NEWSLETTER:: Progress Report: Overlooking Fraud Record

June 1, 2004

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- Center for American Progress

Tuesday, June 01, 2004 11:47 AM

Progress Report: Overlooking Fraud Record

by David Sirota, Christy Harvey, Judd Legum and Jonathan BaskinSIGN UP >> SEND TIP >> PERMALINKS >> MOBILE >>

June 1, 2004

MEDICARE

Overlooking Fraud Record

HALLIBURTON

Cheney Lied

IRAQ

U.S. Railroads U.N.

UNDER THE RADAR

CORRECTION: Last Friday's Progress Report said that John Snow was Inspector General of the Treasury. Snow is Secretary of the Treasury. We regret the error.

MEDICAREOverlooking Fraud Record

As seniors fear being bilked by the confusing new Medicare discount drug card program that starts today, the Center for American Progress released a new report showing that 20 of the 73 companies the White House approved to participate in the program have been charged at the federal and/or state level with fraud. The report, entitled "Paying to Play," shows those 20 companies gave more than $3 million to the president and conservatives in Congress since the 2000 election cycle. That represents more than 60% of the total contributions given to the president and conservatives from all 73 approved card companies. Additionally, seven of the president's "Pioneers" (those who raised $100,000 or more for him) are linked to companies approved for the program. Three of those companies have been accused of fraud. See more on Medicare at American Progress's special Medicare site.

"PIONEER" COMPANIES APPROVED DESPITE INVOLVEMENT IN FRAUD CHARGES: According to AP, Medco president Alan Lotvin recently held a $100,000 fundraiser for the president after the White House overlooked Medco's fraud record and approved the company for the drug card program. Medco recently was forced to pay $29 million in fines in a probe into "unfair and deceptive acts" in 20 states. Similarly, PacifiCare lobbyist Tom Loeffler raised at least $200,000 for the president. His company was subsequently approved by the White House for the drug card program, even though it was recently forced to pay the federal government $87.3 million to settle alleged violations of the federal False Claims Act. According to the 4/13/02 Orange County Register, the fine was "the largest civil settlement ever assessed on a company providing health coverage to federal employees." And Bush Pioneer Samuel Skinner is a member of the board of Express Scripts, a company approved by the White House even though its business practices are currently under investigation by the New York attorney general.

BUSH CRONY'S FIRM APPROVED, DESPITE RESISTING FEDERAL PROBE: AdvancePCS, a company run by Bush's longtime Texas crony and donor David Halbert, was approved to participate in the drug card program, even though in 2002 the company "fiercely resisted attempts by the Justice Department to interview some of its employees" during a probe into a prescription drug price fixing scheme. During the 1980s, Bush was an original investor in an early version of AdvancePCS, which netted him up to $1 million. He rewarded Halbert by allowing AdvancePCS to help craft the legislation that created the original drug card program. For more on the Bush-Halbert-AdvancePCS relationship, see American Progress's earlier report.

HERITAGE SPREADS UNTRUTHS FOR DRUG COMPANIES: In a new paper claiming to be "The Truth About the Medicare Drug Discount Card," the Heritage Foundation spreads the drug industry claim that the cards create competition and "transparency in drug prices." What Heritage does not say is that the "the drug prices offered by a given card can change from week to week as can the list of drugs the cards cover." In fact, while seniors "are scrambling to find the one card that offers the best prices for the drugs they take," the "card sponsors and drug manufacturers have made that task nearly impossible as prices are changing even before the program has begun." Meanwhile, once seniors select a card, they are locked into it for at least a year, even if drug prices and selection changes for that card.

HALLIBURTONCheney Lied

Vice President Dick Cheney, appearing last September on Meet the Press, told a national TV audience, "I have absolutely no influence of, involvement of, knowledge of in any way, shape or form of contracts led by the [Army] Corps of Engineers or anybody else in the Federal Government." But an internal Pentagon e-mail obtained by Time magazine reveals that Cheney's office had specific influence, involvement and knowledge of a multibillion-dollar Halliburton contract. The email, sent by an Army Corps of Engineers official, said the contract was approved contingent on informing the White House, but that the Corps "anticipate no issues since the action has been coordinated with the VP's [Vice President's] office." For more Cheney denials about Halliburton that have proven false, see this American Progress report.

