| 00:00:218 min. |
McCaul, Michael - U.S. Representative, [R] Texas
The Homeland Security subcommittee on investigations will come to order. With the concurrence of the ranking minority member, pursuant to... |
| 00:08:407 min. |
Etheridge, Bob - U.S. Representative, [D] North Carolina
Thank you, Mr. Chairman. Let me thank the witnesses for being here today. Even as we have the first tropical storm of the season approaching... |
| 00:16:1412 sec. |
McCaul, Michael - U.S. Representative, [R] Texas
Let me say, we do intend to have hearings in the future on this issue. The Chair now recognizes the ranking member of the full committee,... |
| 00:16:264 min. |
Thompson, Bennie - U.S. Representative, [D] Mississippi
Thank you very much, Mr. Chairman. I appreciate the opportunity to participate in these hearings. I thank the ranking member for also making... |
| 00:21:21 |
McCaul, Michael - U.S. Representative, [R] Texas
The ranking member is recognized. |
| 00:21:219 sec. |
Etheridge, Bob - U.S. Representative, [D] North Carolina
I ask unanimous consent Ms. Jackson-Lee be able to sit in. She is a member of the full committee. |
| 00:21:3044 sec. |
McCaul, Michael - U.S. Representative, [R] Texas
Without objection, so ordered. Let me remind members that under our committee rules, opening statements are limited to the Chair and ranking members.... |
| 00:22:148 min. |
Kutz, Gregory D. - Managing Director
STATEMENT OF GREGORY D. KUTZ Mr. Chairman and members of the subcommittee, thank you for the opportunity to discuss fraud and abuse related... |
| 00:30:1617 sec. |
McCaul, Michael - U.S. Representative, [R] Texas
Thank you, Mr. Kutz. The Chair now recognizes Ms. Donna Dannels, Acting Deputy Director, Office of Recovery for FEMA. STATEMENT OF... |
| 00:30:3329 sec. |
Dannels, Donna M. - Acting Deputy Director
Good morning, Chairman McCaul, Ranking Member Etheridge, and committee members. My name is Donna Marie Dannels, and I am the acting deputy... |
| 00:31:02 |
McCaul, Michael - U.S. Representative, [R] Texas
Without objection, so ordered. |
| 00:31:027 min. |
Dannels, Donna M. - Acting Deputy Director
FEMA appreciates the opportunity presented by this subcommittee to discuss the changes which FEMA has already implemented in delivering... |
| 00:38:079 sec. |
McCaul, Michael - U.S. Representative, [R] Texas
Thank you, Ms. Dannels. The chair now recognizes Mr. Joseph Becker, senior vice president for preparedness and response, American Red Cross. STATEMENT... |
| 00:38:168 min. |
Becker, Joseph C. - Senior Vice President
My name is Joe Becker, and I lead the American Red Cross's disaster relief. I thank you for the invitation to be here. I appreciate the... |
| 00:46:56 |
McCaul, Michael - U.S. Representative, [R] Texas
Thank you, Mr. Becker. The chair now recognizes the ranking member. |
| 00:46:5612 sec. |
Etheridge, Bob - U.S. Representative, [D] North Carolina
Mr. Chairman, I ask unanimous consent that Mr. Taylor, whose State was hard hit in this, be allowed to sit in the panel with us. |
| 00:47:083 min. |
McCaul, Michael - U.S. Representative, [R] Texas
Without objection, so ordered. Let me say, first, I recognize the magnitude of the challenges these hurricanes presented, and I applaud... |
| 00:50:132 min. |
Dannels, Donna M. - Acting Deputy Director
Thank you. And I do want to talk about some of the specific things that we have done and that were in process when Hurricane Katrina struck.... |
| 00:52:1947 sec. |
McCaul, Michael - U.S. Representative, [R] Texas
Thank you. If I could just comment, as we in the Congress appropriate billions of dollars towards this disaster relief assistance, and as... |
| 00:53:061 min. |
Ryan, John J. - Assistant Director
That is fine. Thank you, Mr. Chairman. In this particular case, when we started looking at this problem, we wanted to know what had been... |
| 00:54:22 |
McCaul, Michael - U.S. Representative, [R] Texas
Mr. Kutz, do you have any comments? |
| 00:54:221 min. |
Kutz, Gregory D. - Managing Director
Yes, I would agree with you on the choice issue. I don't think our Nation's fiscal condition allows us a choice between allowing a billion... |
| 00:55:4519 sec. |
McCaul, Michael - U.S. Representative, [R] Texas
Thank you. And I think what I was most appalled with is not only the magnitude of the amount of money, the fraud, but where it was spent,... |
| 00:56:042 min. |
Etheridge, Bob - U.S. Representative, [D] North Carolina
Thank you Mr. Chairman. You know, as has already been stated, everyone here today is focused on waste, fraud and abuse, which, unfortunately,... |
| 00:58:103 min. |
Dannels, Donna M. - Acting Deputy Director
Thank you. And there are a number of questions on the table for me to address, and I will try to get to all of them. I appreciate... |
| 01:02:04 |
Etheridge, Bob - U.S. Representative, [D] North Carolina
That is good. |
| 01:02:041 min. |
Dannels, Donna M. - Acting Deputy Director
Six occasions, and it was never at $2,000. It had always been at $500. We will go back to a more conservative amount. However, again, our... |
