Sunday, December 16, 2018
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New Investigation Details Pentagon Waste, Fraud and Abuse

Interview with award-winning investigative reporter Dave Lindorff, conducted by Scott Harris

Although Congress ordered all government agencies to undergo federal audits in the 1990s, the Defense Department – which takes in more tax dollars by far than any other government department, had for the past 25 years stubbornly refused to comply. However after 1,200 accountants and analysts recently completed a first-time, yearlong inspection of the Pentagon’s books, all but two sections of the massive agency failed the audit, which means that money spent and assets purchased, couldn’t be properly accounted for.
It’s ironic that as the U.S. has accumulated a record deficit, the Pentagon with a current FY 2018 budget of about $700 billion, asks for ever greater amounts of money that it can’t seem to responsibly track.
Between The Lines’ Scott Harris spoke with Dave Lindorff, an award-winning independent journalist who recently completed an investigation of the Pentagon audit findings for the Nation magazine. His article titled “The Pentagon’s Massive Accounting Fraud Exposed,” found that the Defense Department has routinely employed “accounting tricks” to make it appear that the military spends and needs more money than it actually does.  Lindorff contends that the Pentagon’s misleading accounting practices has accumulated as much as $100 billion in an unaccountable slush fund.

DAVE LINDORFF: The Pentagon has not been audited since the act was passed in 1990 requiring all agencies to have auditable budgets and to be audited every year. And you know, the funny thing is they always have been giving me excuses that “Oh, we have these legacy systems that don’t talk to each other, you know, and stuff.” But they’ve been saying that since back when I was using a Kaypro computer and you know, they, get so much money, they could have bought several Watson computers from IBM and done the whole thing, you know. What I was told by my sources – some on the record, some not on the record – is that the Pentagon doesn’t want to be audited and it has not wanted to be audited and this is all about not being audited.

So Congress finally threw up its hands and said, all right, we’re going to do this. And they voted for a $900 million audit bringing in these top firms this year to do the 2018 budget – the big E & Y (Ernst & Young) and PricewaterhouseCoopers and so on – to audit the Pentagon and they had an army of 1,200 guys, women and men going through the Pentagon books, auditing it, and they produced on Nov. 15th their results, which were: “We can’t do this.” They said the numbers were so confusing and obtuse and obscure or obscuratist that they said they could not do an audit. They could only come up with a list of thousands of deficiencies that have to be fixed before they can even do an audit and that that’s going to take years because the numbers are so screwy and you need prior year reliable, you know, documents in order to do a current year audit. So it’s going to be years; even if the Pentagon really wants to have an audit and since it really doesn’t want to have an audit, it could take even longer.

So there we are with this unit of government that accounts for 54 percent of every tax dollar that people spend or pay and we can’t tell how they spend their money. And not only that, my story was about how they’ve been making up the numbers in their financial statements out of whole cloth, so they aren’t even real numbers. And their own internal agency, the Office of Inspector General has continually complained that the numbers are made up and don’t have any supporting ledger documents to back them up. And yet it continues to happen year after year and nobody gets fired. Nobody gets indicted. Nothing.

BETWEEN THE LINES: Well, Dave, we’re almost out of time. I wanted to ask you, is there any chance that the incoming Democratic majority in the House of Representatives will have a different relationship with the Pentagon? More scrutiny holding their feet to the fire and demanding answers about how taxpayer dollars are being spent or wasted or abused?

DAVE LINDORFF: I would say no, just because, you know, maybe a few progressives had been elected who are anti-military, but let’s face it, the Democrats have been as much of a war party as the Republicans and has been, you know, very generous at funding the Pentagon over the years. So, I mean, just on this story, I tried for months to get a comment on it from Sen. Sanders and never got even a call back. And we tried through sources at The Nation, you know, my editor, Mark Hertsgaard, a great editor who really worked hard on this piece, said, “Oh, we’ll get Sanders, you know, The Nation’s really friends with Sanders.” Nope. Didn’t work. Even tried John Nichols to make contact and it didn’t work. He ducked it. And I tried. I’ve been trying to get (U.S. Rep.) Tulsi Gabbard, (D-Hawaii,) and so far haven’t gotten a call back even from her press office and she’s one of the, you know, more daring critics of the Pentagon.

BETWEEN THE LINES: One of the most alarming pieces of information I’ve found in your piece was the existence of some kind of $100 billion slush fund that the Pentagon has through “creative” accounting, which you say likely funds foreign operations below the radar without congressional authorization. Say a quick word about that, if you will.

DAVE LINDORFF: Yeah. This happened actually in 1980s and (military analyst Franklin C.) Spinney told me about it. They had a fund that was based on falsely estimating the amount of expected inflation. They were using a 30 percent estimate, and then when they wouldn’t have that kind of inflation, they would pocket the difference which quickly added up to about $100 billion and they tucked it away in places that it couldn’t be found.

And then he thinks it got used for funding Iran Contra and other things. He suspects, and so do others that I talked to, that the same thing is happening here where they’re saying they’re spending all the money each year and getting more, but they aren’t actually spending all the money and then they do something called “nippering” where they cut out pieces of money. They reclassify one-year money that’s supposed to be returned to Congress if it’s not spent, turn it into five-year money that’s for things like weapons projects and then hide it and it builds up and then they have it without any oversight because nobody knows it’s there. That’s very dangerous.

Visit Dave Lindorff’s online magazine, thiscantbehappening.net.

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