WASHINGTON – After failing to heed warnings from Sen. Chuck Grassley (R-Iowa) 25 years ago, the Department of Defense (DOD)’s faulty accounting system recently fell prey to a multi-million-dollar embezzlement scheme. Grassley, who first alerted DOD of the potential for this abuse in 1998, is once again sounding the alarm on the DOD’s deficient oversight of taxpayer dollars and calling for accountability.

Grassley is demanding an explanation from the Army and DOD’s Defense Finance and Accounting Service (DFAS) after both failed to catch civilian employee Janet Mello’s years-long theft of $103.3 million. Mello shuttled the stolen funds to a sham company she disguised as a vendor serving military families. The Army lacked the proper internal controls to verify the movement and use of the funds, mirroring the very same accounting issue Grassley brought to DOD’s attention in a 1998 report titled, “Joint Review of Internal Controls at Department of Defense.”

“Allowing $103.3 million of precious taxpayer dollars to flow freely into Mello’s personal coffers does not qualify as a ‘slipup.’ It’s an unacceptable breach of internal controls and watchful oversight,” Grassley wrote to the Army. “Those responsible should be held accountable. With internal controls that are weak or non-existent, it’s incumbent on every manager and overseer to be vigilant and watch for warning signs or irregularities. From my perspective, the magnitude of payments to Mello’s fake company sticks out like a sore thumb.”

“What we are wrestling with here are the results of an age-old Pentagon dilemma – weak or non-existent internal controls,” Grassley continued. “Without a modern, fully-integrated accounting system that can capture and track every transaction as it occurs, internal controls have to be practiced the hard way – manually.”

Read Grassley’s letter to the Army HERE, and to DFAS HERE.

Background

All federal agencies have been required since 1990 to conduct annual audits, yet DOD is the only agency that has failed to pass a single one. Grassley’s bipartisan Audit the Pentagon Act would require DOD to pass a full, independent audit and direct any DOD component that fails to complete a clean audit to return one percent of its budget to the Treasury.

Find video of Grassley discussing DOD’s wasteful spending and lax finances HERE.

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