Today, Explained - Auditing Ukraine

Episode Date: March 8, 2023

Congress wants more oversight of how the billions in US aid to Ukraine are being used. But our own military can’t even seem to pass an audit. This episode was produced by Victoria Chamberlin, edited by Matt Collette, fact-checked by Laura Bullard and Haleema Shah, engineered by Paul Robert Mounsey, and hosted by Sean Rameswaram. Transcript at vox.com/todayexplained   Support Today, Explained by making a financial contribution to Vox! bit.ly/givepodcasts  Learn more about your ad choices. Visit podcastchoices.com/adchoices

The United States has given Ukraine billions of dollars in aid, weapons, money, whatever. And one year in, most Americans remain on board with that generosity. But the number of Americans who think we should pump the brakes is growing, and politicians are starting to reflect that. We're already seeing former President Trump pick up on this. I will get it solved in rapid order, and it will take me no longer than one day. We're seeing Governor DeSantis use some of the same talking points that we're hearing in Congress. Well, they have effectively a blank check policy with no clear strategic objective identified. You also have some lawmakers, particularly Republicans, but really some on both sides

that, you know, see a long-term concern of China and don't want to empty the cupboards of weapons now. This conflict must end and the president must be willing to do what it takes to end it with victory. Auditing Ukraine, ahead on Today Explained. The all-new FanDuel Sportsbook and Casino is bringing you more action than ever. Want more ways to follow your faves? Check out our new player prop tracking with real-time notifications. Or how about more ways to customize your casino page with our new favorite and recently played games tabs.

And to top it all off, quick and secure withdrawals. Get more everything with FanDuel Sportsbook and Casino. Gambling problem? Call 1-866-531-2600. Visit connectsontario.ca. Today Explained, Sean Ramos-Firm here with Dan Lamothe, who covers the United States military for The Washington Post. Dan's here to talk about auditing Ukraine aid. There's been a growing effort and a growing discussion of what kind of oversight is appropriate, what kind of oversight is appropriate, what kind of oversight is necessary, and how do you provide that oversight in a very active,

very violent war zone, particularly when you get out closer to the front lines. It's very difficult to monitor how some of these things are used in places where there are artillery shells falling pretty frequently. How much oversight has there been at this point, just over a year into this thing? There is a team at the embassy in Kyiv. We now have an embassy in Kyiv again. We didn't for a while, so that's another factor. Several dozen U.S. military personnel assigned to the embassy, not meant to be there in a military capacity. They have performed a handful of inspections. And then a lot of this is done remotely. You know, the Ukrainian military has been provided with electronics

that they can then kind of register what they've received and where it's being sent. But I think the closer you get to the front lines, the more and more difficult it is to actually monitor, you know, each and every widget, if you will. There's more emphasis on things that could be problematic.

It's kind of difficult to steal a multi-ton howitzer, for instance. But a stinger missile or a javelin missile that are used to take out low-flying aircraft or vehicles or something like that, you could see that if that were to end up in the wrong hands, end up in the black market, end up in a terrorist group. Those are the sorts of things that could potentially cause problems down the line. That seems to be where the emphasis is right now. So it sounds like there is some oversight, but with this new Republican-led House of Representatives, there have been calls for more oversight. Has that limited oversight satisfied the new House of Representatives? What's a satisfactory level of oversight is very much in the eye of the beholder.

But what we've seen so far is an initial hearing late in February where a lot of these questions were teed up. What's the structure to protect the American taxpayer? Because I think it's a legitimate question, the American taxpayer. Why are we spending money? It seems like a long way away. But a lot of constituents ask the question, what's all this got to do with me? Has there been any waste, fraud or abuse uncovered or reported to your office in these investigations? But how do we feel right now in time about providing all the assistance we've provided to Ukraine and our confidence that it is actually getting where we want it to go? And you had defense officials, you had the inspector general of the Pentagon

kind of explaining what they've been able to do so far. So part of it is what we're seeing and part of it is what we're not seeing. So what we're not seeing is any evidence of significant diversion. I think our assessment is if some of these systems have been diverted, it's by Russians who have captured things on the battlefield, which always happens, but that there's no evidence that the Ukrainians

are diverting it to the black market or some other thing else. There have been efforts. The effort is expanding week by week, but they haven't been able to do, you know, inspections out at the front lines. They haven't been able to do broad, wide accountability of each kind of equipment and each kind of weapon. You know, depending on how it sounds from a given lawmaker, it can sound very partisan or very bipartisan. Help me understand how U.S. taxpayers paying for pensions in Ukraine

