Pubdate: Wed, 04 Oct 2000
Source: Commercial Appeal (TN)
Copyright: 2000 The Commercial Appeal
Contact:  Box 334, Memphis, TN 38101
Fax: (901)529-6445
Website: http://www.gomemphis.com/
Author: Lance Gay

A PROBE IN THE DRUG CZAR'S OFFICE

WASHINGTON - Congressional investigators opened a criminal investigation of 
the White House drug czar's office this spring after uncovering evidence 
that contractors improperly inflated advertising costs for the $1 billion 
national anti-drug campaign.

Robert Hast, head of the congressional General Accounting Office's elite 
criminal fraud unit told the House Government Reform criminal justice 
subcommittee Wednesday that GAO auditors uncovered evidence involving an 
estimated $8 million in inflated charges submitted in 1999 involving 
government advertising contracts.

The charges involve inflated billing for work done on the anti-drug 
contracts, payments of bonuses to executives, and improper travel charges. 
Hast said a former employee of the giant New York advertising firm Ogilvy & 
Mather also gave investigators testimony of other improprieties.

"We are looking at the fraud," he said.

Hast said that the progress of the investigation has been hampered since 
April by White House drug czar Barry McCaffrey, who has refused to allow 
auditors for the U.S. Department of Health and Human Services to complete 
an audit of the drug office contracts. That department oversees government 
drug programs.

Aides to the former U.S. Army general say McCaffrey wants to transfer the 
auditing responsibilities for his office to the U.S. Navy, but has not yet 
received approval for the Navy to do the work.

Hast also recounted how McCaffrey was involved in several other curious 
activities in the case. Although McCaffrey was told of the contracting 
irregularities in a two-page memo dated April 13 from his staff, Hast said 
McCaffrey initially denied to his investigators that he knew anything about 
the matter.

He then changed his testimony after the investigators showed McCaffrey a 
copy of the April 13 memo, which contains McCaffrey's own handwritten 
comments in the margin.

Hast also testified that in June, McCaffrey met privately with an Ogilvy & 
Mather representative, and told drug office subordinates after the meeting 
that he was "satisfied with the contractor's costs."

Howard Pleffner, the drug office's project officer supervising the 
contracts, said the audit is needed to close the books on a backlog of more 
than $13 million in pending bills from Ogilvy, and $5 million from other 
contractors. Some of the bills are a year overdue, he said.

Pleffner, who authored the April 13 memo to McCaffrey detailing the 
contract irregularities, found that some vouchers submitted for payment 
were 33 percent higher than those submitted earlier for the same services.

He said he stands by his conclusions that an investigation is needed to 
find out why this happened . "Yes, I still believe that," he said.

Rep. John Mica, R-Fla., the panel's chairman, said there's no reason for delay.

"If someone ripped off the taxpayers, I want this pursued,'' he said.

Mica warned that controversies surrounding the drug office are eroding 
support in Congress for the anti-drug campaign. The program is designed to 
use advertising and Internet campaigns to change tolerant views of American 
youth toward drug abuse.

Ogilvy officials were not asked to appear at the hearing.

But Bill Gray, president of the advertising firm, said in a statement later 
that all of the bills he submitted "were fair and appropriate" for work 
done on the anti-drug campaign. He said the company is prepared to make any 
adjustments necessary if some errors are found in the company's billings.

Don Maple, a senior policy analyst with the White House drug office, said 
the agency isn't sure that any fraud was committed.

"We don't have evidence of fraud, and we don't believe there is. We need 
the audit to verify this," Maple said.
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MAP posted-by: Larry Stevens