Senator Coleman currently serves as the Ranking Member of the Senate's Permanent Subcommittee on Investigations (PSI). PSI's roots can be traced back to former President Harry S. Truman. As a U.S. Senator, President Truman chaired the Special Committee to Investigate National Defense Program, otherwise known as the "Truman Committee," during Word War II. In 1948, the Truman Committee formally became the Permanent Subcommittee on Investigations. The mission of the Subcommittee initially focused on inefficiency, impropriety, and illegality in government operations.
Since 1957, however, its jurisdiction has been expanded considerably. The Subcommittee is authorized to investigate a wide range of topics, such as (i) the effectiveness of homeland security programs, (ii) fraud, waste and abuse in government operations, (iii) the efficacy of Federal regulatory policies, and (iv) consumer protection matters.
Armed with a broad jurisdictional mandate, the Subcommittee has over the years conducted investigations into a wide variety of topics such as organized crime activities, health care fraud, and the proliferation of chemical, biological and nuclear weapons.
Senator Coleman continued the tradition of the Subcommittee when he became Chairman in 2003 and, throughout his tenure on the Subcommittee, has focused on three major areas: (1) homeland security, (2) waste, fraud and abuse in government operations, and (3) consumer protection issues. Under the leadership of Senator Coleman and current Chairman Senator Carl Levin, the Subcommittee has developed a reputation as one of the most bipartisan committees in Congress.
EXAMPLES OF SENATOR COLEMAN'S HOMELAND SECURITY INVESTIGATIONS
Dirty Bomb Vulnerabilities
Under Senator Coleman’s leadership, the Subcommittee conducted two investigations into the government’s efforts to prevent a “dirty bomb” attack. Specifically, the Subcommittee exposed vulnerabilities in the government’s licensing, control, and detection of nuclear and radiological materials. As part of those inquiries, the Subcommittee commissioned two sting operations, held two hearings, and issued a staff report with detailed recommendations to fix those vulnerabilities. In one of the sting operations, the Government Accountability Office, pursuant to a Subcommittee request, obtained a valid Nuclear Regulatory Commission license for radiological materials for a bogus company.
In response to Senator Coleman’s efforts, the Nuclear Regulatory Commission made some important changes. For instance, it established a 24-hour hotline link with U.S. Customs and Border Protection to facilitate on-the-spot licensee/carrier verification, twice amended its materials licensing procedures, and developed a (proposed) “Action Plan” to specifically address each of the PSI and GAO recommendations.
Security of U.S. Ports and Global Supply Chain
Senator Coleman led a three-year investigation into the federal government’s port security and supply chain security programs. Over the course of the investigation, PSI examined certain vulnerabilities in the Container Security Initiative, the Customs-Trade Partnership Against Terrorism, the Megaports initiative, and the use and deployment of radiation portal monitors. The Subcommittee also inspected the operations of numerous ports. Ultimately, Senator Coleman held Subcommittee hearings to examine the Subcommittee’s findings and issued a staff report detailing numerous substantial recommendations to improve these homeland security efforts.
Based on the Subcommittee’s extensive investigation, Senator Coleman played a key role in bringing the SAFE Port Act to final passage. The final bill contained a provision authored by Coleman requiring a pilot project in three foreign seaports to test an integrated scanning system using non-intrusive inspection and radiation detection equipment. This system is designed to scan 100 percent of all the cargo containers transiting the port, strengthening port security by helping ensure nuclear materials are detected before they could enter the country. To help ensure the transition to full implementation, the Coleman amendment also instructs the Secretary of DHS to issue progress reports on the screening system every six months.
United Nations Oil-for-Food Program
Senator Coleman also conducted an historic and groundbreaking investigation into evidence of abuse and misconduct related to the United Nations Oil-for-Food Program. Over the course of its two-year investigation into high-level corruption in the U.N., foreign governments, and international companies, the Subcommittee, under Senator Coleman’s direction, examined how Saddam Hussein was able to manipulate the U.N. program to generate billions of dollars of illegal cash and exert influence over political leaders all around the world. Senator Coleman convened four Subcommittee hearings and issued four staff reports to present evidence of misconduct and abuses.
The Subcommittee’s investigation helped establish the need for reform of the U.N. system to make it a more accountable and transparent organization. To that end, Senator Coleman introduced a wide-ranging U.N. reform bill with Senator Richard Lugar, then-Chair of the Senate Foreign Relations Committee. The PSI inquiry also led to a referral of misconduct to prosecutors for criminal investigations.
EXAMPLES OF SENATOR COLEMAN'S INVESTIGATIONS INTO WASTE, FRAUD AND ABUSE
Under Senator Coleman’s leadership, the Subcommittee has conducted numerous investigations into waste, fraud, and abuse in government affairs. Senator Coleman’s investigations have identified more than $12 billion waste, fraud, and abuse and potential taxpayer savings.
Federal Contractors Who Cheat on Their Taxes
PSI examined rampant fraud and abuse among Defense Department contractors, revealing in a 2004 hearing that 27,100 Defense contractors owed $3 billion dollars in unpaid taxes. As a direct result of the Subcommittee’s investigation, the Pentagon dramatically improved the collection of unpaid taxes from its contractors. For instance, 99% of all Defense Department payments are now searched for unpaid tax debt. The results have been dramatic: the Defense Department collected from tax-cheating contractors only $1 million per year in fiscal year 2003; in just three years, DoD’s collections rose to $26 million each year.
