Subcommittee Hearing Tries to Shed Light on COVID-19 Relief Fraud | Citizens Against Government Waste

Subcommittee Hearing Tries to Shed Light on COVID-19 Relief Fraud

The WasteWatcher

The COVID-19 pandemic upended lives and business around the globe, including throughout the United States.  In response, Congress allocated more than $4.5 trillion for coronavirus “relief,” which unfortunately was handed out without setting in place sufficient parameters to prevent waste, fraud, abuse, and mismanagement.  It is therefore not surprising that criminals, both foreign and domestic, were able to steal hundreds of billions of dollars desperately needed by millions of Americans.  

On June 16, 2022, the House Select Subcommittee on the Coronavirus Crisis held a hearing to examine the federal government’s efforts in detecting and preventing pandemic relief fraud.  The subcommittee received an update on the progress federal investigators, including the Small Business Administration (SBA) Office of Inspector General (OIG), the Secret Service, the Department of Justice (DOJ), and the Pandemic Response Accountability Committee have made in tracking down and recovering pandemic relief fraud.  

Testimony focused on the lack of anti-fraud measures in the Paycheck Protection Program (PPP).  SBA Inspector General (IG) Hannibal Ware called for a re-instatement of the rule of two, in which two federal employees traditionally must sign off on any request for funding.  The rule had not been implemented for the PPP.  According to IG Ware, this rule stops fraud and does not significantly prevent aid from going out to legitimate recipients.  While Rep. Jim Clyburn (D-S.C.) concurred with the IG’s recommendation, Subcommittee Ranking Member Steve Scalise (R-La.) disagreed that this was the biggest problem related to pandemic relief.  He cited an SBA OIG report that identified only 0.6 percent of total PPP aid as fraudulent,  compared to a Congressional Research Service report that found 18.7 percent of the aid given out through the Department of Labor Unemployment Insurance (UI) program was fraudulent.  He argued that the UI program was thus more prone to fraud than the Paycheck Protection Program.

While there may be some disagreement on the source and amount of pandemic relief fraud across federal agencies, it is clear that Congress and federal agencies charged with issuing payments to taxpayers placed too few guard rails on PPP payments.  This lack of security and oversight led to billions in improperly paid or stolen pandemic relief money and has prevented investigators from determining the true amount of fraudulent payments.   

The government’s abject failure to prevent COVID fraud shows the risks of hasty and reckless spending.  There were simple measures that could have been taken to reduce improper payments but faced with a political incentive to pay out money as fast as possible, these steps were not taken.  Clearly, any future aid programs must be managed with caution, lest taxpayer dollars again flow into the hands of criminals instead of those who are eligible for the money.  

Written by James Eiler

Sign Up For Email Updates

Optional Member Code