Friday, August 17, 2007

What does US 1 million dollar shipping cost ship?

My ex-colleague traded regularly on ebay; shipping cost was a major concern to him. But it doesn't take an ebayer to question a US 1 million shipping cost for an item that costs less than 20-cent. Apparently, the Pentagon lost its brain.

The automated Defense Department purchasing system permits that bills to be paid automatically for shipment labelled 'Priority' to combat areas or U.S. bases. The objective is to get items delivered to the troops promptly wherever they are without running into the redtape of manually approving costs. As much as human errors account for inaccurate payments such as overpayments, automation creates errors which are unknown without human's supervision. This flaw is exploited by the hardware equipment supplier company, C&D Distributors in Lexington, South Carolina. The scheme, however, came into light last September when a purchasing agent identified a bill that costs US 1 million dollar to ship two 19-cent washers. The twin sisters, Charlene Corley and the late Wooten Corley, are owners of the defunct company who pleaded guilty to federal frauds and money laundering. They had 'looted' the Pentagon of $20.5 million between the year 1997 to 2006. Among other ridiculous shipping costs recorded by the Pentagon were:

  • $293,451 to ship an $0.89 split washer
  • $455,009 to ship 3 machine screws worth $1.31 each
  • $492,097 to ship an $11 threaded plug
  • $499.569 to ship 10 cotter pins worth $1.99 each
Everyone starts cheating from small amount; so do the Corley's sisters. Each trasaction got bolder with time until guilt consumed Wooten that she wrote a cheque of $4 million to the DOD (Department of Defense) before committing suicide. Although Charlene pleaded guilty, her attorney claimed that it was Wooten who was directly responsible for the fraud. She is yet to be sentenced. The Pentagon hopes to recoup the $20.5 million by auctioning all the property and luxurious cars that the sisters have bought from the loot.

According to the Pentagon, each item that the military shipped rarely reached $100 and totalled just $68,000 for the past 6 years. I don't know how the automated Defense Department purchasing system work but surely the system is fradulent itself. How could 100 to 125 invoices submitted by C&D Distributors over 6 years for such exorbitant amount got paid unnoticed? Doesn't Pentagon has internal or external auditors, and if so, doesn't any of the auditors raised any eyebrows?

If a golden tap that costs $1,000 at T T Durai's office (ex-CEO of NKF, a fund-raising and health organization) became a public's interest after the NKF scandal, surely American taxpayers are as interested as Singaporeans to know how their money are managed by the government. The U.S. has public debt amounting to $8,967,781,081,102.69 and each citizen's share of this debt is $29,622.96. Based on the figure, $20.5 million that was swindled by both sisters is able to pay the debts of 692 Americans.

To my American's readers: are you angry at the system or the people?

PS: The system has since been changed.

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