GAO: Navy travel card control weak

"Control Weaknesses Leave Navy Vulnerable to Fraud and Abuse"

Despite several years of investigation and oversight, the Navy's control over its travel card program is still weak and vulnerable, according to a recent General Accounting Office report.

GAO conducted an investigation into the use of the charge cards at Navy installations from early 2001 to mid-2002. A review of three randomly selected installations showed that control and oversight weaknesses continue to leave the program vulnerable to fraud and abuse.

The report, issued in late December, found that as of March 31, 2002, more than 8,000 Navy cardholders had $6 million in delinquent debt. For the prior two years, the Navy's delinquency rate was about 12 percent, slightly lower than that of the Army's travel card program. The Army program had the highest delinquency rate of any federal agency.

"Since November 1998, Bank of America has charged off nearly 14,000 Navy accounts totaling almost $17 million, and placed many more in a salary offset program similar to garnishment," the report read. "The Navy's practice of authorizing issuance of the travel card to virtually anyone who asked for it compounded these problems."

Government travel cards were used for inappropriate transactions at legalized brothels, gentlemen's clubs, cruise lines, jewelry stores, and sporting and theater venues. During the period under audit, 50 Navy employees purchased more than $13,000 in prostitution services from two known legalized brothels. An additional 137 individuals charged more than $29,000 at gentlemen's clubs.

The six major commands with the highest delinquency rates — ranging from 22 percent to 12 percent — as of March 31, 2002, were the Naval Reserve Force, the U.S. Atlantic Fleet, the U.S. Pacific Fleet, U.S. Marine Corps Forces Pacific, U.S. Marine Corps Forces Atlantic and Marine Forces Reserve.

As a result of similar findings from the Army and Navy travel card programs, Congress has taken actions in the recent Defense Appropriations Act to require the Defense secretary to establish guidelines for disciplinary actions to be taken against cardholders for improper, fraudulent or abusive use of the cards and to deny issuance of government travel cards to individuals who are not creditworthy.

One major security risk highlighted in the report was that fully half of the delinquent cardholders still had active secret or top-secret clearances as of August 2002.

GAO praised the Navy and the Defense Department for taking several punitive actions to address the Navy's high delinquency and charge-off rates, but the report recommended that more needs to be done to prevent misuse in the first place.

GAO is expected to complete a review of the Air Force's travel card program soon. A recent audit of Air Force purchase cards revealed about $12 million in delinquent debt charged off by Bank of America.