is a good idea for our country. One notable factor, a number of the Republicans didn't really sound very different from the Democrats. I will compliment the president and the ranking member will be glad to hear this. I think it was right for him to go to Ukraine recently, and I think that that sent the right signal. They were asking how it worked. They were asking what they had been able to pull off. There's a number of Republicans who are interested in making sure this works. It sounds very reasonable when you hear it out. I've asked the Inspector General and the Undersecretary to appear today because it is imperative that the American people understand, A, where our security system is going, B, how it's being used, C,

and what protections are in place to ensure it doesn't fall into the wrong hands. There are other lawmakers who are very opposed to any aid to Ukraine at this point, really looking to rein it in. You know, the questions you get from some of them, you often come with a flavor of whether or not the United States should be providing the size and scope of aid that it is right now. Who are the lawmakers who seem most opposed to this sort of mass funding of the war effort in Ukraine? Congressman Matt Gaetz from Florida. He is someone who's really digging in on whether or not the United States should be providing virtually any kind of aid. Is the Azov battalion getting access to U.S. weapons?

There's a second group of Republicans here that are really pressing the Biden administration on why they are not doing more. Which argument seemed to sort of carry these hearings? Was it that there should be less funding for Ukraine or that there should be more aid and a ramping up of aid to Ukraine? More lawmakers are in favor of expanding aid, or at least continuing down the path the United States is on. You also hear sort of very frequent rhetoric from lawmakers, particularly Republicans, who fall in both camps, which is, we don't want a blank check. No blank checks for runaway spending. Whatever that means, we don't want a blank check for Ukraine.

But I think there's a desire to probably politically make this palatable to as many people as possible. of oversight, show that you are in favor of having as much accountability of these weapons as you can, you then can continue down the path of supporting Ukraine while placating some of the people in your group that are concerned that we're just kind of providing Ukraine whatever it wants. Did these hearings produce any evidence to support this idea that there isn't enough oversight and therefore weapons or even money could be getting into the hands of dangerous actors with bad intentions? oversight and therefore weapons or even money could be getting into the hands of dangerous actors with bad intentions. What came out several times was that there was no evidence of weapons falling into the wrong hands. But that comes with the caveat of them also acknowledging that there is still a limit on what kind of oversight they have been able to provide. And when one lawmaker in particular,

Congressman Garamendi from California, asked if any weapons had been provided that had then fallen into the wrong hands, the inspector general kind of pumped the brakes a bit and said, Once the weaponry goes into Ukraine, there needs to be appropriate accountability and tracking. We did make a number of findings and recommendations. Most of those have been addressed and the recs have been closed. There are a couple that are

outstanding related. But he could not promise that it hasn't happened at all. That's troubling, isn't it? It's troubling. It's also, I think, a very likely outcome. You're limited on your oversight. They can't promise something that they're not sure about because they haven't had that level of oversight. So I think the natural question is what kind of additional oversight do you need? How do you need to expand on this mission? Where do you need to send people? Do you need more people? What does it take to, I guess, feel confident that these weapons are ending up where they are intended to end up? That's a rolling concern. That's a rolling challenge that probably evolves over time and probably requires additional American effort. Up to this point, we've been

talking about weapons, but what about the billions of dollars? I saw President Zelensky fired a bunch of staffers over corruption concerns. Were any of the concerns discussed at this hearing about money and where it's ending up? Yes. In fact, Congressman Gates specifically raised the firing of those individuals. Deputy head of Zelensky's office can't explain where the sports cars came from, so he had to resign. Deputy defense minister resigned over contracting corruption. And the wife of a former Ukrainian politician was found with $22 million in cash crossing the border into Hungary last year. President Zelensky is kind of in a box on this. He's got the choice between taking action when he sees something going wrong and kind of dealing with the backlash of that, or kind of trying to

sweep it under the rug and then having it potentially blow up as a larger issue later. And also, you know, that money has an intended focus as well. And if people are skimming off the top, you would expect a good leader to say that's not acceptable. You know, you're fired and I'm going to find somebody who's going to do this job right. The best case scenario is the vast majority of this money, the vast majority of these weapons are delivered, used to their intended effect, create some good, you know, in the eyes of the Western world, stop Russia where it is, and help the Ukrainian people as they attempt to rebuild their economy. The American system isn't completely free of corruption either. But in a very dynamic system where there's an awful lot going on and an awful lot of money moving around, can you really promise 100% accountability? I think that's

impossible. I think it would be impossible if it was just our system alone. Dan Lamothe, Washington Post. Believe it or not, the Pentagon isn't terribly accountable to the American taxpayer. In truth, it's hardly accountable at all. The deets in a few beats on Today Explained. Support for Today Explained comes from Ramp. Ramp is the corporate card and spend management software designed to help you save time and put money back in your pocket. Ramp says they give finance teams unprecedented control and insight into company spend. With Ramp, you're able to issue cards to every employee with limits and restrictions Thank you. ramp.com slash explained ramp.com slash explained r a m p.com slash explained cards issued by