| 01:03:157 sec. |
Etheridge, Bob - U.S. Representative, [D] North Carolina
Thank you. Thank you, Mr. Chairman. I have a follow up if we have another round. I just want to get my question in before-- |
| 01:03:22 |
McCaul, Michael - U.S. Representative, [R] Texas
Chair now recognizes the sherriff from Washington State, my colleague, Mr. Reichert. |
| 01:03:221 min. |
Reichert, David "Dave" - U.S. Representative, [R] Washington
Thank you, Mr. Chairman. First, I want to talk about what we are going to do. I think we are going to try and help you. We are from the... |
| 01:05:1754 sec. |
Ryan, John J. - Assistant Director
Under the situation that we are presently in right now, there was an agreement that they would form a task force which the Attorney General... |
| 01:06:11 |
Reichert, David "Dave" - U.S. Representative, [R] Washington
Gets you fired up a little bit; doesn't it? |
| 01:06:1114 sec. |
Ryan, John J. - Assistant Director
It does primarily because law enforcement gets blamed for not doing enough at the end when people are stealing it. And my problem is, I... |
| 01:06:25 |
Reichert, David "Dave" - U.S. Representative, [R] Washington
Yes. |
| 01:06:25 |
Ryan, John J. - Assistant Director
If you take away the opportunity to commit fraud, you are going to cut down the number of cases you have to refer. |
| 01:06:25 |
Reichert, David "Dave" - U.S. Representative, [R] Washington
Right. |
| 01:06:2519 sec. |
Ryan, John J. - Assistant Director
If you talk about the money that's going to prosecute somebody for $2,000 when you could have put controls in place to stop that, I think... |
| 01:06:44 |
Reichert, David "Dave" - U.S. Representative, [R] Washington
So we are following up on these cases that these crooks ripped off the American public. |
| 01:06:447 sec. |
Ryan, John J. - Assistant Director
Yes, sir. |
| 01:06:51 |
Reichert, David "Dave" - U.S. Representative, [R] Washington
We are also looking at some employees? |
| 01:06:5110 sec. |
Ryan, John J. - Assistant Director
I think that is a question that needs to be addressed in regards to being able to get the data on employees. |
| 01:07:0118 sec. |
Reichert, David "Dave" - U.S. Representative, [R] Washington
Okay. I just want to ask another question about what--what happened prior to September 11? Did you have these sorts of things happening,... |
| 01:07:19 |
Dannels, Donna M. - Acting Deputy Director
Are you addressing me, sir? |
| 01:07:19 |
Reichert, David "Dave" - U.S. Representative, [R] Washington
Yes, ma'am. |
| 01:07:1920 sec. |
Dannels, Donna M. - Acting Deputy Director
Our fraud rate and, what I would say, our overpayment rate is typically very low. We do a review process after every single disaster. I... |
| 01:07:399 sec. |
Reichert, David "Dave" - U.S. Representative, [R] Washington
But you have experienced the fraud, waste and abuse prior to September 11. It happens when you go into an area and you try to help people.... |
| 01:07:48 |
Dannels, Donna M. - Acting Deputy Director
I think it is inevitable. Our job is to minimize it. |
| 01:07:481 min. |
Reichert, David "Dave" - U.S. Representative, [R] Washington
Have you ever experienced bad Social Security numbers being presented to your office before? Have you ever experienced bogus addresses before?... |
| 01:08:5521 sec. |
Dannels, Donna M. - Acting Deputy Director
Sir, I don't think that we did know that the levies would break, and there would be hundreds of thousands of people who would be airlifted... |
| 01:09:1614 sec. |
Reichert, David "Dave" - U.S. Representative, [R] Washington
The question that I wanted answered, please, was, you had systems in place before September 11, is that not true, to address some of the... |
| 01:09:3014 sec. |
Dannels, Donna M. - Acting Deputy Director
We have those systems in place. They continue to be improved upon, and they generally work very well. Again, the level of overpayments is... |
| 01:09:4437 sec. |
Kutz, Gregory D. - Managing Director
Congressman, can I clarify something there? Because you have a big reconciliation problem. She is saying 1 to 2 to 3 percent, which is what... |
| 01:10:21 |
Reichert, David "Dave" - U.S. Representative, [R] Washington
Yes. |
| 01:10:2111 sec. |
Kutz, Gregory D. - Managing Director
So I think we need to clarify the prior fraud rates if we are talking about the same things for prior disasters. That would not represent... |
| 01:10:3226 sec. |
Reichert, David "Dave" - U.S. Representative, [R] Washington
Mr. Chairman, if I could just follow up very quickly. Sir, you mentioned call centers and Western Union and new innovative ideas and... |
| 01:10:581 min. |
Becker, Joseph C. - Senior Vice President
Yes, sir, we did, and the conversations that we had in the earliest days to deliver service, we were focused on that issue. And we knew... |
| 01:12:07 |
Reichert, David "Dave" - U.S. Representative, [R] Washington
Thank you. |
| 01:12:0728 sec. |
McCaul, Michael - U.S. Representative, [R] Texas
