Treasury Department whistleblower revealed half a billion dollars in uncollected US debt

It’s now clear that the glitch caused a much bigger problem than any other – including the anonymous ones Whistleblower – realized.

As a result of his complaint to the Office of Special Counsel (OSC), a new review has found that As of June 27, the government has failed to collect nearly $473 million owed to 28 federal agencies, including the House of Representatives.

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

This was fixed by January 2020 – but there’s still not much missing money was collected. As of June 27, only 10 percent of the $96.9 million owed to OSHA had been collected, the report said. The problem for the other agencies is much worse. They raised 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 amount referenced in any disclosure matter referred by OSC,” Special Counsel Henry J. Kerner told The Washington Post. “This is by far the largest sum of money uncovered by a whistleblower during my tenure.”

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

Kerner honored the whistleblower with the 2021 Special Counsel Public Service Award in September. “The allegations made by the whistleblower in this case have been corroborated,” Kerner said at the time, before documenting issues that went well beyond OSHA, adding the measure did “resulted in significant corrective action to address the software issue and recover funds owed to the government.”

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

Unlike the SEC, which funds rewards for whistleblowers (generally in the private sector) through fines against securities rights violators, the Special Counsel may not offer cash rewards to its whistleblowers, who are almost always federal employees.

“These staff are coming forward to voice their concerns about their agencies and are instrumental in ensuring government accountability,” said Zachary Kurz, OSC’s communications director. “Unlike the SEC, our whistleblowers generally understand that this is not a financial rewards process — most are making a disclosure because they want to correct wrongdoing as part of their public service.”

The SEC on Tuesday announced a $17 million award for a whistleblower, including $1.3 billion for 278 people since 2012.

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

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

Following the whistleblower’s allegations, Kerner sent a letter to Labor and Treasury in September 2019, in which he concluded that “there is a significant possibility that the information provided to OSC reveals a breach of any law, rule or regulation; gross mismanagement; and a gross waste of money.”

The gross waste of money is obvious.

“This is certainly gross mismanagement,” said Kerner. “Although aware of the software issue, neither the Treasury Department nor OSHA officials took immediate action to fix it, prompting the whistleblower to come to OSC. The Treasury Department’s initial report also indicated that uncollected debts are a potential waste of money, as they become more difficult to collect with age.”

An OSHA statement said the inspector general “has concluded that OSHA has complied with federal debt collection guidelines.” The Treasury Department said the bug “did not result in the loss of the government’s statutory rights to collect the debt and the majority of the debt continues to be collected through our normal collection processes.”

Labor and Treasury have taken no disciplinary action over the mismanagement and waste of millions.