How TVA tackles Fraud Waste and Abuse (FW&A)
March 4, 2009
This may be the Tennessee Valley Authority’s “perfect storm” propelling its more speedy demise. The confluence of the Kingston dam disaster and now an audit report revealing a ballooning of purchases of “small business items” of $75 million much of it improperly spent by TVA employees. This alone demands an immediate change in management, TVA’s CEO Tom Kilgore and his seven-member board.
Irresponsible management at several levels in TVA continues to put the spotlight on the long-term corrupt “TVA culture”. Leaders at TVA over and over have been called on the carpet with none of the punitive action normally taken by private industry or even in the military.
If a military commander is unable to control his troops, the commander is relieved of his command and appropriately punished under the Uniform Code of Military Justice (UCMJ). TVA has its own “Code of Conduct” (see “Disciplinary Measures”, pg. 7). Their Code can be followed or not with apparent immunity.
I wonder what changes CEO Kilgore purportedly is making based on the OIG report in the misuse of TVA Visa credit cards. Supposedly, Kilgore asked the TVA OIG to look into the matter two years ago. Something doesn’t smell right about the coziness between TVA and its OIG. TVA’s Code seems explicit enough which says in effect – don’t steal or else be punished, (maybe).
After all, it is difficult to admit to deserving a self-applied 40 lashes. They have acted irresponsibly on many occasions to the point of ignoring FW&A policies not only of their own organization but of federal regulations as well.
Maybe the point of concern should center on an investigation by the Government Accountability Office (GAO) about TVA’s accountability and of their financial accounting systems. TVA seems to have trouble reporting financial matters correctly to the Securities and Exchange Commission (SEC) and repeatedly has had to amend them.
The TVA OIG is very slow to ever finish an investigation. For example, congressman Heath Shuler (D-NC), co-chairman of the so-called TVA Congressional Caucus with Sen. Lamar Alexander (R-TN), has been under investigation by the TVA OIG for many months. His company is accused of taking advantage of his congressional position to gain favors from the TVA which, of course, TVA denies. But it seems like old-style TVA deal-making when TVA used to swap and sell TVA land acquired with the sword of eminent domain. That supposedly was changed by Executive Order 13406 nearly three years ago by the Bush administration.
The Shuler case should be disposed of quickly; it should not be that difficult to determine whether Shuler received special favors or not. His name deserves to be cleared if in fact he was not given preferential treatment by the TVA.
One correspondent, a former TVA employee, calls it core corruption, from the bottom to the top. He cited instances where safety regulations were ignored just to keep up production, just so bonus levels could be met.
The Nuclear Regulatory Commission (NRC) has warned TVA on several occasions that workers either were not paying enough attention or were not properly trained in procedures.
The Government Accountability Office (GAO) in an audit of TVA’s computer security procedures last year found many violations. Some so serious that the entire TVA grid could be put in jeopardy by cyber-terrorists. All of the TVA miscues in GAO’s report were not made public but there were plenty of other charges and implications. As usual, TVA’s response was “we’re fixing it”.
I felt that that breach of security which endangered the rest of the electricity grid in the East warranted swift management change, a change that never came. In fact, of the litany of significant mismanagements made by the TVA over the years, no penalty to any management employee has occurred. No one has been fired. There is no accountability.
In the recent Kingston “catastrophe”, as CEO Tom Kilgore now calls it (at first it was merely “an ash slide”), the only management changes were to rearrange the deck chairs.
The governor of Tennessee in an unprecedented move has demanded that the TVA report back to the state certain benchmark actions to be taken by the TVA on a specific timetable regarding the Kingston disaster. So far, TVA, in an unprecedented manner, has complied.
With Tennessee’s unchallenged power to require the TVA to do something, now may be the appropriate time for the governor of Tennessee to demand that the TVA completely justify all of the many recent raises in its electricity rates, their exorbitant spending excesses on salaries and bonuses and to demand a higher “payment-in-lieu-of-taxes” rate for the state of Tennessee, TVA’s largest electricity-using state.
When it was reported that a laptop computer had been stolen, one of hundreds in use by TVA employees, it was discovered that most of them could not be accounted for at the time. TVA displayed an attitude of unconcern about taking care of government property; seems it’s no big deal stealing a laptop computer.
There is no telling how much security information has been compromised by those dilatory actions or how many identity thefts may have occurred or how many terrorism attempts could be made by tapping into the main TVA computer system with a stolen laptop. Again, no one publically was fired or investigated for criminal activity to my knowledge.
And now TVA’s own credit cards have been used to buy software to erase views of porno sites. Many other personal items were purchased by individual TVA employees. At audit time, there were over 1600 TVA Visa cards in employees’ hands.
“A TVA administrator approved $18 million of credit card purchases from his employees in a two-day period without reviewing any documentation for the purchases.” (Chattanooga Times Free Press)
TVA’s financial structure is in shambles. Debt now exceeds $25 billion with more debt being piled on from inept management decisions such as a federal court ruling where the TVA failed to timely install air pollution devices. (North Carolina case.) And the absurdity of TVA borrowing a billion dollars from the Bank of America while the BoA was getting billions from the U.S. Treasury is beyond belief.
I have suggested some ways to stop the bumbling TVA from committing even more mistakes. Since TVA has, in effect, nationalized electricity in a huge swath of the South (80,000 square-miles) its operation should fully be turned over to the Department of Energy until a decision is made whether to privatize it or, God forbid, even to expand it.
Considering the present economic climate, the American people are being asked to pay for FW&A in an unprecedented way, yet they have been ignoring the $10 billion taken in yearly by the wastrel TVA.
Surely the “main” federal government can oversee FW&A violations better than one of its anomalous out-of-control federal agencies.
For my comments on how this could be done, see http://norsworthyopinion.com
Ernest Norsworthy
emnorsworthy@earthlink.net