Thank you. I would say, the submitted 16 percent equals $1 billion or more dollars to the taxpayers, 7,000 cases referred for prosecution.... |
| 01:12:351 min. |
Thompson, Bennie - U.S. Representative, [D] Mississippi
Thank you very much, Mr. Chairman. Ms. Dannels, I personally think you have been put under the bus by being brought here. We absolutely... |
| 01:13:4727 sec. |
Dannels, Donna M. - Acting Deputy Director
I think that we are making great strides on--I am sorry. I don't remember who made the comment about lack of internal controls. We have... |
| 01:14:14 |
Thompson, Bennie - U.S. Representative, [D] Mississippi
I recognize you are under the bus. So now you know-- |
| 01:14:1410 sec. |
Dannels, Donna M. - Acting Deputy Director
So now you are going to drive a little faster. I understand. |
| 01:14:248 sec. |
Thompson, Bennie - U.S. Representative, [D] Mississippi
Yes. Do you think we can do it with 82 percent staffing? Yes or no? |
| 01:14:32 |
Dannels, Donna M. - Acting Deputy Director
I don't know the answer to that question. |
| 01:14:327 sec. |
Thompson, Bennie - U.S. Representative, [D] Mississippi
Well, I am going to have to speed up on the bus then. |
| 01:14:39 |
Dannels, Donna M. - Acting Deputy Director
You are going to put it in reverse. I can tell. |
| 01:14:3910 sec. |
Kutz, Gregory D. - Managing Director
Congressman, can I make one point on that just-- and I think Ms. Dannels could probably add to this. A lot of the fraud prevention efforts... |
| 01:14:49 |
Thompson, Bennie - U.S. Representative, [D] Mississippi
I am coming to that. |
| 01:14:49 |
Kutz, Gregory D. - Managing Director
All right. |
| 01:14:4912 sec. |
Thompson, Bennie - U.S. Representative, [D] Mississippi
We have a contract. Did you participate in the contracting that is presently in force? |
| 01:15:01 |
Dannels, Donna M. - Acting Deputy Director
We have a great number of contracts. |
| 01:15:01 |
Thompson, Bennie - U.S. Representative, [D] Mississippi
ChoicePoint. |
| 01:15:017 sec. |
Dannels, Donna M. - Acting Deputy Director
ChoicePoint, yes. |
| 01:15:08 |
Thompson, Bennie - U.S. Representative, [D] Mississippi
You did. |
| 01:15:08 |
Dannels, Donna M. - Acting Deputy Director
Yes. |
| 01:15:08 |
Thompson, Bennie - U.S. Representative, [D] Mississippi
Any reason that was a sole source contract? |
| 01:15:0812 sec. |
Dannels, Donna M. - Acting Deputy Director
That was my understanding while I participated-- |
| 01:15:207 sec. |
Thompson, Bennie - U.S. Representative, [D] Mississippi
What was the reaction now for it being a sole source contract rather than competitively bid? |
| 01:15:2716 sec. |
Dannels, Donna M. - Acting Deputy Director
My understanding is we accessed that from a schedule where DHS already had that under contract. So we were leveraging something that was... |
| 01:15:437 sec. |
Thompson, Bennie - U.S. Representative, [D] Mississippi
How is it not a sole source contract? Was it competitively bid? |
| 01:15:5018 sec. |
Dannels, Donna M. - Acting Deputy Director
The Department of Homeland Security used a schedule that was in place that allows--my understanding is that there is qualifying that is... |
| 01:16:088 sec. |
Thompson, Bennie - U.S. Representative, [D] Mississippi
Why did we pick ChoicePoint if--were there any other people on the schedule? |
| 01:16:1611 sec. |
Dannels, Donna M. - Acting Deputy Director
That was already in place in DHS. We simply used what was in place. FEMA used what was in place at DHS, so I don't know the answer as to... |
| 01:16:2723 sec. |
Thompson, Bennie - U.S. Representative, [D] Mississippi
So you see--you are still under the bus. Can you tell me if it is in place with this contract that if they perform poorly and we identify... |
| 01:16:508 sec. |
Dannels, Donna M. - Acting Deputy Director
I don't know the answer to that question, but the 16 percent doesn't relate back to ChoicePoint either. |
| 01:16:58 |
Thompson, Bennie - U.S. Representative, [D] Mississippi
You mean to tell me, if we hire a contractor-- |
| 01:16:5814 sec. |
Dannels, Donna M. - Acting Deputy Director
That was not--that contract was not completely in place. It was in place only on Internet registrations and not those on the 800 number... |
| 01:17:1224 sec. |
Kutz, Gregory D. - Managing Director
Congressman, I think that is an important point because ChoicePoint had a menu of options for them to pick that included many more comprehensive... |
| 01:17:369 sec. |
Thompson, Bennie - U.S. Representative, [D] Mississippi
Can you tell me why we didn't exercise the menu before us, Ms. Dannels? |
| 01:17:456 sec. |
Dannels, Donna M. - Acting Deputy Director
I have to ask Mr. Kutz for clarification on the menu. Are you referring to not doing it on the 800 number? |
| 01:17:5122 sec. |
Kutz, Gregory D. - Managing Director
No. Also, they have, address validation is another menu item. The identity validation, she is correct; I mean, they have hired them to do... |
| 01:18:1328 sec. |
Dannels, Donna M. - Acting Deputy Director