CHENEY STILL HAS FINANCIAL TIES TO HALLIBURTON: Cheney has also repeatedly denied any financial connection to Halliburton. On 9/14/04 Cheney said, "I've severed all my ties with the company, gotten rid of all my financial interest. I have no financial interest in Halliburton of any kind and haven't had, now, for over three years." In fact, Cheney receives more than $150,000 in deferred compensation each year from Halliburton and holds 433,000 stock options, which increase in value when the company's stock rises. Time Magazine reports that Cheney's "recently filed 2003 financial-disclosure form reveals that Halliburton last year invoked an insurance policy to indemnify Cheney for what could be steep legal bills 'arising from his service' at the company."

IRAQU.S. Railroads U.N.

For weeks, President Bush has insisted that the makeup of the Iraqi government to which the U.S. will transfer power June 30 is "going to be decided by Mr. [Lakhdar] Brahimi," a special envoy to the United Nations. Putting the U.N. in charge was supposed to reassure Iraqis that the new government would owe their primary allegiance to the Iraqi people, not the United States. But it appears that the Bush administration has not been able to relinquish its iron grip on the process. According to the NYT, Ayad Alawi, named Prime Minister on Friday, was presented to Brahimi as "'a fait accompli' after President Bush's envoy to Iraq, Robert D. Blackwell, 'railroaded' the Governing Council into coalescing around him." Brahimi "reluctantly endorsed [Alawi] only after American officials aggressively recommended him." Yesterday Paul Bremer, head of the U.S. Coalition Provisional Authority, "ordered Iraq's Governing Council...to postpone a vote on nominating a president because the council's favored candidate is opposed by the authority." This morning, Bremer finally relented after the candidate he favored – former Iraqi foreign minister Adnan Pachachi – "turned down the job." In light of the continued confusion, take a look at the American Progress alternative plan for Iraq: Iraq: a Strategy for Progress.

MEET THE NEW BOSS, SAME AS THE OLD BOSS: Both Alawi and the newly appointed president, Ghazi al-Yawar, are members of the Iraqi Governing Council, a group appointed by the Bush administration which is viewed by Iraqis "as little more than a mouthpiece for the United States." The new government is in grave danger of "looking too much like the old one" and "could lack the credibility it needs to carry the country though the turbulent period leading to nationwide elections next year." Sheikh Mohammed Bashir al-Faydi, the spokesman for the Association of Muslim Clerics summed up the problem: "We were hoping that they would chose a neutral government, a trusted government. Instead we see only a second version of the Governing Council with America written all over it."

U.N. PROCESS HAS COLLAPSED: The appointment of Yawar and Alawi makes it clear that the "UN process...[has] largely collapsed." Brahimi recommended that Iraqi politicians like Yawar and Alawi should "stay out of the interim government." Brahimi "sought independent technocrats who would act as caretakers until elections are held next year." Although he was supposed to be in charge of the process the results "have been the opposite of what [brahimi] wanted."

ALAWI PASSED FAULTY INTELLIGENCE TO THE CIA: Alawi, "is the secretary general of the Iraqi National Accord (INA), an exile group that has received funds from the Central Intelligence Agency." Alawi also has close connections the British MI6 intelligence agency. Alawi is "the person through whom the controversial claim was channeled that Iraqi weapons of mass destruction could be operational in 45 minutes" – a claim pushed by British intelligence and parroted by President Bush. After months of weapons inspections, Alawi's claims have yet to be supported by any evidence. The INA had little support in Iraq. In fact, "during an uprising in the town of Baiji, north of Baghdad, last year, crowds immediately set fire to the INA office." Alawi's close association with the CIA and the United States "could become an issue in a country where public opinion has grown almost universally hostile to the Americans."

AS TRANSITION FLOUNDERS, SECURITY PROBLEMS PERSIST: The chaotic transition is especially troubling in the context of Iraq's persistent security problems. In recent weeks, "much of the country has been badly destabilized by the recent surge in fighting aimed at forcing out U.S. troops." While the U.S. boasts that it has created a 70,000 person Iraqi police force, just 3,000 have completed a two month training course – 55,000 are listed as untrained. $18 billion in reconstruction projects have been "delayed by insurgent attacks and rampant corruption." A poll conducted by the CPA in April found 92 percent of Iraqis believe "freedom and democracy are meaningless without peace and security."