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Cash rules everything around me. Cream, get the money. But before he left, he said, yeah, a lot of lawmakers are worried about corruption in Ukraine with all this defense aid we're sending over there. But then he said the American system isn't free of corruption either. Don't go thinking our defense spending is 100 percent accountable. And obvi, that got us wondering exactly how accountable the Pentagon is to the American taxpayer. So we reached out to Julia Gledhill. She's an analyst at the Project on Government Oversight, a.k.a. POGO. Not to be confused with the Pogo stick. It happens a lot. Pogo keeps track of fraud, waste, and abuse throughout the federal government. And when it comes to the Pentagon, it's a big bag.

Last year, Congress authorized $858 billion for the Department of Defense. Counting defense spending outside of the Pentagon, like nuclear spending at the Department of Energy, for example, the budget is really closer to a trillion and a half dollars. And apparently that trillion and a half doesn't even include the billions and billions and billions of Ukraine aid. No big deal. Just an additional 62 billion. So we're talking about a lot of money and the DOD-based budget is just one large puzzle piece in that equation. But the trillion and a half dollar question,

how good is the Pentagon at keeping track of all of its money? Can I get a drum roll, Paul? The Pentagon is notoriously really bad at managing its money. We hear often that the DoD has failed every audit it's ever taken. Ever? Like, ever. Yes, and it has only completed five. The first one was in 2018, the last of which was this past winter.

So you're saying that the first time anyone even tried to hold the Department of Defense accountable for its spending, which is something in the neighborhood of a trillion dollars, was in 2018? It is the first year that the DOD completed what's called a comprehensive financial audit. Previously, they did have an Office of an inspector general. The inspector's general system exists to place internal watchdogs at all government agencies to detect and prevent waste, fraud, and abuse of funds. However, in a comprehensive sense, it is correct to say that the Pentagon had not completed a full audit until 2018, which is absolutely insane. How did it get to the point where the Pentagon finally had to complete a full audit in 2018? In 1990, Congress required every agency to go through an audit process. You can only kick the can for so long, basically. Yeah.

What happened in the intervening 28 years? You know, we could ask that question about so many things that the Pentagon is congressionally mandated to do and that they simply don't. Well, how did this go in 2018? Not well. The Pentagon received a disclaimer of opinion. Former comptrollers have described disclaimers of opinion like a red light. So it's helpful to think about different audit outcomes in terms of red light, yellow light, and green light. And we've gotten red lights every single year for five years. But when we talk about the Pentagon failing audits, it's a slight mischaracterization because a full failure would in fact be an adverse opinion, which to be clear

is also a red light. But an adverse opinion is one where independent auditors actually have all the information they have, and they say, OK, there's actually really systemic and pervasive inaccuracies in the way that the Pentagon is doing financial reporting. What disclaimers of opinion mean are that independent auditors were not able to obtain all of the evidence necessary to even formulate an opinion. They just, they straight up didn't have all the information they needed.

Did things get better in the subsequent four audits? There's been very, very slight progress in the past four years. However, the 2022 audit and the 2021 audit were basically the same. So, you know, there's not a lot to be happy about, in short. There are no consequences to failing an audit, right? And we know this because Congress, year after year, increases the Pentagon budget by tens of billions of dollars, even beyond what the president and the Pentagon request. And they do this despite the fact that the Pentagon has received these

disclaimers of opinion, these so-called failures for the past five years. And even despite the fact that in this past year, the DOD reported that it could not adequately account for 61% of its $3.5 trillion in assets. 61%. 61%. Well over half of its assets valued at $3.5 trillion. The DoD was like, well, we don't really have a complete and accurate picture of what those assets are. And to be clear, you know, this is a lot of material. It's a lot of information. information, $3.5 trillion in assets at the DoD are more than 643,900 buildings, structures, fences, utilities, all sorts of capital that you can imagine.

643,900 buildings. And they're located in nearly 5,000 sites around the world. This isn't just military bases. This is all types of physical DOD presences on the planet Earth. So to be clear, it is a lot of information, and a disclaimer of opinion is not surprising or unexpected, particularly for a government agency in the early years of completing comprehensive audits. But it is still astounding that well over half of its $3.5 trillion in assets are just not properly accounted for at the Pentagon when we continue to increase its budget year after year.

