Transparency credited for preventing Recovery Act fraud

The high level scrutiny on the allocation, management and spending of Recovery Act funds resulted in unprecedented levels of transparency and minimized the risk of fraud, waste and abuse, according to the former chairman of the Recovery Accountability and Transparency Board.

Speaking at a June 12 panel discussion organized by the Partnership for Public Service on lessons learned of the Recovery Act, Earl Devaney highlighted how the increased attention – by citizens, politicians and media alike -- on where Recovery Act money was spent deterred potential fraud from occurring.

“With that kind of money, the fraud was extraordinary low,” he said. “I think that the biggest factor was transparency; there was so much sunlight on this money that the bad guys just said to themselves, ‘We’ll just continue to steal Medicaid money. What the heck, it’s pretty easy!’”

Congress passed the Recovery Act in 2009 as a response to the economic crisis. The primary goals were to boost job growth, spur economic activity and promote unprecedented levels of accountability and transparency in federal spending.

The transparency piece “is a force multiplier,” Devaney said. “On the accountability side, I think that the biggest lesson learned, is the shift from merely detecting fraud, waste and abuse to trying to actually prevent it.”

Devaney, who formerly served as an inspector general at the Interior Department, said when the goal is just to detect fraud and abuse, IG are “naturally very aggressive” about performing that mission. However, when the objective is to prevent fraud, agencies and IGs come together for “remarkable collaboration,” he said.

“Both of them came eagerly to the table, trying to prevent loss in the pre-award stage,” he said.

President Barack Obama in February 2009 named Devaney to lead the Recovery Accountability and Transparency Board, a position he held until 2012 when he announced his retirement.