We now have home ownership occupancy with ChoicePoint also in place. The reason we did not before is because we accomplished that at the... |
| 01:18:4122 sec. |
Thompson, Bennie - U.S. Representative, [D] Mississippi
Last question, Mr. Chairman. Ms. Dannels, can you tell me how many people have been terminated for approving vouchers for payment or anything... |
| 01:19:03 |
Dannels, Donna M. - Acting Deputy Director
Are you talking about Federal employees? People terminated-- |
| 01:19:0321 sec. |
Thompson, Bennie - U.S. Representative, [D] Mississippi
Well, if somebody inspected a cemetery and said that that cemetery met the criteria for payment, somebody should have been fired. |
| 01:19:2452 sec. |
Dannels, Donna M. - Acting Deputy Director
First of all, I can't address the specific situations that are in their statement of fact. Again, we received it just Thursday. What I would... |
| 01:20:1612 sec. |
Thompson, Bennie - U.S. Representative, [D] Mississippi
Well, the only thing I am saying is, we have testimony that somebody certified that an inspection had occurred, that approved the payment. |
| 01:20:2815 sec. |
Dannels, Donna M. - Acting Deputy Director
That may have been done through technology and not an inspector onsite, which we do not normally do. That is a new technology we used this... |
| 01:20:43 |
Thompson, Bennie - U.S. Representative, [D] Mississippi
And if you would bear with me, Mr. Chairman, can the GAO people explain? |
| 01:20:4321 sec. |
Kutz, Gregory D. - Managing Director
There may not have been a physical inspection of that cemetery. I think one of the cemeteries received expedited assistance. Another one... |
| 01:21:048 sec. |
Dannels, Donna M. - Acting Deputy Director
We will go back and look at each and every one of these cases with them to determine what went wrong and improve those processes. |
| 01:21:12 |
Thompson, Bennie - U.S. Representative, [D] Mississippi
Thank you, Mr. Chairman. |
| 01:21:1228 sec. |
McCaul, Michael - U.S. Representative, [R] Texas
Thank you. I would also like to indicate to the ranking member that we did invite Director Paulison to testify, and he declined. As... |
| 01:21:40 |
Shays, Christopher - U.S. Representative, [R] Connecticut
He has a right to object. |
| 01:21:409 sec. |
McCaul, Michael - U.S. Representative, [R] Texas
So ordered. The Chair now recognizes the gentlelady from Florida, Ms.Ginny Brown-Waite. |
| 01:21:4919 sec. |
Brown-Waite, Virginia "Ginny" - U.S. Representative, [R] Florida
Thank you very much. Ms. Dannels, when I first heard your testimony, I was a little concerned that maybe your staff hadn't properly briefed you... |
| 01:22:08 |
Dannels, Donna M. - Acting Deputy Director
That would be of the recovery programs, not the agency. |
| 01:22:081 min. |
Brown-Waite, Virginia "Ginny" - U.S. Representative, [R] Florida
Okay. Well, this hearing has been noticed as a hearing on fraud, waste and abuse in the aftermath of Katrina, and my concern is that you... |
| 01:23:1825 sec. |
Dannels, Donna M. - Acting Deputy Director
Yes. I did know it was about fraud, waste and abuse. What was just shared with us on Thursday was the statement of fact, GAO statement of... |
| 01:23:43 |
Brown-Waite, Virginia "Ginny" - U.S. Representative, [R] Florida
Did you have a draft of what they were doing before that? |
| 01:23:43 |
Dannels, Donna M. - Acting Deputy Director
No. |
| 01:23:43 |
Brown-Waite, Virginia "Ginny" - U.S. Representative, [R] Florida
Well, knowing what-- |
| 01:23:4317 sec. |
Dannels, Donna M. - Acting Deputy Director
However, I am prepared to talk about more of what is in that statement of fact. I welcome the opportunity to talk about some of their conclusions... |
| 01:24:0053 sec. |
Brown-Waite, Virginia "Ginny" - U.S. Representative, [R] Florida
Well, submitted your testimony in advance, it just seems to me, as if knowing it is really about fraud, waste and abuse, the entire testimony... |
| 01:24:531 min. |
Dannels, Donna M. - Acting Deputy Director
I will gladly answer that question. Before I do, we will gladly update the testimony. Again, we were busy with Tropical Storm Alberto this... |
| 01:26:118 sec. |
Brown-Waite, Virginia "Ginny" - U.S. Representative, [R] Florida
Thank you. Mr. Kutz, how long ago did FEMA meet with you about your report? |
| 01:26:1933 sec. |
Kutz, Gregory D. - Managing Director
The final testimony meeting was last week. But we have ongoing discussions with them about various aspects of what we are doing. They grant... |
| 01:26:52 |
Brown-Waite, Virginia "Ginny" - U.S. Representative, [R] Florida
But they were aware that it was ongoing? |
| 01:26:5218 sec. |
Kutz, Gregory D. - Managing Director
I believe they were, yes, and they may have been confused about what that was, but yes, we have told them very clearly we were going to... |
| 01:27:1010 sec. |
Brown-Waite, Virginia "Ginny" - U.S. Representative, [R] Florida
Two other quick questions. WhoSec. t those checks away from this convicted person in prison? |
| 01:27:2019 sec. |