HEALTH CARE – REIMPORTATION REALITY: The Hill reports this morning that lawmakers may finally have "lined up the 60 votes needed to get a prescription-drug reimportation bill through the Senate, which some say could lead the White House to change its position on the controversial issue." Reimportation of drugs from Canada has gained massive popular support in recent months, as Americans have grown increasingly angry at drug prices pushed up by the powerful pharmaceutical lobby.

ENVIRO – BUDGET CUTS AFFECT PARKS: "America's national parks, including those in Utah, continue to suffer from chronic underfunding, according to surveys by a group of retired Park Service employees and park managers in Utah." Group spokesman Bill Wade said the surveys' findings "raise questions about the Bush administration's stated goal to 'restore and renew' the national parks…Wade said his group's survey found 'widespread and often deep cuts in budget, staff, maintenance and key services that will diminish the experience of national park visitors.'" Despite the fact the cuts will affect visitor experience, the ability to monitor natural resources, and "servicewide responses to homeland security," Rep. Chris Cannon, (R-UT) said "that decreased tax revenues and increased spending on the war against terrorism make it unlikely the parks will get any significant budget increases until at least 2007."

AFGHANISTAN – THE FORGOTTEN WAR: With the administration focused on Iraq, Robert Novak suggests in his column today that "The handful of valiant American warriors fighting the 'other' war in Afghanistan is not a happy band of brothers. They are undermanned and feel neglected, lack confidence in their generals and are disgusted by Afghan political leadership. Most important, they are appalled by the immense but fruitless effort to find Osama bin Laden for purposes of U.S. politics." One of the major problems in the region continues to be the flourishing drug trade. According to the Washington Times, "Farmers in Afghanistan have harvested another bumper crop of heroin-producing poppies, but the Bush administration still cannot decide on a strategy to eliminate this new source of al Qaeda funding more than two years after the Taliban fell."

CONGRESS – A BIPARTISAN CALL FOR OVERSIGHT: Congressional leaders are calling for more oversight of President Bush's administration, the NYT reports. "The disclosures about the treatment of detainees, coupled with complaints from some quarters about the Bush administration's handling of antiterrorism money, have ignited a debate over whether Congress is keeping a close enough eye on the White House and staying adequately informed on developments in Iraq." There is a growing sense among both conservatives and progressives "that the Bush administration resists energetic oversight.I believe our failure to do proper oversight has hurt our country and the administration," said Rep. Christopher Shays (R-CT), who traveled to Iraq to get a view of the situation outside administration control. "Maybe they wouldn't have gotten into some of this trouble had our oversight been better."

Don't Miss

DAILY TALKING POINTS: U.N. Bypassed in Selection of Interim Iraqi Government

AFRICA: New American Progress column calls for action to halt the mass killings in Sudan

IRAQ: The New Yorker takes a look at Ahmad Chalabi, master manipulator

TERRORISM: Antiterrorism agency Transportation Security Administration underfunded; shrinking away

CAMPAIGN FINANCE: The Nation details Arizona's fight to overhaul campaign finance system.

Contact The Progress Report:pr.

Daily Grill

"Since I left Halliburton to become George Bush's vice president, I've severed all my ties with the company, gotten rid of all my financial interests...And as vice president, I have absolutely no influence of, involvement of, knowledge of in any way, shape or form of contracts led by the Corps of Engineers or anybody else in the federal government..."

– Vice President Dick Cheney on Meet The Press, 9/14/03

VERSUS

"Time Magazine has obtained an internal Pentagon e-mail sent by an Army Corps of Engineers official...dated March 5, 2003 [that] says 'action' on a multibillion-dollar Halliburton contract was 'coordinated' with Cheney's office. The e-mail says Douglas Feith, a high-ranking Pentagon hawk, got the 'authority to execute RIO,' or Restore Iraqi Oil, from his boss, who is Deputy Defense Secretary Paul Wolfowitz."

– Time Magazine, 5/30/04

Daily Outrage

The White House approved 20 companies involved in fraud charges to administer the Medicare drug discount card program.