Millions of dollars in Katrina aid blasted

In its rush to provide Katrina disaster aid, the Federal Emergency Management Agency wasted millions of dollars and overpaid for hotel rooms, including $438 ( Ђ 368) a day lodging in New York City, U.S government investigators said Monday. Two reports released by the Government Accountability Office and the Homeland Security Department's office of inspector general detail a series of accounting flaws, fraud or mismanagement in their initial review of how $85 billion ( Ђ 71.5 billion) in federal aid is being spent.

The audits found that up to 900,000 of the 2.5 million applicants who received aid under FEMA's emergency cash assistance program, which included the $2,000 ( Ђ 1,682)debit cards given to evacuees, were based on duplicate or invalid identification numbers, or false addresses and names.

Thousands of additional dollars appear to have been squandered on hotel rooms for evacuees that were paid at retail rather than the contractor's lower estimated cost. They included $438 rooms in New York City and beachfront condominiums in Florida at $375 ( Ђ 315.44) a night, according to the audits.

The adminstration's lackluster response to Katrina undermined Americans' confidence in President George W. Bush's leadership abilities and contributed to a decline in his opinion poll ratings. The audits were released during a hearing on Katrina fraud and abuse by the Senate Homeland Security Committee as the panel wrapped up its investigation into the federal government's preparation and response to the disaster.

"FEMA has a substantial challenge in balancing the need to get the money out quickly to those who are actually in need and sustaining public confidence in disaster programs by taking all possible steps to minimize fraud and abuse," the GAO audit by Gregory Kutz states.


Offering the $2,000 ( Ђ 1,682) emergency aid "was a calculated risk taken in a catastrophic situation where many people were forced from their homes, often without any identification or basic necessities," she said. "It was the right thing to do."

On the plus side, an initial review by Homeland Security inspector general Richard Skinner found that FEMA's decision to sign a contract with Carnival Cruise Lines for Hurricane Katrina housing shortly after the Aug. 29 storm "was reasonable under the urgent circumstances."

The six-month,$236 million ( Ђ 198 million) deal with Carnival for three full-service cruise ships, which initially sat half empty for several weeks on the coast of the Gulf of Mexico _ had been criticized by lawmakers of both parties as a prime example of wasted spending in Hurricane Katrina-related contracts.

However, Skinner said the decision to use cruise ships appeared to be a wise economical choice "in a high-cost area such as New Orleans so long as occupancy remains high." A review of the contract's specific terms was continuing.

"While we have found many instances where contractors performed their work efficiently and in good faith, we have also found instances where there were problems," Skinner said. "In some cases, the government will have little legal recourse to recoup payments to contractors for payments under questionable contracts", reports the AP.