What are some of the things we've learned about how sloppy the Pentagon's spending might be in these audits we've had? So many of the Pentagon's assets are actually in the possession of military contractors. And when I say military contractors, I'm talking about corporations that work for the Pentagon. These are huge corporations that depend on the U.S. government. And in the most recent audit, the IG reported that it could not substantiate records of government property in the possession of contractors because the Pentagon did not have an internal tracking system for this equipment. And this is a big deal. It's also a longstanding issue that the Pentagon has completely

neglected. And the DOD estimated that about $220 billion worth of government property was in the possession of contractors. I almost expect Lockheed Martin to be getting wild sums of money with little accountability from the federal government. But what are some that might surprise us even more? The auditors reported errors in the Navy's property and inventory records. And in an effort to resolve those errors, the Navy found a warehouse it just did not have on the books anywhere. And inside of that warehouse, they found a warehouse. They Navy found a warehouse it just did not have on the books anywhere. And inside of that warehouse, they found a warehouse. They literally found a warehouse. And inside of the warehouse, it gets better. There was $126 million worth of spare parts for a number of aircrafts,

including the F-14 Tomcat, which, fun fact, the Navy retired in 2006. Oh, my goodness. When you see politicians in Congress calling for increased scrutiny on Ukraine aid and defense spending, does it strike you as a little ironic considering what you know about Department of Defense spending and the fact that we're in the throes of a fight over our debt ceiling at this very moment? Yes, it does strike me as ironic. I love to see people talking about oversight, but not only when it's politically advantageous or socially advantageous for them. I think that a lot of the time when we're talking about Ukraine, when we're talking about the debt ceiling, defense cuts, I'm seeing lawmakers really after soundbites and messaging bills and headlines. What I don't see them talking about is the deterioration of accountability mechanisms that prevent corporate price gouging. And the situation in Ukraine really highlights all of the longstanding issues

that the Pentagon has neglected for years. And so I really wish that these oversight conversations were happening on a broader scale. Of course, the Ukraine lens is really helpful in thinking through how this sort of lack of accountability impedes national security. But I don't see these lawmakers after soundbites also talking about how to prevent corporate price gouging in a way that maximizes bang for buck, increases national security, and protects taxpayer dollars. And why is that? Because it's not a popular political position to ask for more oversight of military spending? No, I don't think it is. It absolutely should be. But I think that people are really afraid

of looking weak on defense. And I think the reasons why are an entirely different conversation. But lawmakers on top of that, on top of sort of cowardice, honestly, in my opinion, they also have a lot of vested interests in keeping the defense industry close. Just to name two financial conflicts of interest, you know, many members of Congress on key national security committees receive campaign funding from defense corporations. There's also evidence to suggest that many of them have owned and traded stocks in defense companies. Pogo has long called for a congressional ban on stock trading for a reason, because it colors the way that lawmakers do policy in a way that is not equitable and not fair to taxpayers in any way.

So beyond Pogo calling for increased accountability, how does this problem get solved? These have been issues for a really long time. Like Congress, the Pentagon need to listen to the powers that be and take their freaking recommendations. Military contractors, the Lockheeds, the Northrop's, Boeing have a history of price gouging the Pentagon. And it's important now more than ever to prevent corporate price gouging to make sure that the Pentagon is actually paying fair prices and not arbitrarily inflating spending because they're getting ripped off by defense corporations. The answers are out there. The Pentagon is simply not taking them because money makes the world go round. And the revolving door so often seems to run Washington, D.C.,

and it's very disheartening, I will say, because there are folks in Congress and private industry in the Pentagon that simply ping pong between those three areas of policymaking and policy influencing, and they don't necessarily have an incentive to make acquisition better, to make the Pentagon a smarter buyer. And so I think that slowing down the revolving door, chipping away at corporate power in defense policy is all part of the process to advance a more accountable and a more effective Department of Defense. Julia Gledhill is an analyst in the Center for Defense Information at the Project on Government Oversight, a.k.a. POGO. Victoria Chamberlain is a producer at Today Explained.

Matthew Collette, Laura Bullard, Halima Shah, and Paul Robert Mounsey helped her produce this episode about... 643,900 buildings. 643,000 moments so dear. 643,900 structures. How do you measure measure measure a year in weapons in fences

in ammo in cups of coffee in roadways in Bradley's laughter and strife 643,900 minutes how do you measure year in the life?