Ryan, John J. - Assistant Director
Actually, those checks were cashed. Those are copies. In order for us to find out exactly where the funds went, we needed to go to Financial... |
| 01:27:396 sec. |
Brown-Waite, Virginia "Ginny" - U.S. Representative, [R] Florida
So will the person who is in jail get additional jail time for this fraudulent act? |
| 01:27:457 sec. |
Ryan, John J. - Assistant Director
It will be 1 of 6,000 to 7,000 cases we will be referring to the Department of Justice for action, yes. |
| 01:27:5219 sec. |
Brown-Waite, Virginia "Ginny" - U.S. Representative, [R] Florida
My understanding is there was also fraud at the call centers where there was collusion between some of the employees at the call center... |
| 01:28:1153 sec. |
Dannels, Donna M. - Acting Deputy Director
GAO has not shared those findings with us. So I am not sure that we can respond specifically to what you have an understanding from them... |
| 01:29:04 |
Brown-Waite, Virginia "Ginny" - U.S. Representative, [R] Florida
NCIS? |
| 01:29:04 |
Ryan, John J. - Assistant Director
Yes. |
| 01:29:0424 sec. |
Dannels, Donna M. - Acting Deputy Director
Check first to give them limited access, and then after the fingerprint check was adjudicated, we would make a final determination. We will... |
| 01:29:288 sec. |
Brown-Waite, Virginia "Ginny" - U.S. Representative, [R] Florida
Ms. Dannels, please do update your response to the GAO report. I yield back the balance of my time. |
| 01:29:3631 sec. |
McCaul, Michael - U.S. Representative, [R] Texas
I would like to make a correction to the record that I know personally that FEMA was not blindsided last Thursday, but rather, there has... |
| 01:30:071 min. |
Pascrell, William "Bill" J. Jr. - U.S. Representative, [D] New Jersey
Mr. Chairman, from what I have heard so far today, reinforces my thoughts about this being a pervasive situation not only in FEMA but beyond.... |
| 01:31:28 |
Kutz, Gregory D. - Managing Director
You are correct. |
| 01:31:28 |
Pascrell, William "Bill" J. Jr. - U.S. Representative, [D] New Jersey
Correct. |
| 01:31:28 |
Kutz, Gregory D. - Managing Director
We're not addressing fraud today on the contracts. |
| 01:31:281 min. |
Pascrell, William "Bill" J. Jr. - U.S. Representative, [D] New Jersey
Thank you. The GAO reports, your agency, that four of the 24 Federal agencies have issued disclaimers on their agency's fiscal year 2005... |
| 01:32:34 |
Kutz, Gregory D. - Managing Director
Yes. They are one of the four agencies that have disclaimers. |
| 01:32:3417 sec. |
Pascrell, William "Bill" J. Jr. - U.S. Representative, [D] New Jersey
We have not only a pervasive mix with the entire Department but many other Departments we are not discussing today. We are not just talking... |
| 01:32:51 |
Kutz, Gregory D. - Managing Director
Correct. |
| 01:32:512 min. |
Pascrell, William "Bill" J. Jr. - U.S. Representative, [D] New Jersey
Put there by yours truly around this table, and that is a fact of life. We are talking about the inability of the Federal Government to... |
| 01:34:5815 sec. |
Dannels, Donna M. - Acting Deputy Director
I would say it has now become a fleet of buses. I would say that there are a large number of things that contribute. |
| 01:35:1311 sec. |
Pascrell, William "Bill" J. Jr. - U.S. Representative, [D] New Jersey
Ms. Dannels, which is it, a leadership issue, a budgetary issue or a staffing issue? Mr. Chairman, the question is clear. |
| 01:35:24 |
Dannels, Donna M. - Acting Deputy Director
Sir, I think that is a very difficult question to ask a career person. |
| 01:35:2415 sec. |
Pascrell, William "Bill" J. Jr. - U.S. Representative, [D] New Jersey
I think you have answered the question. My final question, if I may--Mr. Chairman, do I have time? |
| 01:35:39 |
McCaul, Michael - U.S. Representative, [R] Texas
Well, you don't, but I will give it to you. |
| 01:35:3910 sec. |
Pascrell, William "Bill" J. Jr. - U.S. Representative, [D] New Jersey
Thank you. Very good. |
| 01:35:49 |
McCaul, Michael - U.S. Representative, [R] Texas
Keep it short. |
| 01:35:4940 sec. |
Pascrell, William "Bill" J. Jr. - U.S. Representative, [D] New Jersey
I want to finish with this point by GAO. I like GAO. I like the work you do. We don't follow up because we don't really mean what we say.... |
| 01:36:29 |
Kutz, Gregory D. - Managing Director
Could you explain the $25 billion? Is that related to the financial statements of the Federal Government? Is that what you are talking about? |
| 01:36:29 |
Pascrell, William "Bill" J. Jr. - U.S. Representative, [D] New Jersey
Yes. |
| 01:36:2915 sec. |
Kutz, Gregory D. - Managing Director
Yes, that is a problem with the government not being able to reconcile its checkbook, basically. That would be an example, if your checkbook... |
| 01:36:44 |
Pascrell, William "Bill" J. Jr. - U.S. Representative, [D] New Jersey
Minor problem. |
| 01:36:448 sec. |
Kutz, Gregory D. - Managing Director
Minor problem, yes. You know, with a budget of $1.6 trillion, you could say that is still significant. |
