Keeping Hurricane Katrina Contractors Honest
Thursday, September 15, 2005SUSIE GHARIB: The state of Mississippi sued five major insurance companies today saying they're trying to cheat hurricane Katrina survivors out of millions of dollars in homeowners' claims. The state says the companies are having policyholders file paperwork saying they sustained flood damage in order to get immediate cash. The flood damage is not covered by homeowners insurance. Mississippi fears the companies can use that paperwork to refuse to pay claims. Nationwide Mutual, State Farm, Allstate, Mississippi Farm Bureau Insurance and United Services Automobile Association are the insurers being sued.
PAUL KANGAS: Businesses in some parts of New Orleans will open up again next week. And residents of some areas will be allowed to return to the city. President Bush and members of Congress are vowing to help the region's reconstruction effort with a comprehensive aid package. But as Darren Gersh reports keeping tabs on the money spent by federal contractors will not be easy.
DARREN GERSH, NIGHTLY BUSINESS REPORT CORRESPONDENT: As members of Congress call for tens of billions of dollars in new spending to rebuild the Gulf Coast, many are also asking the Bush administration to tell them more about where the money is going.
SEN. DAVID VITTER, R-LOUISIANA: I want to hear a new outside the box way of assuring transparency and accountability.
GERSH: The calls to keep a close watch on government contracts are increasingly bipartisan. While the contracts FEMA and other agencies issue are public documents, trade secrets and competitive information that might hurt a company's ability to bid in the future are not released to the public. At an oversight hearing on the government's response to Katrina, a leading democrat also charged that complaints by government auditors and whistle-blowers are being ignored.
REP. HENRY WAXMAN, D-CALIFORNIA: Under the administration, the value of no-bid contracts has skyrocketed. Oversight of federal contracts has been turned over to private companies with blatant conflicts of interest.
GERSH: The administration has already issued no-bid contracts to companies cleaning up the mess left from Katrina. Officials argue bypassing the bidding process helps the government to move more quickly in national emergencies, but companies often get multiple federal contracts complicating the oversight process.
SCOTT AMEY, PROJECT ON GOVERNMENT OVERSIGHT: It is very difficult to track down the component parts of those federal government contracts to figure out what all the puzzle pieces are that make the whole entire amount.
GERSH: Scott Lilly worked in the congressional appropriations process for 30 years . He says even members of congress are now having trouble figuring out how taxpayer dollars are being spent.
SCOTT LILLY, SR. FELLOW, CENTER FOR AMERICAN PROGRESS: Congress is not going to get the information unless they are willing to withhold money until that information is forthcoming. And so far that hasn't happened.
GERSH: The Department of Homeland Security was supposed to issue its first weekly report today, eetailing for Congress the costs so far of the Katrina cleanup. Those costs are estimated to be running $2 billion a day. Darren Gersh, Nightly Business Report, Washington.
