What Fraud Might Look Like At TVA

What do country-western songs and fraud have in common?  They both are about lying, crying, cheating, and stealing.

While finding fraud may be a little more difficult than picking a good country-western song, past experience shows TVA employees can spot fraud as well.  Employee tips over the years have saved TVA millions and led to the removal and conviction of dishonest contractor employees.

Without your tips, we cannot effectively fight fraud.  While there is no simple guidebook for spotting fraud, here are some things to look for, including examples of past tips that have led to monetary recoveries.

How can we find fraud?

Have you ever gotten a part from a contractor that didn’t perform like you expected?  Ever seen an invoice that looked way too high for the services performed?  Ever had doubts about whether contractor employees were qualified?

Your suspicions may be the only available clue that TVA is being cheated. 

Like the stories in many country-western songs, fraud generally involves a deliberate act of deception to deprive another of something of value.  And like country-western music, the variations on this theme are limitless, including false claims, false statements, credit card fraud, and product substitution.  Fraud can be as simple as a contractor running up charges on a TVA credit card or as complex as the Enron scandal.

If you don’t think it looks right and TVA might be getting cheated, it could be fraud.

Do tips make a difference?

Yes.  Special Agent Jim Farr has been conducting investigations for more than 27 years.  “You have to build relationships to find fraud because most major cases result from tips,” Farr says.

The following real-life past cases at TVA show what tips can lead to. 

• Information from employees in Information Services (IS) led to the conviction of a TVA contractor executive and TVA recovering over $1 million.  After IS employees complained about the contractor’s billings and performance, an OIG investigation confirmed their suspicions were right on point.  The contractor had submitted false claims for hours worked and per diem.
  
  
• A tip from a TVA employee about the way a contractor was handling TVA tools led to five convictions and another recovery of more than $1 million.  Farr, the agent in that case, said the TVA employees who provided the information which led to the convictions should get full credit.
   
  "We could not have made the case without them,” he says.  “The contractor employees in charge of the tool program ordered tools that were not marked and then transported them to a private warehouse.
  
  "The TVA employee did not believe the contractor’s explanation that the tools were transported to a private warehouse for safekeeping so they could be used the following year when TVA was going to cut the budget.  We confirmed the contractor employees were in fact stealing and selling the tools."
  
  
• A TVA employee reviewing invoices became suspicious about the amount of goods being billed to TVA.  He called the OIG, and we found a contractor sales representative had been ranked as the company's number-one salesman and had provided training to other employees on how to obtain government contracts, based in large part on the amount of goods he sold to TVA.
  
  We also found, however, that TVA had not ordered the products and that the employee was receiving them and putting them in private warehouses.  The contractor employee used a TVA credit-card number to obtain the supplies and falsified records to indicate TVA received them.
  
  He was convicted, and TVA recovered more than $600,000. 

 “These investigations would not have taken place if TVA employees had not taken the initiative to report concerns to the OIG,” Farr said.

That Information Is Confidential. . . .

In the last issue of OIG Connection, we reported results from the TVA-wide survey which OIG conducted in late 2005.  We also provided in-depth information about OIG independence because several survey respondents expressed reservations about that topic.

Some survey respondents also expressed concerns about whether their identity would be kept confidential if they reported matters to the OIG.  While a majority of those responding to the survey agreed the OIG would keep their identity confidential at their request, we believe it is important to respond to the expressed concerns.

What are the concerns about confidentiality?

Representative concerns about confidentiality expressed in the survey included the following:

“Employees do not feel comfortable reporting something they would consider fraud due to the employee being concerned that their name would be told to TVA management.”

“I do not believe that my report would remain confidential.”

“With all the technology available and the ability to bring up deleted information from computers, track e-mail, and caller ID, I feel it is impossible to keep someone’s identity private.”

“If employees could be certain that no one would know they’d reported a problem, it’s likely that more problems would be reported.”

What are the facts?

Fact 1:  The identity of TVA employees who bring forward concerns is protected by law.  Under section 7 of the Inspector General Act, the IG is prohibited, without the consent of the employee, from disclosing the identity of an employee who brings forward a concern to the OIG, unless the IG determines such disclosure is unavoidable during the course of an investigation.

Fact 2:  The OIG does not review electronic data to identify anonymous sources.  The OIG is using a contractor—Intercede—to staff Empowerline and provide an additional layer of assurance that employees can submit concerns anonymously.  No one at TVA has access to Intercede’s records showing where an anonymous concern originated.

Fact 3:  The OIG does not reveal the identity of individuals who wish to remain confidential.  We have chosen not to investigate allegations where to do so would reveal the identity of a confidential source.  We do not even reveal anonymous allegations where the complainant’s identity can be discerned from the allegation itself.

Fact 4:  The OIG has never revealed the identity of a confidential source to TVA management.

Fact 5:  The OIG does not refer issues to TVA management where to do so would reveal the identity of a confidential or anonymous source.

Because of personal privacy concerns, neither the OIG nor management can explain some actions that are taken.  Sometimes these actions are perceived by others as being retaliatory, e.g., because the individual raised a concern.  If all the facts were known, however, that perception might be dispelled.

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Inspector General Richard Moore Begins Plant Visits

Inspector General Richard Moore kicked off his initiative to open a dialogue with TVA employees and contractors when he attended all-hands meetings at the Kingston Fossil Plant on February 9, at John Sevier Fossil Plant on March 24, and at Johnsonville Fossil Plant on March 30.

