June 19, 2020 / 2:28 AM / 21 days ago

Watchdogs, White House at odds over scrutiny of pandemic aid

WASHINGTON(Reuters) - When Congress approved $2 trillion pandemic aid in March, many Democratic and Republican lawmakers agreed on safeguards against fraud and abuse to ensure that companies receiving the money use it to save American jobs.

U.S. President Donald Trump signs the $2.2 trillion H.R. 748 CARES Act coronavirus aid package bill in the Oval Office of the White House in Washington, U.S., March 27, 2020. REUTERS/Jonathan Ernst TPX IMAGES OF THE DAY

But the Trump administration has advised agencies that they can largely ignore reporting requirements in the legislation designed to help a newly created watchdog group track how the money is spent, according to public documents and four people with knowledge of the matter.

Several lawmakers, nonprofit organizations and members of the watchdog group - the Pandemic Recovery Accountability Committee (PRAC) - say the avoidant approach proposed by the White House would violate the law. They contend it would keep taxpayers in the dark as to whether businesses such as airlines or hospitals use the cash to save jobs and keep the lights on - as Congress intended - or, for instance, spend it on management bonuses and other perks.

The dispute between the accountability committee and the White House Office of Management and Budget (OMB) is the latest sign of tensions between independent investigators tasked with overseeing taxpayer money and Trump administration officials who have resisted calls for greater transparency in several key relief programs.

The $2 trillion Coronavirus Aid, Relief, and Economic Security (CARES) Act, passed in March, calls for organizations getting more than $150,000 in aid to document their spending to the dispensing federal agencies - who in turn must report that information to the accountability committee so it can scan for signs of fraud and abuse. The act requires recipients to report spending quarterly, along with a detailed description of the projects supported and the number of jobs created or preserved.

In April, however, the White House budget office wrote a memo to federal agencies telling them it did not believe such detailed reporting was required to comply with the law. The memo, a public document reviewed by Reuters, advised agencies that they could avoid the administration burden and satisfy the law instead by following “existing reporting requirements” for all federal spending, with “minimal modifications.”

The accountability committee consists of independent watchdogs, known as inspectors general, from 21 federal offices. Created by Congress, the committee provides findings to both lawmakers and the administration. While Trump cannot disband the body, he can and already has ousted some of its members by removing them from their agency inspector general roles.

Asked why the committee had told agencies they could rely on existing data reporting requirements, the White House budget office pointed to a section of its guidance in which it wrote that “time is of the essence” in getting funds to those in need.

The office also said that it is working with the accountability committee and inspectors general to “ensure proper reporting and transparency.”

Robert Westbrooks, director of the PRAC, said the White House directive did not appear to meet the CARES Act reporting requirements. He said the PRAC was talking regularly with the White House budget office to address data gaps, but declined to elaborate on those talks.

Some PRAC members and some lawmakers, including those on the Homeland Security and Governmental Affairs Committee, have privately pressed the White House budget office to comply with the law, according to a committee aide with knowledge of the discussions and another person who had been briefed on the matter.

“Americans deserve to know where their hard earned tax dollars are going,” said Senator Gary Peters, the lead Democrat on the Homeland Security and Governmental Affairs Committee, which is pushing for transparency and accountability measures.

SECRET BAILOUTS?

The disagreement over the reporting requirements is only the most recent example of the Trump administration’s reluctance to open the books on pandemic bailout spending.

Treasury Secretary Steven Mnuchin has resisted naming businesses that got money from a $660 billion small business rescue fund, calling their names and amounts received “confidential” and “proprietary” business information.

On Monday, Mnuchin softened his stance, tweeting that he would discuss potential disclosures with Congress. On Tuesday, Republican Senator Marco Rubio, who is leading that discussion as chair of a small business committee, said the government planned to disclose information about larger aid awards, without specifying what would be released.

The Treasury Department also last month determined that states and local governments getting a total of $150 billion in aid were not subject the rules requiring detailed reporting of aid spending - or to any PRAC oversight.

The Treasury’s internal legal interpretation only came to light when the Treasury’s inspector general disputed it in a brief audit report published on May 27. Last week, the PRAC wrote to lawmakers saying the Treasury opinion raised “potentially significant transparency and oversight issues.”

Treasury Department spokesperson Monica Crowley said that the agency is complying with the law and that its programs are already subject to oversight by Congress and other agencies.

“Further duplication of these oversight functions by the PRAC would not increase transparency or oversight,” she said in a statement.

Over the past two months, Trump has also ousted three inspectors general serving on the PRAC, including Glenn Fine, the acting Pentagon inspector general who had been appointed as its chair.

GET THE MONEY ‘OUT THE DOOR’

The tussle over reporting to the accountability committee spilled into public view earlier this month during a Congressional hearing with the budget office’s acting director Russell Vought, who approved the White House guidance.

“I don’t see how that guidance comports with the law, and I don’t see why ... we wouldn’t have more, rather than less, oversight,” Republican Senator Rob Portman told Vought during the hearing.

Vought told Portman that the guidance aimed to balance transparency requirements with getting the money “out the door.” He said the office did not intend to ignore the law and would comply with it.

Sean Moulton, a senior policy analyst at the Project on Government Oversight, said the reporting by aid recipients that the CARES Act requires is crucial to providing effective oversight of the massive stimulus program. With no details on how loans and grants are spent, he said, inspectors general will have limited ability to detect abuse.

“They’ll catch some of these frauds,” he said. “With others, they may not know without this recipient data.”

Reporting by Chris Prentice; Editing by Michelle Price and Brian Thevenot

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