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Report Details Fraud and Abuse at TVA

By Ed O'Keefe

A two-year review by the inspector general's office at the Tennessee Valley Authority finds that staffers made millions of dollars of questionable purchases on credit cards provided by the government-backed corporation.

Staffers spent more than $360,000 over two years on electronic items including X-Boxes and TiVos for an employee awards program and made questionable purchases of alcohol, beer and wine for training sessions and other meetings, despite TVA's policy against consumption during such events. Others purchased software to "erase evidence of Internet usage," according to the report.

TVA was established by Congress in 1933 to address infrastructural and economic needs across seven southern states. The executive agency is entirely self-financing and receives no funding from Congress. Revenues come from the sale of electricity and bonds.

The authority established its purchasing card program in 1995 for business-related expenses not exceeding $5,000. TVA's business service general manager approves and issues the cards to employees and any purchases exceeding the limit must be approved by superiors on a case-by-case basis. Employees can use them to buy materials, supplies, equipment, books or periodicals, or pay for memberships with professional organizations. Contrary to the pattern of misuse, the cards are not approved for expenses related to travel, vehicle leasing, heavy equipment rental or to buy computer hardware or software. Total annual purchases on the cards have fluctuated between $23 million and $87 million over the life of the program, according to the report.

The inspector general's office regularly reviews the program and the most recent investigation looked at transactions between Oct. 2005 and Dec. 2007. While TVA staff and management identified and reported some cases of waste, fraud and abuse, many went unreported. Investigators also discovered that some employees sought refunds or made balance transfers from TVA-issued cards because of fraudulent transactions, including $20,000 for United Airlines tickets, $2,500 paid to, and hundreds of dollars in fraudulent engineering and electrical costs. A former TVA vendor is serving a three-year prison term for fraudulently using a TVA card for nearly a month.

The latest inspector general report comes as TVA faces more than $800 million in costs to clean up a late December ash spill at its Kingston, Tenn. plant. Observers have also raised questions about last month's election of former Republican National Committee chairman Mike Duncan to serve as the next chairman of the TVA board of directors. The Tennessee native and former TVA board member has pledged to serve in a nonpartisan manner.

By Ed O'Keefe  | March 6, 2009; 6:10 AM ET
Categories:  Agencies and Departments  
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This story is worth the effort to flush out the truth where possible. Wouldn't it be fair to find out if the Mr. Tom Duncan has been supportive of public issues over partisan through his voting record? One might be able to assess who are those who voted him in and what their stances have been. This kind of information would bring back a little ethical credibility to the paper. As far as the difficulties in credibility at the TVA itself, one might be able to find who were the members who made spending beyond the charter of the company and find if they have made amends, have they left the TVA, etc.

The media has a job of flushing out the truth and its now more capable through the resources of internet than ever. Its my hope that that will be the #1 profit motive for The Post and every other media forum.

Posted by: folkwoman1234 | March 6, 2009 8:42 AM | Report abuse

How TVA tackles Fraud, Waste and Abuse (FW&A)

This may be the Tennessee Valley Authority's "perfect storm" propelling its more speedy demise. The confluence of the Kingston ash waste disaster and now this audit referred to in the article revealing basic "FW&A", demands an immediate change in management. TVA's CEO Tom Kilgore and his seven-member board should be removed.

See for my full article.

Ernest Norsworthy, former HUD employee

Posted by: emnorsworthy | March 6, 2009 10:26 AM | Report abuse

I'm sure that a program that erases disks could be useful at TVA. I had a friend who worked at the Savannah River Site who told me that their preferred method was to take the old disk drives and use sledgehammers to render them unreadable. I realize that the data on computers at the TVA might not be as critical as what's on drives at a former nuclear facility, however I am sure that some material on disk drives is confidential and destruction is essential for security reasons when the computers are decommissioned. We have read many stories of drives being sold on Ebay and then ending up in foreign countries where personal data was recovered. The same could happen with data that contains governmental secrets that we don't want foreign countries to know about, particularly if some of the old computer equipment is sold at auction in these economically sensitive times.

I'm not taking up for the fraudulent spending here, but that particular example could have a completely innocent explanation and should have been left out of the article. Of course, some of the former officials in the Bush administration just "contracted out" their data destruction. Karl and the RNC might very well find out how that worked out when the time is ripe.

Posted by: Perry3 | March 6, 2009 11:22 AM | Report abuse

Perry3, the statement in the article was that employees purchased computer programs not to erase hard disks but to "erase evidence of Internet usage". Visiting pornography sites is a common misuse of internet access by employees, and porn sites are often a source of viruses and spy programs. Many employers monitor internet usage because employees often ignore work to look at porn, play games, shop, read the news, etc., none of which is productive in terms of the job they were hired for, and are getting paid for. The programs purchased would interfere with this monitoring process.

Posted by: Nebreklaw01 | March 6, 2009 1:45 PM | Report abuse

Why is it surprising that a Government Sponsored monopoly would have corruption problems? When you don't have any competition it is much more likely that you will fall into inefficient and irresponsible patterns. This is just another relic of FDR's failed attempts to remedy the economic problems of the 1930's. We would all be better off if he hadn't crushed all of the private energy companies like Commonwealth and Southern that operated more efficiently at that time. The Government corrupts everything it touches or endorses.

Posted by: fallsmeadjc | March 6, 2009 2:28 PM | Report abuse

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