| 01:36:52 |
Pascrell, William "Bill" J. Jr. - U.S. Representative, [D] New Jersey
Well, these things contribute to the $8.3 trillion debt we have, too. |
| 01:36:528 sec. |
Kutz, Gregory D. - Managing Director
True. |
| 01:37:00 |
McCaul, Michael - U.S. Representative, [R] Texas
The Chair now recognizes the gentleman from Connecticut, Mr. Shays. |
| 01:37:002 min. |
Shays, Christopher - U.S. Representative, [R] Connecticut
Thank you all for being here. In my capacity as Chairman of the National Security Subcommittee of Government Reform, we have oversight over... |
| 01:39:1112 sec. |
Dannels, Donna M. - Acting Deputy Director
First, let me tell you, if I in any way have given the impression that I am trying to minimize it or the agency is, that is not the case... |
| 01:39:23 |
Shays, Christopher - U.S. Representative, [R] Connecticut
That is not--welcoming involvement doesn't go half the way. |
| 01:39:237 sec. |
Dannels, Donna M. - Acting Deputy Director
We are anxious to have their recommendations. |
| 01:39:3017 sec. |
Shays, Christopher - U.S. Representative, [R] Connecticut
That doesn't cover it either. Let me ask you this, do you believe the GAO report is accurate? |
| 01:39:479 sec. |
Dannels, Donna M. - Acting Deputy Director
While you can say that they have interacted with us over a period of months, that may be true, but they have also interacted with probably... |
| 01:39:56 |
Shays, Christopher - U.S. Representative, [R] Connecticut
Finish your sentence. The statement of fact. |
| 01:39:568 sec. |
Dannels, Donna M. - Acting Deputy Director
The statement of fact I received on Thursday. We have not had an opportunity-- |
| 01:40:04 |
Shays, Christopher - U.S. Representative, [R] Connecticut
That is not what I am even asking you about. |
| 01:40:0410 sec. |
Dannels, Donna M. - Acting Deputy Director
I don't know whether 16 percent is reasonable not, whether a billion dollars is accurate or not. Any amount is unacceptable. |
| 01:40:1435 sec. |
Shays, Christopher - U.S. Representative, [R] Connecticut
That is true, but that doesn't get at it. My view is you would be way up here with me if you basically said the report is accurate because... |
| 01:40:4913 sec. |
Dannels, Donna M. - Acting Deputy Director
I will go back to an earlier statement, that some of the untested technologies and processes that we used this time because our systems... |
| 01:41:02 |
Shays, Christopher - U.S. Representative, [R] Connecticut
Is that a yes? |
| 01:41:0215 sec. |
Dannels, Donna M. - Acting Deputy Director
I knowledge that. However, I think it is also apparent--and Mr. Kutz himself said that he can't testify that that cemetery had an eyes-on... |
| 01:41:171 min. |
Shays, Christopher - U.S. Representative, [R] Connecticut
I am giving you an opportunity to not have to take the blame for this. All I am asking you is the following: You are acknowledging--I don't... |
| 01:42:218 sec. |
Dannels, Donna M. - Acting Deputy Director
Absolutely not. We have been completely cooperative with them; and, again, we look forward to the recommendation so we can make those improvements. |
| 01:42:2914 sec. |
Kutz, Gregory D. - Managing Director
Congressman, can I say one thing? I think you came in after we had the discussion. FEMA has also testified, Mr. Paulison, that the actual... |
| 01:42:43 |
Shays, Christopher - U.S. Representative, [R] Connecticut
I was here. |
| 01:42:4313 sec. |
Kutz, Gregory D. - Managing Director
I think there is a real problem with them digesting and understanding the bigger number, because they have always gone out and said it is... |
| 01:42:5631 sec. |
Shays, Christopher - U.S. Representative, [R] Connecticut
You just gave my summary point. It might have been more effective if I had done it, since you are basically talking about yourself. I was... |
| 01:43:2743 sec. |
Dannels, Donna M. - Acting Deputy Director
Could I just say that I don't know what context Director Paulison said the 2 to 3 percent for this particular event. In my opinion, we don't... |
| 01:44:1037 sec. |
Shays, Christopher - U.S. Representative, [R] Connecticut
I am going to conclude by saying that I still don't think you are hearing me. The amount of fraud that was outlined in this report is pretty,... |
| 01:44:4740 sec. |
McCaul, Michael - U.S. Representative, [R] Texas
To exercise the privilege of the Chair and follow up on the gentleman's comments, I think you are absolutely on point. The problem I see... |
| 01:45:274 min. |
Jackson Lee, Sheila - U.S. Representative, [D] Texas
Let me thank the chairman and the ranking member, Mr. Etheridge, very much for this hearing and the opportunity to participate in this hearing... |
| 01:50:041 min. |
Kutz, Gregory D. - Managing Director
There are two things I would say. There was probably moments after the immediate crisis, but the real effective way to do fraud prevention... |
| 01:51:0528 sec. |
Jackson Lee, Sheila - U.S. Representative, [D] Texas