Moore said it was a positive experience to meet the people who keep TVA operations running.  “Since I spend most of my time in a corporate environment, these visits help me appreciate the hard, demanding work performed by TVA employees all over the Valley."

Plant managers Earl Deskins (Kingston), who retired at the end of March, Mike Wagner (John Sevier), and Don Wallace (Johnsonville) encouraged the OIG outreach efforts.

During the all-hands meetings, Moore described the OIG ’s role and responsibilities and encouraged employees to call Empowerline—OIG’s confidential connection for reporting fraud, waste, and abuse affecting TVA.

“I wanted to ensure that employees understand that Empowerline provides a vehicle for them to report concerns anonymously or in confidence, and that we value their input,” Moore said.

Why is the OIG reaching out to plant personnel?

“The OIG cannot be truly effective unless employees feel free to express concerns to the OIG,” Moore said.   The OIG relies heavily on employees who are on the front lines to identify areas where a more in-depth review, such as an audit or investigation, might help TVA.

If employees do not know who to contact or are unwilling to raise concerns, for whatever reason, the company is left in the dark and stands to lose money.  One way to make employees feel more comfortable is to interact with them at their worksite.

“As part of that effort, I plan to visit as many plant sites as I can over the coming year," Moore said.

Who can you contact at the OIG for more information regarding your facility?

The OIG outreach efforts include designating special agents for each TVA facility in order to establish better communications with plant personnel.

Jim Farr and Nancy Holloway, the special agents designated for Kingston and John Sevier Fossil Plants, and Craig Yates, one of the special agents designated for Johnsonville, also attended one or more all-hands meetings.  Moore encouraged plant personnel to contact them at 1-800-383-3835 with any questions or concerns.

 “We hope plant personnel will become more comfortable with the OIG if they have a specific person to talk to about their concerns,” Moore said.

To see the OIG contacts for other facilities, click here.

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Who Approves OIG Funding?

After the first issue of OIG Connection, which focused on OIG independence, we received an e-mail message from a TVA employee.  Below is the message and our response:

"Good newsletter, but it left one of my questions unanswered.  I understand that the President appoints TVA's Inspector General.  But who provides the budget?  If it's TVA, it could create an impression that TVA management might have some influence over OIG operations."

We thought this was a good question and we told the employee so.

OIG funding, however, is an issue that has undergone some scrutiny within TVA and the inspector general community, as well as from congressional appropriations committees in recent years.  Here’s our response to the employee’s question:

"The straightforward answer is yes, the TVA Board approves the OIG budget.  It is important to note at the outset that this Board has never attempted to direct or interfere in any way with our operations through its approval of our budget.  Rather, this Board has been very supportive of our budget requests and our independence.

"We recognize, however, that there may be a perception of a lack of OIG independence because the TVA Board approves the OIG budget.  To deal with that issue, we have worked with the Office of Management and Budget (OMB) in an attempt to have the OIG budget approved separately by Congress (as are the budgets of all other Inspectors General appointed by the President).  To date, OMB has included our budget in the President’s Budget during the last two budget cycles as a separate line item, to be funded by TVA revenues.  Each time, however, the relevant appropriations subcommittees removed our funding from the President’s Budget prior to its consideration by Congress.  We understand OMB plans to continue working on this issue in order to remove any perception of undue Board influence on our office.  In the meantime, we can only assure you that this budget issue has not and will not affect our operations."

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The TVA Ombudsman And The OIG

The OIG welcomes DeWitt Burleson as the new TVA ombudsman.  The OIG has been working with Mr. Burleson to better define the relationship between the OIG and the ombudsman.

Here are some clarifications on the roles of the OIG and the ombudsman.

What does the OIG investigate?

To state the obvious, the OIG does not have the resources to investigate every allegation it receives.  So how does the OIG decide what cases to open?

What authority does the OIG have?

The OIG cannot make decisions for TVA management.  By law, the OIG cannot have any program-operating responsibilities for TVA.  Accordingly, the OIG finds facts and makes recommendations but has no authority to require TVA to take a specific action, such as reinstating an employee or giving back pay.  While the OIG has generally been pleased with management’s response to our recommendations, the OIG has not always agreed with the action taken.

So where does the ombudsman fit in?

We believe the ombudsman will fill in the gaps the OIG cannot cover.  As noted above, the OIG generally does not have the resources to investigate or the authority to resolve recurring workplace issues, such as allegations of nepotism, equal employment opportunity matters, non-selection, or favoritism.  The ombudsman now creates a central location for employees to take those types of concerns if they do not want to pursue a formal grievance or complaint procedure.

What are some of the ombudsman's duties and concerns?

He will be able to help employees manage and resolve workplace problems and concerns at an early stage.  He also will have the authority to mediate, collect facts, make recommendations, and facilitate resolution based on his judgment and experience.

How will the OIG coordinate with the ombudsman?

The OIG will not:

• Refer a concern from an identified person to the ombudsman for handling without the permission of that individual.

• Refer anonymous concerns to the ombudsman for handling if the identity of the individual may be determined from the facts of the concern.

Having said that, some matters that may be more appropriate for the ombudsman's handling will inevitably be reported to the OIG.  Conversely, some issues that should be reviewed by the OIG likely will be reported to the ombudsman.  The OIG and the ombudsman will coordinate when necessary to make sure all concerns are handled appropriately; and each may refer a matter to the other for handling, when necessary, subject to the above conditions.