Following the successful inquiry into tax-cheating Defense contractors, Senator Coleman directed the Subcommittee to examine tax-delinquent contractors and suppliers in other areas of government operations. The Subcommittee revealed the following over the course of three additional hearings from 2005-2007:
*More than 3,800 GSA contractors owed $1.4 billion in unpaid taxes
*More than 33,000 civilian contractors owed $3.3 billion in unpaid taxes
*More than 21,000 Medicare providers owed $1 billion in unpaid taxes
As a direct result of Senator Coleman’s oversight investigation, federal agencies improved their collection procedures considerably. The results have been striking: in fiscal year 2003, the collection program recovered a mere $89 million; in fiscal year 2006, just three years later, the amount of collected unpaid taxes jumped to more than $303 million each year. These collections are projected to increase to $550 million each year by fiscal year 2009.
Federal Travel Abuse
Senator Coleman led a Subcommittee examination into the extent to which Defense Department employees violated travel rules by improperly buying first- or business-class airline tickets. Pursuant to a Subcommittee request, GAO estimated that 73% of DOD’s premium-class travel was improper, amounting to roughly $45 million per year in waste and abuse.
The Subcommittee’s inquiry led to significant tightening of the Defense Department’s procedures for premium-class travel. For instance, DoD limited the number of employees who could authorize premium-class travel, clarified the travel regulations, and encouraged its employees to adjust their travel practices to avoid the situations in which premium-class tickets would be justified. Those changes, which followed the Subcommittee’s inquiry and hearing in 2003, resulted in an estimated savings of $165 million over just two years. The rate of premium-class travel at DoD has plummeted from $60+ million per year to only $23 million per year, even though the total volume of travel in that time has doubled.
Following the Subcommittee’s successful investigation into waste and abuse in Defense Department travel, Senator Coleman directed the Subcommittee to examine the extent of abuse of premium-class travel throughout the rest of the federal government. In conjunction with the Subcommittee’s inquiry, GAO conducted an analysis and found that 67% of premium-class travel was improper, amounting to $146 million of waste and abuse each year.
As a direct result of the Subcommittee’s investigation, some federal agencies have already made changes. For instance, the Department of Agriculture, which had certain noteworthy violations, tightened its policies: (i) each premium-class ticket will have to be approved by the Department’s CFO, and (ii) it has initiated an investigation into evidence of travel abuse. Moreover, GSA expanded the government-wide reporting requirements, mandating the disclosure of all premium-class travel starting in FY08. Senator Coleman introduced legislation to go one step further, requiring that all business-class trips be disclosed to Congress.
EXAMPLES OF SENATOR COLEMAN'S INVESTIGATIONS INTO CONSUMER PROTECTION PROBLEMS
The Dangers of Imported Drugs and Unregulated Internet Pharmacies
The Subcommittee engaged in a two-year inquiry into the dangers of imported drugs and unregulated internet pharmacies. In addition, PSI examined the federal government’s efforts to prevent the import of illegal controlled substances, including oversight of the Customs and Border Protection, FDA, and to a lesser degree the DEA. This investigation culminated in two Subcommittee hearings, a clandestine operation conducted by the GAO on the Subcommittee’s behalf.
The Subcommittee’s investigation led to the introduction of legislation to combat the illegal import of certain pharmaceuticals and the monitoring of internet pharmacies. The inquiry also effected some changes in the government’s efforts to combat the illegal import of controlled substances, such as CBP’s establishment of new procedures to expedite seizure and processing of controlled substances.
Exposing Predatory Practices in the Credit Counseling Industry
Senator Coleman led a lengthy Subcommittee investigation into abuses in the credit counseling industry. The Subcommittee revealed predatory practices in the industry and uncovered that many ostensibly charitable entities were improperly using their non-profit status to generate significant revenues for their for-profit affiliates. The Subcommittee’s inquiry also included oversight of the federal government’s regulation of the credit counseling industry, focusing on IRS and FTC efforts to combat abuses. In connection with this inquiry, the Subcommittee released a staff report, held a hearing, and issued a formal Senate report.
The Subcommittee’s investigation shined a spotlight on the predatory practices and caused a major shake-up in the industry. For instance, as a direct result of the Subcommittee’s hearing and reports, one of the most predatory counseling agencies in the U.S. experienced a top-to-bottom reorganization and overhaul of its practices. In addition to rooting out predatory practices, the Subcommittee also promoted the use of Best Practices throughout the credit counseling industry. The Subcommittee’s investigation also strengthened efforts by the IRS and FTC to eliminate predatory practices.
Addressing Abuses in Refund Anticipation Loans
In response to consumer complaints about the predatory lending practices of some tax preparers, Senator Coleman instructed the Subcommittee to examine these issues. Senator Coleman ultimately held a hearing exposing certain predatory practices in the refund anticipation loan industry on April 15, 2005.
As a direct result of PSI’s investigation and hearing, one major nationwide tax preparer agreed to eliminate a surcharge on certain refund anticipation loans resulting in an annual savings of $5 million for the poorest tax payers.
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These investigations provide a snapshot of how Senator Coleman has used his leadership of the Senate Permanent Subcommittee on Investigations to protect the interests of Minnesotans and all Americans. As Chair and Ranking Member of the Subcommittee, Senator Coleman has focused his efforts on rooting out waste, fraud and abuse, bolstering America’s homeland security and protecting American consumers.
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