My last question, Mr. Chairman. Ms. Dannels, would more money have helped you? Mr. Becker, could you have used more local people rather than... |
| 01:51:33 |
Dannels, Donna M. - Acting Deputy Director
Systems were not in place. |
| 01:51:33 |
Jackson Lee, Sheila - U.S. Representative, [D] Texas
Would that have taken some resources? |
| 01:51:3353 sec. |
Dannels, Donna M. - Acting Deputy Director
It would have. There is something very important, a point to make here, and that is the Red Cross--and I am not throwing my good friend,... |
| 01:52:2623 sec. |
Jackson Lee, Sheila - U.S. Representative, [D] Texas
I understand that you said you needed more resources, and I understand that it was a contract with Red Cross. I have already said to Mr.... |
| 01:52:4941 sec. |
Becker, Joseph C. - Senior Vice President
I would agree with your assessment. One of the big learnings we had in Hurricane Katrina was partnerships can't happen in the middle of... |
| 01:53:3021 sec. |
Jackson Lee, Sheila - U.S. Representative, [D] Texas
Mr. Chairman, I hope you will persist, and the ranking member, on securing the Secretary of Homeland Security if we are to go forward and... |
| 01:53:5127 sec. |
Dannels, Donna M. - Acting Deputy Director
May I also just quickly add for the record that we do have a process in place now that would prevent that from happening again. The people,... |
| 01:54:188 sec. |
Jackson Lee, Sheila - U.S. Representative, [D] Texas
Taking into consideration that some people may not have identification because they have been so devastated, you do have that part in place... |
| 01:54:26 |
Dannels, Donna M. - Acting Deputy Director
Yes. |
| 01:54:26 |
Jackson Lee, Sheila - U.S. Representative, [D] Texas
Thank you. Thank you very much. |
| 01:54:2610 sec. |
McCaul, Michael - U.S. Representative, [R] Texas
We may have votes as early as 1:30, so I would like to move forward. Recognizing the gentleman from New Mexico, Mr. Pearce. |
| 01:54:3637 sec. |
Pearce, Steve - U.S. Representative, [R] New Mexico
Thank you, Mr. Chairman. Mr. Kutz, FEMA has testified that they think the fraud is in the range of 2 to 3 percent. You all are saying basically... |
| 01:55:137 sec. |
Kutz, Gregory D. - Managing Director
I have done dozens of samples before. I am pretty confident that the statistics are-- |
| 01:55:207 sec. |
Pearce, Steve - U.S. Representative, [R] New Mexico
Thank you. You are embedded from day one, GAO. That is what Ms. Dannels testified. |
| 01:55:27 |
Dannels, Donna M. - Acting Deputy Director
That would have been the OIG, Inspector General. |
| 01:55:2714 sec. |
Pearce, Steve - U.S. Representative, [R] New Mexico
I am sorry. Did the OIG ever bring to your attention, Ms. Dannels, there are things that are happening that maybe should not be happening? |
| 01:55:419 sec. |
Dannels, Donna M. - Acting Deputy Director
I am sure--we spent hours together. I am sure that there were many things brought to our attention. |
| 01:55:50 |
Pearce, Steve - U.S. Representative, [R] New Mexico
They didn't send formal memos? |
| 01:55:5016 sec. |
Dannels, Donna M. - Acting Deputy Director
I can't guarantee that, because I can't guarantee I would have necessarily seen them all. They have brought things to our attention, and... |
| 01:56:0618 sec. |
Pearce, Steve - U.S. Representative, [R] New Mexico
So if we looked at a continuum of problems from the beginning to the end, that continuum of problems, Mr. Kutz, started out huge and decreased... |
| 01:56:24 |
Kutz, Gregory D. - Managing Director
Yes, they were deep in the timeline. |
| 01:56:2429 sec. |
Pearce, Steve - U.S. Representative, [R] New Mexico
So, Ms. Dannels, with all due respect, you testified that many of your problems came because you were kind of overwhelmed with the flood... |
| 01:56:5311 sec. |
Dannels, Donna M. - Acting Deputy Director
I would say that it does take more time than a matter of 1 month, 2 months or 3 months to make some of the systems corrections that are... |
| 01:57:049 sec. |
Pearce, Steve - U.S. Representative, [R] New Mexico
What systems corrections are required, Ms. Dannels, for-- doesn't someone have to approve or disapprove payments? You have got this-- |
| 01:57:1316 sec. |
Dannels, Donna M. - Acting Deputy Director
A lot of that is done via automated business rules. Those are the systems I am talking about. The system that is in place had to go through... |
| 01:57:2921 sec. |
Pearce, Steve - U.S. Representative, [R] New Mexico
I understand that, but my question is a little bit different. You get someone who has got to key in things for the computer to even measure... |
| 01:57:50 |
Kutz, Gregory D. - Managing Director
That was a preloaded card. Once they got the card, they could spend the money however they wanted. |
| 01:57:5011 sec. |
Pearce, Steve - U.S. Representative, [R] New Mexico
Are there any instances where things are not preloaded, where they had to request a payment? |
| 01:58:017 sec. |
Kutz, Gregory D. - Managing Director
Yes, everything else. The debit cards were preloaded, but all the rental assistance, personal property repair-- |
