Plastic and the Pentagon
The numbers were staggering: $3,400 for a sumo-wrestling outfit, $16,000 for a corporate golf membership, $38,000 in cash advances for lap dances. All were part of a $101 million shopping spree made with "government purchase cards," the U.S. military's version of corporate credit cards -- another made-for-media scandal of reckless Defense Department spending.
But throughout congressional hearings on the topic in July, the real scandal with the military's other piece of plastic, the Government Travel Card (GTC), went ignored by the mainstream press, despite the fact that the card has plunged thousands of ordinary servicemen and servicewomen into debt so deep that the Pentagon is busy attaching the wages of its own soldiers. And the only military commander known to raise hell about the scheme -- a lone Air Force colonel based in the Midwest -- says that blowing the whistle on the GTC ruined her career.
Lower in the ranks, the damage has been considerable. U.S. soldiers in Afghanistan -- ordered not to leave home without their GTCs -- have found themselves stranded in the desert without a dime because their credit was suddenly cut off, according to a May 29 report in the Military Times, leaving families behind in a nasty catch-22: Swallow the debt, or borrow more money to pay the bills so their credit wouldn't be ruined.
Concocted by Congress in 1998, the GTC was designed to privatize the accounting of federal travel expenses and touted to save taxpayer money. (It also reaps huge fees by the financial conglomerates that issue the cards.) It works like this: Servicepeople are ordered to apply for personal GTCs -- interest-free credit cards issued exclusively by the Bank of America. Instead of requesting vouchers or getting cash to pay for travel expenses, servicepeople pay up front with the their own GTC cards -- essentially floating interest-free loans to the government. As a result, they have to submit expense reports and wait for reimbursements.
But reimbursements often come late, according to a recent report issued by the General Accounting Office, which means the GTC bills aren't always paid on time and servicepeople are getting branded as "delinquents." The GAO found "substantial" delays in reimbursements; in one command unit, for example, the California National Guard failed to pay its personnel within a month 61 percent of the time, and of those payments, 42 percent were inaccurate.
Just in the past year, the names of more than 10,000 military personnel have been reported to national credit bureaus as "credit risks," according to the Military Times. Instead of changing the mechanics of the travel card system, however, the DOD and the bank have only tightened their grip on cardholders; since October, the Pentagon has garnisheed over $19.5 million from military paychecks to pay off "delinquent" GTC bills, according to DOD accountants.
"It's totally unbelievable," says Ed Mierzwinski, consumer banking advocate at the U.S. Public Interest Research Group. "The notion that you're forced into a contract--one where you can't pay your bills on time--and the Pentagon takes it out of your paycheck is outrageous." Military personnel have even less cushion than civilians: Annual pay for an E-2 private is between $11,000 and $14,000.
"It's a pathetic situation when soldiers are forced to buy into a system that's likely to screw them personally," says Danielle Brian, executive director of the Project on Government Oversight, a D.C. group. "This is just another example where the Pentagon has conjured up a scam with a favorite contractor. The desperate rush to privatization has a million warts."
By putting the burden of bookkeeping on its servicepeople and the bank, the Bank of America claims that the Pentagon has saved anywhere from $100 million to $450 million a year in administrative costs. Meanwhile, Bank of America has acquired an entire new fleet of captive consumers: more than 1.4 million servicemen and servicewomen ordered by law to use the card for every travel expense till 2008.
Pentagon officials contend that the program is beneficial to both taxpayers and servicemen. Consumer advocates laugh.
"In no way can this be characterized as a pro-employee program," says Stephen Brobeck, executive director of the Consumer Federation of America. "For any government agency to insist that its employees obtain a personal credit card only shifts the cost and risk on its employees. It's highly inappropriate."
More unsettling, the GTC program may turn out to be highly illegal. All employees of the executive branch are required to apply for them; all servicepeople are ordered to do it. But using a military order to force a serviceman or servicewoman into a private contract--against his or her will--is a clear violation of basic contract law, according to handful of military and constitutional legal scholars.
Moreover, they argue, forcing military personnel to personally front the government money for travel expenses and subject their personal "creditworthiness" to the whims of the Pentagon's sluggish accounting system could potentially violate private property rights, which are protected--even for servicepeople--under the Fifth Amendment.
"There are serious legal and moral concerns with a government agency ordering a member of the military to sign a private contract," says Philip Cave, a class-action lawyer who specializes in military law. "In the big scheme of things, this policy may seem like small potatoes--until you're the individual involved."
Top Pentagon officials are grinding out publicity about their get-tough probes of credit-card abuse, but their investigations apparently have nothing to do with the cards' shattering effects on the piggy banks of their military personnel.
In late June, for instance, DOD Comptroller Dov Zakheim scheduled a Pentagon press conference to announce the findings of a special task force ordered by Donald Rumsfeld to investigate the military's credit card programs. Zakheim did mention servicepeople's "abuse" of the card; legal and consumer concerns were not raised.
Vince Crawley, a reporter for the Military Times, raised those issues with Zakheim, and the comptroller, who's the Pentagon's chief financial officer, seemed caught off guard.
"You're effectively forcing people to get into a third-party contract with Bank of America," Crawley told Zakheim, according to a transcript of the press conference, "and they're personally responsible for getting the card paid. Has anybody looked at the legality of that?"
"Oh, sure," Zakheim replied. "Look, a person can always refuse to take a card. You know, nobody's forcing you to take the card."
"But there's a mandatory use requirement," Crawley said, "It's the law."
"Well," Zakheim said, pausing to lean away from the microphone and toward an aide. "Yes. It's true. It's the law. So, yes, the law is telling you to do it, but . . . correct me if I'm wrong, have people been violently against the use of credit cards, or rather, charge cards? We haven't heard any protest against it."
Colonel Judith Varnau protested the travel card even before the day her application came in the mail in March 2000 at McConnell Air Force Base in Wichita. She signed the form, but scribbled in the margins: "I have signed this under duress. I have not voluntarily, for fear of losing my job."
The bank activated her card, so she wrote back, "Again, I state that I am not, nor have I been willing to enter into this private contract. . . . I am only following orders to obtain the card out of fear of losing my job, adversely affecting my career, or resulting in conviction and possible imprisonment."
Ten days later, her card was canceled. A week after that, she was in the office of her wing commander, Colonel Frederick Roggero. Under air force policy, if a card is canceled, personnel are expected to pay expenses in cash or from other credit cards. Roggero, instead, gave Varnau an ultimatum.
"It's either leaving or staying," a voice identified by Varnau as Roggero said on an audiotape Varnau secretly recorded during many closed-door meetings.
She decided to stay, and to fight the card. She wrote state representatives and senators in protest. She asked the Pentagon for whistle-blower protection. She filed five criminal charges against Roggero, with specifications--extortion, extortion with threats, conspiracy, solicitation, and false official statements, all serious criminal offenses with maximum jail time of three years. She kept the unreleased tapes as the final trump card, if her day in military court should come.
That day might never come. After two years of fighting the policy, Varnau's charges against Roggero were dropped for lack of evidence, according to the air force press office. But no proper investigation was ever made, Varnau contends, and the air force lost her file three times in one year. Once a colonel running a small clinic, the 55-year-old Varnau now pushes papers in a dead-end job that she says was created just for her. "I'm blackballed," Varnau tells the Voice. "I'm the black sheep. My career is over. I've got no place to go."
Roggero, on the other hand, was recently promoted to brigadier general. He now works at the Pentagon as director of marketing for the the air force.