(Mourning the 10th anniversary of a natural catastrophe that turned itself into a man-engineered disaster – Hurricane Katrina)

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Emails that the FEMA head, Michael Brown, exchanged with friends and colleagues at the height of the Katrina crisis

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In August 2006, the US House of Representatives Committee on Government Reform – Minorities published a report titled Waste, Fraud & Abuse in Hurricane Katrina Reconstruction Contracts. This report reveals the Republican Party-fueled avarice that went by the name of relief at that time, ably aided by a lying President.

You can google this report – it is in the public domain, but here are some titbits you’ll love. Especially my Indian brethren will be relieved that naked avarice lives even in the very mecca of democracy and rule of law – the United States of America. Here we go…….

In the aftermath of Hurricane Katrina, the Bush Administration turned to private contractors to provide relief and recovery services worth billions of dollars. Soon it was apparent that taxpayers and the residents of the Gulf Coast were being stiffed with waste, fraud and abuse in federal contracting.

The report identified 19 Katrina contracts, collectively worth $8.75 billion, that saw significantly inflated charges, wasteful spending, bribery and mismanagement.

In each of those 19 contracts, US government auditors found massive irregularities that reminded me of my days as an outside sales guy selling to the huge Indian Public Sector undertakings like The Indian Railways, SAIL and the ordnance Factories. I used to deal with the same folks who signed off on the same 18-wheeler bringing in the same steel scrap over and over and over, dawn to dusk. One consignment got billed three, sometimes four times.

The post-Katrina shenanigans assured me that there are just as many crooked folks in the developed nations as well, ripping off the tax-payers in broad daylight without any questions asked. Unlike in third world countries like India, over here whenever they want to steal, they write the laws that make stealing legal. Here are some of the cases of pillage in broad daylight, as reported in the Waste, Fraud & Abuse in Hurricane Katrina Reconstruction Contracts report……

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Off all those shenanigans, the blue roof program does take the cake – In the aftermath of Hurricane Katrina, FEMA contracted with three large contractors – the Shaw Group, Simon Roofing and LJC Construction – to cover hurricane-damaged roofs with blue tarps. These contractors subcontracted with other contractors, who in turn subcontracted with yet another layer of subcontractors. Because so many contractors took a cut, the costs to taxpayers were inflated over 1700 times the going rates. The taxpayer paid an average of $2,480 for a blue tarp roof that should not have costed more than $300.

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The rip-off went on and on. The US has a legislation that provides federal employees the authority to use credit cards to buy small amounts of goods or services directly from vendors. These charge card programs were designed to provide an easy, efficient means for government agencies to make small, routine purchases in emergencies, while avoiding the requirements of the contracting regulations.

While the use of charge cards can increase flexibility and streamline acquisition procedures, government charge cards were used for making purchases like 2,000 sets of canine booties at a cost of more than $68,000, a 63” plasma screen television set for $8000 and 20 flat-bottomed boats, only eight of which were actually found in the  FEMA inventory – all purchased at twice the retail price.

Move over, Suresh Kalmadi, even with your greed in the 2010 CGG, Katrina makes you look like Judhishthir.

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In one of the hundreds of cases of outright bribery, two FEMA officials, Andrew Rose and Lloyd Holliman, pled guilty to accepting bribes from a food service contractor. In their plea agreement, Rose and Holliman acknowledged that they demanded a $20,000 payment plus $2,500 a week in exchange for inflating the number of meals provided by the contractor.

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Hang on, this getting better – in September 2005, the Corps of Engineers awarded four contracts worth $500 million each to remove and dispose of debris. Bribery allowed the contractors to double bill for the same debris, overstate mileage to claim extra fees and haul ineligible debris from private property to boost reimbursements. Government inspectors observed contractors fraudulently being paid for the same load by exiting dump sites without completely unloading all the debris from its truck bed.

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In the aftermath of Hurricane Katrina, FEMA purchased 25,000 manufactured homes and 1,800

modular homes at a cost of $915 million to provide housing and temporary office space for displaced persons and businesses. But according to auditors, as of January 2006, only 4,600 manufactured homes and 100 modular homes had been used for housing or office space. Six months after Hurricane Katrina, nearly 11,000 homes worth over $301 million were sitting on the runways at some Arkansas airport.