| 01:58:087 sec. |
Pearce, Steve - U.S. Representative, [R] New Mexico
So people were keying in rental assistance from the guys from prison, and I suspect somebody-- |
| 01:58:1529 sec. |
Dannels, Donna M. - Acting Deputy Director
Actually, I suspect that the rental assistance--again, we need to go back and look at these specific cases, but the rental assistance for... |
| 01:58:449 sec. |
Pearce, Steve - U.S. Representative, [R] New Mexico
Do you think there is any sloppy work on the behalf or have you detected any sloppy work on the behalf of people or is it all systems? |
| 01:58:5323 sec. |
Dannels, Donna M. - Acting Deputy Director
No, I suspect there is sloppy work, also. Again, we hired people and put them into doing jobs that ideally would have had more training... |
| 01:59:161 min. |
Ryan, John J. - Assistant Director
If I could add something to this. We talked about these up-front controls. The problem is that they were not applied equally. You have a... |
| 02:00:56 |
Pearce, Steve - U.S. Representative, [R] New Mexico
Thank you, Mr. Chairman. I see my time has expired. |
| 02:00:569 sec. |
McCaul, Michael - U.S. Representative, [R] Texas
The Chair recognizes the gentleman who knows more about this subject matter than any Member, the gentleman from Mississippi Mr. Taylor. |
| 02:01:051 min. |
Taylor, Eugene "Gene" - U.S. Representative, [D] Mississippi
Thank you, Mr. Chairman, for letting me participate today. I do appreciate the panel. I appreciate the Red Cross's generosity. I very... |
| 02:02:26 |
Kutz, Gregory D. - Managing Director
That was Inspector General Skinner, so that was the DHS Inspector General. |
| 02:02:265 min. |
Taylor, Eugene "Gene" - U.S. Representative, [D] Mississippi
I would very much like to see that report, because I think we as a Nation were taken for a lot of money on that. The second one is... |
| 02:07:4819 sec. |
McCaul, Michael - U.S. Representative, [R] Texas
The Ranking Member and I visited your State on a delegation and saw the devastation, which was horrible, and the lack of coverage, which... |
| 02:08:071 min. |
Dent, Charles "Charlie" - U.S. Representative, [R] Pennsylvania
Thank you, Mr. Chairman; and I thank you for holding this hearing. Sometimes--I have been in the political business now for a long... |
| 02:09:21 |
Kutz, Gregory D. - Managing Director
Not with respect to this program. This is the first time we have looked at this program. |
| 02:09:2159 sec. |
Dent, Charles "Charlie" - U.S. Representative, [R] Pennsylvania
I guess the question that I have for the GAO is that I would like you to discuss the recommendations that I believe you will be making very... |
| 02:10:201 min. |
Kutz, Gregory D. - Managing Director
The primary recommendations relate to the up- front validation process, the identity validation and damaged property address validation... |
| 02:11:52 |
Dannels, Donna M. - Acting Deputy Director
We have put in place. |
| 02:11:5238 sec. |
Dent, Charles "Charlie" - U.S. Representative, [R] Pennsylvania
I guess I would like to see what changes we have made or are making now in response to Katrina versus what changes we made in response to... |
| 02:12:3025 sec. |
Dannels, Donna M. - Acting Deputy Director
What I would say and one of the reasons we are not doing debit cards again this year is we don't have a program that has enough adequate... |
| 02:12:55 |
Dent, Charles "Charlie" - U.S. Representative, [R] Pennsylvania
Was that purchase made out of housing assistance or IHP program? |
| 02:12:5510 sec. |
Dannels, Donna M. - Acting Deputy Director
That would have been out of IHP. That is correct. |
| 02:13:059 sec. |
Dent, Charles "Charlie" - U.S. Representative, [R] Pennsylvania
That would have been considered a medical service, clearly not hotel or some kind of temporary residence. I just don't understand how this... |
| 02:13:1456 sec. |
Ryan, John J. - Assistant Director
When they get these checks, they can spend it for whatever they want as long as they cash it. They can use it for that. They can use it... |
| 02:14:1042 sec. |
Dannels, Donna M. - Acting Deputy Director
Mr. Dent, I would like to also mention to you and the rest of the committee that the hearing that we had with the GAO before the Senate... |
| 02:14:5214 sec. |
Dent, Charles "Charlie" - U.S. Representative, [R] Pennsylvania
Thank you. It gets a little depressing. Because, on the one hand, we want to be compassionate and help the people like Mr. Taylor and... |
| 02:15:0630 sec. |
McCaul, Michael - U.S. Representative, [R] Texas
Thank you. I want to thank the witnesses for your testimony. We are going to keep this hearing open for 10 days, allow the members to... |
| 02:15:3620 sec. |
Etheridge, Bob - U.S. Representative, [D] North Carolina
Mr. Chairman, I think the issue that Mr. Taylor raised is important to this committee; and I would hope in the near future we invite the... |
| 02:15:561 min. |
McCaul, Michael - U.S. Representative, [R] Texas
Without objection, the committee stands adjourned. |