Exclusive: The Pentagon’s Massive Accounting Fraud Exposed

In all, at least a mind-boggling $21 trillion of Pentagon financial transactions could not be traced, says one source.

By Dave Lindorff and cross-posted from The Nation

In November 15, Ernst & Young and other private firms that were hired to audit the Pentagon announced that they could not complete the job. Congress had ordered an independent audit of the Department of Defense, the government’s largest discretionary cost center—the Pentagon receives 54 cents out of every dollar in federal appropriations—after the Pentagon failed for decades to audit itself. The firms concluded, however, that the DoD’s financial records were riddled with so many bookkeeping deficiencies, irregularities, and errors that a reliable audit was simply impossible.

Deputy Secretary of Defense Patrick Shanahan tried to put the best face on things, telling reporters, “We failed the audit, but we never expected to pass it.” Shanahan suggested that the DoD should get credit for attempting an audit, saying, “It was an audit on a $2.7 trillion organization, so the fact that we did the audit is substantial.” The truth, though, is that the DoD was dragged kicking and screaming to this audit by bipartisan frustration in Congress, and the result, had this been a major corporation, likely would have been a crashed stock.

As Republican Senator Charles Grassley of Iowa, a frequent critic of the DoD’s financial practices, said on the Senate floor in September 2017, the Pentagon’s long-standing failure to conduct a proper audit reflects “twenty-six years of hard-core foot-dragging” on the part of the DoD, where “internal resistance to auditing the books runs deep.” In 1990, Congress passed the Chief Financial Officers Act, which required all departments and agencies of the federal government to develop auditable accounting systems and submit to annual audits. Since then, every department and agency has come into compliance—except the Pentagon.

Now, a Nation investigation has uncovered an explanation for the Pentagon’s foot-dragging: For decades, the DoD’s leaders and accountants have been perpetrating a gigantic, unconstitutional accounting fraud, deliberately cooking the books to mislead the Congress and drive the DoD’s budgets ever higher, regardless of military necessity

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2 thoughts on “Exclusive: The Pentagon’s Massive Accounting Fraud Exposed

  1. No lost, not mising. It’s in a piggy bank and the US Government dips in to it. Watched a vid on USA watchdog. Fella by the name of Holter. (Not sure.)
    This explains why the jets are worn out. Equipment failures, reduced training chicks at sea ramming cargo ships etc. Can not win a war, the list goes on and on.
    The US military gets the greatest cash budget on earth…ON PAPER. In reality the country going broke and they will just abandon the 800+ foreign bases and go quietly home.
    Putin knows it, China and everyone else knows it.. Hense the back chat from “shit holes.”


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