#4
WAR WATCH WEDNESDAYS
January
13, 2021
“Exclusive:
The Pentagon’s Massive Accounting Fraud Exposed. How
US military spending keeps rising even as the Pentagon flunks its audit.” By Dave Lindorff. The Nation (NOVEMBER 27, 2018). https://www.thenation.com/article/archive/pentagon-audit-budget-fraud/
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On November 15, Ernst & Young and
other private firms that were hired to audit the Pentagon announced that they
could not complete the job. Congress had ordered an independent audit of the
Department of Defense, the government’s largest discretionary cost center—the
Pentagon receives 54 cents out of every dollar in federal appropriations—after
the Pentagon failed for decades to audit itself. The firms concluded, however,
that the DoD’s financial records were riddled with so many bookkeeping
deficiencies, irregularities, and errors that a reliable audit was simply
impossible.
Deputy Secretary of Defense Patrick Shanahan tried to put the best
face on things, telling reporters, “We failed the audit, but we never expected
to pass it.” Shanahan suggested that the DoD should get credit for attempting an audit, saying, “It was an audit on a
$2.7 trillion organization, so the fact that we did the audit is substantial.”
The truth, though, is that the DoD was dragged kicking and screaming to this
audit by bipartisan frustration in Congress, and the result, had this been a
major corporation, likely would have been a crashed stock.
As Republican Senator Charles Grassley of Iowa, a frequent critic
of the DoD’s financial practices, said on the Senate
floor in September 2017, the Pentagon’s long-standing failure to conduct a
proper audit reflects “twenty-six years of hard-core foot-dragging” on the part
of the DoD, where “internal resistance to auditing the books runs deep.” In 1990,
Congress passed the Chief Financial Officers Act, which required all
departments and agencies of the federal government to develop auditable
accounting systems and submit to annual audits. Since then, every department
and agency has come into compliance—except the Pentagon.
Now, a Nation investigation
has uncovered an explanation for the Pentagon’s foot-dragging: For decades, the
DoD’s leaders and accountants have been perpetrating a gigantic,
unconstitutional accounting fraud, deliberately cooking the books to mislead
the Congress and drive the DoD’s budgets ever higher, regardless of military
necessity. DoD has literally been making up numbers in its annual financial
reports to Congress—representing trillions of dollars’ worth of seemingly
nonexistent transactions—knowing that Congress would rely on those misleading
reports when deciding how much money to give the DoD the following year,
according to government records and interviews with current and former DoD
officials, congressional sources, and independent experts. . . . MORE https://www.thenation.com/article/archive/pentagon-audit-budget-fraud/
So here’s the situation: We have a Pentagon budget that a former
DOD internal-audit supervisor, Jack Armstrong, bluntly labels “garbage.” We
have a Congress unable to evaluate each new fiscal year’s proposed Pentagon
budget because it cannot know how much money was actually spent during prior
years. And we have a Department of Defense that gives only lip service to
fixing any of this. Why should it? The status quo has been generating
ever-higher DoD budgets for decades, not to mention bigger profits for Boeing,
Lockheed, and other military contractors.
The losers in this situation are everyone else. The Pentagon’s
accounting fraud diverts many billions of dollars that could be devoted to
other national needs: health care, education, job creation, climate action,
infrastructure modernization, and more. Indeed, the Pentagon’s accounting fraud
amounts to theft on a grand scale—theft not only from America’s taxpayers, but
also from the nation’s well-being and its future.
As President Dwight D. Eisenhower, who retired from the military as
a five-star general after leading Allied forces to victory in World War II,
said in a 1953 speech, “Every gun that is made, every warship launched, every
rocket fired signifies, in the final sense, a theft from those who hunger and
are not fed, those who are cold and are not clothed.” What would Eisenhower say
today about a Pentagon that deliberately misleads the people’s representatives
in Congress in order to grab more money for itself while hunger, want, climate
breakdown, and other ills increasingly afflict the nation?
Dave LindorffNation contributor
Dave Lindorff also writes for Salon, London Review of Books, and Counterpunch. He is founder of ThisCantBeHappening.net. Author of
four books, he was a 1990s Hong Kong/China correspondent for Business Week. https://www.thenation.com/article/archive/pentagon-audit-budget-fraud/
$billions lost or wasted on weapons to care for the millions now or nearly destitute.
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