RAT Board to monitor spending of stimulus plan dollars for fraud, waste and abuse
The stimulus package, also known as the American Recovery and Reinvestment Act, signed into law on February 17, 2009, includes a number of initiatives aimed at addressing climate change, including investment in renewable energy. However, companies receiving monies from the stimulus package for clean tech, renewable energy, and other climate-related projects will be subjected to heightened scrutiny, transparency in spending and accountability. Along with the billions of dollars allocated to energy and the environment, the Act created the “Recovery Accountability and Transparency Board,” commonly referred to as the “RAT” Board, which has been given the authority to root-out fraud, waste and abuse in the expenditure of stimulus dollars. Indeed, of the $787 billion to be plowed into the economy, $350 million was allocated to the RAT Board and the offices of Inspector General for many of the major federal agencies.
Based on the composition of the Board, it is patently clear that the RAT Board will have a law enforcement bent. President Obama appointed Earl Devaney as the RAT Board’s first Chairman. Chairmen Devaney is a former Secret Service Agent, who later as the Inspector General of the Interior Department had a hand in uncovering the scope of disgraced lobbyist Jack Abramoff’s corrupt dealings with federal officials. The remaining members of the Board are Inspector Generals from the Departments of Agriculture, Commerce, Energy, Health and Human Services, Homeland Security, Justice, Transportation, Treasury, Tax Administration and Education. The key tool in promoting transparency and accountability will be the RAT Board’s website, which will provide transparency to the public about the manner in which stimulus dollars are spent, and a mechanism for the public to report fraud, waste and abuse. Tips received from the website easily can be referred to sworn federal law enforcement agents within the office of one of the Inspector Generals, the FBI and the United States Attorney’s Office for further investigation and criminal prosecution.
While accountability for the manner in which such significant sums of taxpayer dollars are spent is laudable and necessary, the undefined standard of what constitutes “waste” and “abuse” creates a legal minefield for companies receiving stimulus dollars. When it comes to criminal fraud, there are clearly defined statutes, standards of intent, and constitutional precedents to which the government must adhere when prosecuting a criminal case. Similarly, when bringing a case under the False Claims Act, 31 U.S.C. § 3729 et seq., the government or whistleblower must prove that the defendant acted knowingly, with deliberate ignorance or in reckless disregard of the truth or falsity of the information provided to the government. There is no standard for what conduct constitutes “waste” and “abuse” as used by the RAT Board, and there is no indication of the consequences when there is a finding of waste and abuse that falls short of the defined standards under federal criminal and civil fraud statutes. Compounding the confusion is the reliance the RAT Board appears to be placing on the information received from tipsters through its website. One person’s allegation of waste and abuse can be another’s innovative attempt to solve a highly complex technical problem.
To reduce the risk of becoming a RAT Board target, companies receiving stimulus monies should implement employee training and compliance programs which include standards of conduct. It is recommended that examples of waste and abuse specific to the project be included in the training program so that employees understand and have tangible examples of what constitutes fraud, waste and abuse. Employees should be encouraged to report misconduct, including waste and abuse; and procedures should be instituted to address employee complaints and concerns. If fraud, waste and abuse are detected, companies are encouraged to have a system and structure in-place for reporting the misconduct to the highest levels of management, including in-house counsel, and procedures for self-reporting the conduct to the government. When misconduct is detected, it is highly advisable to enlist the assistance of outside counsel to conduct a thorough internal investigation and provide legal advice on the manner in which the misconduct should be reported to the government.
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