ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, October 10, 1996 TAG: 9610100092
SECTION: VIRGINIA PAGE: C-3 EDITION: METRO
DATELINE: RICHMOND
SOURCE: Associated Press
The cost of operating the State Employee Fraud Hotline for the past three years exceeded the amount of money the state recovered from rooting out fraud, the state auditor of public accounts said Wednesday.
Most of the complaints that were substantiated did not result in any repayment to the state, according to a report by Walter J. Kucharski.
The hot line identified fraud, waste and abuse totaling $1.18 million between July 1, 1993, and June 30, 1996. But the documented costs of pursuing hot line tips were at least $1.3 million.
What can't be measured are the hours many state officials and investigators put in checking fraud complaints, Kucharski wrote.
Gov. George Allen had not seen the report, but spokesman Greg Crist said the hot line has been a valuable tool in uncovering fraud and waste.
``I think it's also important to note that the hot line also has a certain deterrent value that is not quantified,'' Crist said.
The $1.18 million represented 234 cases, Kucharski's report said. Many of the cases, however, involved misspent funds that the state cannot recover.
In one such case, a state agency violated procurement procedures in buying office furniture, adding $56,215 to the cost. By the time the hot line received the complaint, the furniture had been paid for and received, and the person who made the purchase had left state government. The department, which was not identified in the report, did not return the furniture, and no money was recovered.
Based on hot line complaints, 3,560 investigations were completed in three years; 2,278 were unsubstantiated and resulted in no savings.
All hot line calls go to the state internal auditor, who refers them to the appropriate agency heads to determine their validity. The internal auditor is an arm of the executive branch.
Kucharski, who is appointed by the General Assembly, said in an interview that his agency has received an increasing number of complaints from state departments and institutions about the time and expense required to review hot line tips.
The hot line ``is a valuable internal control for the commonwealth,'' but the process for screening calls needs to be less expensive and time-consuming, Kucharski's report said.
Twenty other states operate fraud hot lines, and most have procedures to screen calls and determine which have no substance, the report said.
Clogging the hot line are calls from individuals complaining about local governments and officials.
``By allowing the state internal auditor to deal with these calls, the hot line evolves from a `State Employee' hot line to a `State' hot line,'' the report said.
State internal auditor John J. Huston said he will put a call-screening program into effect immediately.
Gov. Douglas Wilder established the hot line by executive order Sept. 28, 1992, and encouraged state employees to report fraud, waste and abuse.
The order directed the Department of the State Internal Auditor to oversee the hot line. The internal auditor also must make sure other state agencies make appropriate investigations.
Kucharski's study did not include the hot line's first nine months of operation, because records are compiled by the fiscal year.
The hot line has had successes:
*Becky Norton Dunlop, the state secretary of natural resources, used Capitol Police to drive her to meetings. She stopped after Republican Gov. George Allen's chief of staff told her not to use police officers as chauffeurs.
*Nine staff members at the Virginia School for the Deaf and Blind in Hampton lost their jobs after turning a local field trip for students into an out-of-state lunch adventure.
*A law was rewritten to stop Virginia truckers from dodging thousands of dollars in taxes by titling their vehicles in other states.
Despite its balance sheet, Huston said the hot line remains ``an effective deterrent against fraudulent, wasteful or abusive activities.''
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