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After Hurricane Katrina, FEMA went into a greed-fueled buying frenzy – it spent $1.7 billion to purchase 114,000 trailer-homes, with at least 27,000 of them purchased ‘off the lot’, without negotiating either price or specifications. Yet, over 23,700 of these trailers sat unused for months, gradually losing their resale value and turning into worthless junk due to lack of maintenance. In December 2005, Scott Wells, FEMA’s Federal Coordinating Officer in Louisiana for Hurricanes Katrina and Rita, testified before the Senate that the entire concept of purchasing trailers for temporary housing had been flawed.

Wells further testified that the cost to house a family for 18 months (the limit for FEMA-financed temporary housing) could reach $90,000 to $100,000 for housing in a mobile home or $30,000 to $40,000 for housing in a travel trailer. He noted that if FEMA had simply given the families $26,200 in cash for housing (which is the maximum entitlement for hurricane victims), this would allow them to quickly get on with rebuilding their lives and afford them a permanent housing solution while saving the taxpayer hundreds of thousands of dollars.

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In September 2005, FEMA awarded Carnival Cruise Lines three contracts worth a combined $236 million, to provide temporary housing to Hurricane Katrina evacuees, in their cruise ships. These contracts paid out more than $50,000 to house a single evacuee for six months, which works out to more than $300 per person for each night’s lodging. And yet, the conditions aboard the ships were deplorable, food and janitorial services vastly inadequate.

One reason for the high costs of the Carnival contracts was the generous terms the cruise line had negotiated with FEMA. Rather than being paid based on the cost of housing the evacuees, this highly profitable cruise ship company was compensated for both the revenues the company would have earned under normal operations and any additional expenses that Carnival incurred under the contract.

As a result, the American taxpayer reimbursed the company for both the cost of housing the evacuees and the revenues the ships would have earned from their casino operations, liquor and drink sales, and on-shore excursions, as if they had been operating normally. The $236 million contract value also did not take into account all the cost savings that Carnival realized under the contract, such as avoided entertainment and navigational expenses

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And all the while that the house was burning down, the head of FEMA, Michael Brown, whom George Bush infamously endorsed (‘You’re doin’ a heck of a job, Brownie’), was exchanging emails with his colleagues and friends, that gave a reader the sense that he was somehow outside the groove…

‘If you see my FEMA attire, you’ll vomit’

‘Are you proud of me? Can I quit now? Can I go home?’

‘Roll up your sleeves tonight. You’re going to be on TV. You have to look like you’re working hard’

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President Bush had promised American taxpayers: “We’ll make sure your money is being spent wisely. And we’re going to make sure that the money is spent honestly.” A spokesperson for the White House Office of Management and Budget similarly asserted, “We feel that we have the controls in place to prevent abuse and fraud.” It is widely believed that Bush knew he was lying.

In the same breath, the Bush administration refused to allow emergency funds to pay public sector salaries. The City of New Orleans, whose tax base had been wiped out overnight, had to fire three thousand workers in the months after Katrina. Reminiscent of the De-Baathification of Iraq after the 2003 invasion, the lay-offs came at the precise moment when New Orleans was in desperate need of workers.

Instead, millions of public dollars were diverted to outside consultants, many of whom were powerful real estate developers, aiming to clean up in the clean-up. Thousands of teachers were fired, paving the way for the conversion of dozens of public schools into privately-run charter schools.

The story of the man-made disaster that followed Katrina is the work of one man – Milton Friedman (See Part-2) – father of Disaster Capitalism, an economic philosophy that thrives on exploiting catastrophes (natural and man-made) which invariably leave behind poverty and hunger, bribery and abuse of power.

In my opinion, Friedman was a criminal who should have been incarcerated, preferably chained to the floor of his cell for life and fed only dead mice. Alas, Friedman escaped unscathed – he died in 2006, before justice could be meted out to him.

As to the poor black New Orleanians, They are trying to get back to their honky-tonk blues, their rum and Coca-Cola, Oh Mama me O Mama.

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Related reading:

Big, Easy Money: Disaster Profiteering on the American Gulf Coast

by Rita J. King

The Shock Doctrine

by Naomi Klein

Waste, Fraud and Abuse in the Hurricane Katrina Contracts

US Senate House of Representatives, Committee on Government Reform – Minorities, August 2006

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