DEA AUDIT REVEALS POOR ACCOUNTING PRACTICES

WASHINGTON (AP) -- The Drug Enforcement Agency, stung twice this year by
revelations that its own workers stole millions of dollars, has kept a
sloppy checkbook, according to an audit that may explain how it got scammed.

The audit concludes the main U.S. drug fighter hasn't been able to
``accurately and completely account'' for the property it owns, the money
that drug traffickers give undercover agents during sting operations or the
seized drugs it has on hand.

In fact, the DEA's accounting was so poor in 1997 that the private
accounting firm that conducted the audit under new government
accountability laws said it could not form an opinion as to whether the
agency's books are accurate.

``We were unable to satisfy ourselves as to the fair presentation of these
balances and transactions,'' Peat Marwick reported after looking at DEA's
1997 books.

The audit cited DEA for several ``material weaknesses,'' the most severe
criticism in professional accounting. Some of the concerns had been brought
to the agency's attention in previous years.

The agency agreed with the findings. The Justice Department, which overseas
DEA, said Tuesday that while it hasn't seen the final audit it is aware of
the concerns and believes they have been adequately addressed with a new
accounting system DEA is implementing this year.

``The department is committed to addressing the problems that have been
raised,'' said Chris Watney, a Justice Department spokeswoman. ``The
department acknowledges there were concerns about DEA's antiquated
financial system, and a new more modern system is being implemented now
that addresses those concerns. The attorney general had made it a high
priority to see those changes through.''

The Senate Judiciary Committee is expected to quiz Attorney General Janet
Reno about the problem at a hearing Wednesday. While the language in the
audit is dry and technical, the consequences of the shoddy bookkeeping took
real human form in March when two separate criminal cases were brought
against DEA workers who stole more than $6 million between them in schemes
that went undetected for years.

In one, a just-retired DEA budget analyst was charged in a 74-count
indictment with stealing $6 million between 1990 and 1997, spending it on
an extravagant lifestyle for himself and his family.

The indictment accused David S. Bowman, 57, of Arlington, Va., of using the
money to buy and renovate several homes, lease and purchase automobiles
including a Lincoln Mark VIII, send his family on European vacations and
buy jewelry, collector coins and art work.

The indictment accused Bowman, a 22-year agency veteran, of submitting
hundreds of false payment vouchers in the name of a sham company, prompting
the DEA to send checks to a post office box he controlled. The alleged
fraud was only discovered by happenstance when a colleague became suspicious.

The audit of DEA's books didn't specifically address the criminal cases but
disclosed that the agency's accounting practices were ripe for abuse.

``The DEA has not maintained a system to accurately and completely account
for property and equipment,'' the audit said, claiming the agency doesn't
always get invoices for purchases and in 1997 couldn't document more than
$5 million in purchases. Just a few days after Bowman was indicted, a
second DEA employee pleaded guilty in a different scheme to conspiring with
a colleague to order and steal nearly $500,000 in electronic equipment over
five years.

The court records said Michael D. Hendrix, 53, a DEA telecommunications
specialist, and an unnamed colleague submitted 37 purchase orders for
electronic equipment that included a 50-inch television set, videocassette
recorders, stereos and computers. The two kept the equipment for their own
use or sold it.

The audit also noted that the DEA has no way of reporting exactly how much
in seized drugs it has in inventory at the end of the year because the
computer system the agency uses can't generate a historical report.

The DEA told the auditors it doesn't have the resources to perform ``a
physical inventory count at year end on each exhibit of evidence for which
there are tens of thousands.''

And the audit found that the agency ``does not have a system and related
controls in place to ensure that all trafficker-directed funds activities
are recorded in the general ledger.'' That is money DEA undercover agents
receive from drug traffickers during sting operations.

The DEA has agreed to ask its local offices to report those totals
quarterly so they can be counted in the ledger.

Checked-by: Mike Gogulski