivery of intercept information required by a Foreign Intelligence Surveillance Act (FISA) order was halted due to untimely payment.
Moreover, our audit found that many FBI employees did not know how to handle refunds of confidential case fund money. One technical agent told us that he sends refunds back to the carrier attached to other telecommunication surveillance bills and requests that they be applied to the remitted bill. Another official told us that he does not know why he receives refunds and has a difficult time matching them to the proper case. In some cases, special agents told us they returned refund checks to the third party draft office simply because they did not know what else to do.
we also examined the personnel and security files of 35 field division employees who had daily access to confidential case funds. This examination revealed that nearly half of the sampled employees had indications of personal financial problems, such as late loan payments and bankruptcies. As demonstrated by our review of FBI files, the 5-year background investigation program may be helpful in identifying employees who have financial hardships or concerns. Beyond identification, however, the FBI has not developed or implemented procedures that ensure employees with financial concerns are not placed in situations where they are responsible for approving and handling confidential case funds without enhanced supervision.
FBI’s FMS lacks the controls necessary to prevent theft and, as such, is not an effective financial system for FBI employees to use to account for and approve confidential case funds. In addition, the audit found that the FBI has not established sufficient guidance and consistent procedures necessary to track and pay telecommunication surveillance bills accurately and timely. The audit also identified areas where field division oversight should be improved to further mitigate the risk of improper use of confidential case funds.
SOX has really forced the private sector to think a lot about corporate governance but this latest report is a timely reminder that the workings of the public sector are also too often in need of better fiscal and administrative controls. And there can sometimes be a great deal more at stake than shareholder value.