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Congressional hearing focuses on Pentagon credit card abuse

By Brad Wright, CNN Washington Bureau

WASHINGTON (CNN) -- Focusing on reports last week of millions of dollars in unpaid credit card bills run up by Defense Department employees, Sen. Charles Grassley, R-Iowa, Monday placed blame for the alleged spending sprees on former Pentagon officials.

Grassley said some 43,000 civilian and military employees have defaulted on more than $59 million in authorized travel charges. Travel cards are billed to the individual, but there are problems collecting the money in some cases.

Audits issued by the General Accounting Office, the investigative arm of the Congress, have shown some "sloppy accounting and non-existent internal controls leave DOD's financial resources vulnerable to theft and abuse," Grassley said in testimony before the House Government Reform Subcommittee on Financial Management.

"The government has no liability for unpaid balances (with travel cards), and the bank has no collection authority and earns no interest. And the losses are mounting fast," he said.

Grassley offered no criticism of the banks who agreed to such terms in their contracts with the government, and at the end of his prepared remarks, the senator insisted nothing he said should be taken as criticism of Defense Secretary Donald Rumsfeld.

Rather, he continued, "the problems I have addressed are the result of decisions made in previous administrations, and mainly former Deputy Secretary of Defense John Hamre," who served in the Clinton administration.

Hamre is now president of the Center for Strategic and International Studies, a Washington based think tank.

Hamre, through a spokesman, refused comment.

Monday's hearing aimed to focus attention on the credit card use of two units in the U.S. Navy that had been investigated by the GAO.

Defending the practices of the Navy units was Vice Admiral Keith Lippert, outgoing Commander of the Naval Supply Systems Command. "It is interesting to note," Lippert said, "That the commercial benchmark for vendor fraud and compromised card activity is .06 to .09 percent of the total dollars spent. The Department of the Navy's rate is less than half of this commercial benchmark."

Lippert said while the policies and procedures that guide the 12-year-old purchase card program are generally adequate, they probably could use some improvement. Lippert praised the program as a "business revolution" that "allows the purchase of commercially available supplies and services without the delay [that is characteristic of] the traditional purchasing process."

• Military credit cards rang up $9 billion in debt, documents show

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