Treasury whistleblower revealed half-billion dollars in uncollected U.S. debts

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A Labor Department employee uncovered almost a half-billion dollars in federal government waste.

The former Occupational Safety and Health Administration staffer alerted officials nearly three years ago to unpaid fines owed the agency from companies with workplace safety violations. The Treasury Department, which did not collect the money because of a computer software error, soon found millions were owed to OSHA.

Now, it’s clear the glitch created a much larger problem than anyone — including the anonymous whistleblower — realized.

As a result of his complaint to the Office of Special Counsel (OSC), a new audit has found that the government didn’t collect almost $473 million owed to 28 federal offices, including the House, through June 27.

Problems apparently began in October 2017, when Treasury’s Bureau of the Fiscal Service installed “a commercial off-the-shelf” computer program for government-wide debt collection, according to July 7 report from the Bureau. This new system was unable to initiate collection requests from agencies “due to a software error primarily occurring when a business address was provided instead of a primary address,” the report explained. That meant “demand letters … could not be sent because of the missing or incorrect address information.”

This was fixed by January 2020 — but still, not much of the missing money has been collected. As of June 27, the report said, only 10 percent of the $96.9 million owed to OSHA was collected. The problem for the other agencies is much worse. They have collected just $3.2 million, less than 1 percent of the $376 million due.

“This is certainly one of the largest, if not the largest, dollar amounts referenced in a disclosure matter referred by OSC,” Special Counsel Henry J. Kerner told The Washington Post. “It is by far the largest sum of money uncovered by a whistleblower during my tenure.”

Kerner’s office is not to be confused with special counsels who are appointed on a temporary basis to investigate potential corruption. Instead, it’s an independent agency that enforces federal whistleblower protections and civil service laws among other things.

Kerner honored the whistleblower in September with the 2021 Special Counsel Public Service Award. “The whistleblower’s allegations in this case were substantiated,” Kerner said at the time, before problems extending far beyond OSHA were documented, adding the action resulted “in significant corrective action to fix the software problem and recoup funds owed to the government.”

But this good citizen and vigilant federal employee did not get a cut of the recouped dollars as Securities and Exchange Commission whistleblowers do.

Unlike the SEC, which funds rewards to whistleblowers (generally in the private sector), through fines against securities law violators, the special counsel is not allowed to offer monetary rewards to its whistleblowers, who almost always are federal employees.

“These employees come forward to voice concern about their agencies and are integral to ensuring government accountability,” said Zachary Kurz, OSC’s communications director. “Unlike with the SEC, our whistleblowers generally understand this is not a financial reward process — most make a disclosure because they want to correct some wrongdoing as part of their public service.”

SEC announced a $17 million award to a whistleblower on Tuesday, among $1.3 billion to 278 individuals since 2012.

In this case, the whistleblower wants to remain anonymous even though he no longer works for the agency. He is pleased his report to OSC led to action against a half-billion-dollar problem.

“I’m not driven by money,” said the OSC whistleblower, who spoke on the condition of anonymity out of concern for his former colleagues still in the department. “I’m an honest person … I’ve always wanted to do right, regardless of the consequences or whether it ruffles feathers or what have you.”

Following the whistleblower’s allegations, Kerner sent a September 2019 letter to Labor and Treasury that concluded that “there is a substantial likelihood that the information provided to OSC discloses a violation of law, rule, or regulation; gross mismanagement; and a gross waste of funds.”

The gross waste of funds is evident.

“It is certainly gross mismanagement,” Kerner said. “Although they were aware of the software problem, neither Treasury nor OSHA officials took prompt action to correct it, prompting the whistleblower to come to OSC. Treasury’s initial report also indicated that uncollected debts pose a potential waste of funds, because as debts age they become more difficult to collect.”

An OSHA statement said its inspector general “concluded OSHA complied” with federal debt collection guidance. Treasury said the software error “did not result in the loss of the Government’s legal rights to pursue the debts, and the majority of the debts continue to be collected through our normal collection processes.”

Labor and Treasury took no disciplinary action related to the mismanagement and the waste of millions.