Watchdogs warn of waste, fraud in storm relief efforts
Hundreds of millions lost in wake of Katrina
Congress is preparing to open the federal checkbook for Hurricane Harvey, but budget watchdogs say lawmakers should take a lesson from Hurricane Katrina, after taxpayers doled out $100 billion — and investigators are still finding massive fraud and waste 12 years later.
One inspector general this summer sounded an alarm over some $2 billion that New Orleans, the epicenter of Katrina damage, had asked the federal government to pony up to repair its sewers and streets. Auditors said the city’s infrastructure was a disaster even before Katrina and that it appeared the city was trying to take the feds for a ride.
That was the worst, but by no means the only instance of waste or fraud stemming from the 2005 storm. Auditors rooted out waste everywhere, regularly releasing reports identifying bogus projects that totaled hundreds of millions of dollars.
Top federal and state officials have already said Harvey’s price tag is likely to be higher than Katrina’s, leaving watchdogs fearful of another round of lavish spending as Congress rushes to get money out the door.
“Just like the ‘ fog of war,’ there is a ‘fog of disaster,’ and the country would be better served to mete out funds more deliberately,” Steve Ellis, vice president of Taxpayers for Common Sense, said in a statement.
Texas Gov. Greg Abbott has said at least $125 billion will be needed. A congresswoman from Texas has floated a $150 billion number.
The White House said it was preparing a first installment of perhaps $6 billion in emergency aid and will come back later with a bigger relief package.
But just as important as the price tag is how the money is spent by the Federal Emergency Management Agency, according to the watchdogs.
“Speed and haste is the enemy in this case in terms of accountability,” said Leslie Paige, vice president for policy and communications at Citizens Against Government Waste.
“It behooves everyone in this process going forward to incorporate, early on, safeguards and accountability standards that are going to be met and reporting standards,” she said.
Even when accountability standards are in place, they don’t always work.
One example from Katrina was Holy Cross School, an all-boys parochial school in New Orleans that was destroyed.
The school rebuilt a spectacular new campus with nearly $90 million in federal assistance. But the Homeland Security inspector general in 2015 said the school broke federal guidelines on several fronts and that FEMA should demand repayment of more than $80 million.
The school fought the repayments, and Clancy Dubos, who was chairman of the school’s board of directors, explained in an online posting this year how they prevailed by refusing to accede to anything less than they wanted.
“We figured we just had to wear you guys out,” Mr. Dubos recalled telling a FEMA bureaucrat. “He smiled and nodded in agreement.”
The biggest Katrina boondoggle uncovered so far, according to the Homeland Security inspector general, is New Orleans’ plans to spend $2.04 billion of federal money to repair the city’s sewer system.
In a July report, the inspector general said the city’s 100-year-old system had been in need of repairs long before the storm and that had sewers been maintained correctly, the storm would not have caused such damage.
“This massive investment — representing almost $5,200 for every man, woman, and child in New Orleans — while perhaps sorely needed, is not eligible for a FEMA disaster grant because there is no evidence that the damage was caused as a direct result of the storms,” acting Assistant Inspector General John E. McCoy II said in the report.
In 2006, a year after the storm, the Government Accountability Office also flagged wasteful spending and pointed out the difficulties FEMA had in trying to claw back bogus payouts.
The Katrina experience left a number of Republicans gun shy about massive federal spending, and that played out in the aftermath of the 2012 Hurricane Sandy that struck the Northeast.
Cara Crawford tried to ride her bike to church in Vidor, Texas. Texas Gov. Greg Abbott has said at least $125 billion will be needed for storm relief and others have estimated more.