Our community cancer

The recent OPA report detailing the Marianas Public Lands Authority travel abuses to the tune of $1.3 million emphasizes the need for a concerted effort to curb the misuse of resources on island. Many states, cities, military and other government agencies have a Fraud, Waste & Abuse program or hotline that allows individuals to anonymously “blow the whistle” on observed or suspected abuses. This helps to deter and prosecute individuals who intentionally misuse valuable resources. Do we have anything like that here? If not, why?

If we were to list them in order of severity and intent, it should be called Waste, Abuse & Fraud, or WAF for short. Let’s define the gradations of WAF, and why it affects everyone.

[B]Waste[/B] happens when an individual or organization does not use resources in a productive manner. This can be unintentional due to apathy, ignorance, or not knowing better methods. However, waste is typically a cause of poor management decisions and practices that results in unnecessary expenses, or gross mismanagement of assets.

At the next level of severity and intent is [B]Abuse[/B], which can occur when an individual uses his/her power or position inappropriately to exploit resources for personal benefit. It usually involves taking advantage of “loopholes” in policies and procedures, or the misuse or destruction of resources. It is similar to Fraud; however, even though Abuse is unethical, it may not be unlawful.

[B]Fraud[/B] is the deliberate and dishonest actions that violate trust and possibly break laws. Individuals who commit Fraud take waste and abuse to a higher level of intentional deception to deprive others, such as the public, of their rightful resources so that the fraudster can benefit personally.

To illustrate the differences between the three, imagine that an employee attends a training conference in Hawaii. (Acceptable) The employee chooses the Hawaii location even though the same conference will be held in Guam and travel costs will be much cheaper. (Waste) While in Hawaii, the employee stays at a very expensive resort instead of at the hotel hosting the conference. (Abuse) Returning back to Saipan, the employee submits multiple travel reimbursement requests for the training trip to Hawaii. (Fraud)

It is practically impossible to determine the total cost of WAF because Abuse and Fraud often involve concealment, which means that what gets investigated and punished is only the tip of the iceberg. According to a 2004 report from the Association of Certified Fraud Examiners, about six percent of an organization’s total revenues is lost to occupational abuse and fraud. Now this is only based on known cases of fraud, and it does not include activities that are wasteful.

Some of the costs associated with WAF results in higher costs to customers, decreased wages, lower profits and fewer resources available to expand current programs or develop new programs. Imagine the millions of dollars spent on frivolous flights that could have been used to buy books for schools, build more classrooms, or purchase new electric generators. In other words, every dollar wasted is a dollar that cannot be spent wisely somewhere else. The inappropriate use of taxpayer dollars and public property affects you and me in a multitude of ways.

We would go as far as to say that many of the difficulties we suffer today are the accumulation of Waste, Abuse & Fraud committed by government employees, executives, and politicians over the years. WAF is an insidious community cancer that erodes assets, zaps initiative, hurts morale, paralyzes productivity, and reduces results. People who consistently engage in Waste, Abuse & Fraud are the termites of society who slowly gnaw away at the productive resources until they are rendered useless. And your pocketbook will continue to tighten if it is tolerated.

You could almost think of it as a WAF tax that each of us has to pay in the form of a utility surcharge, higher fees, and other charges that do NOT improve the quality of service. If tolerated, the WAF tax eventually converts into taxes on income and sales because of the need of politicos to maintain their status quo, while lowering the quality of life for others.

Here are some things that can be done to help eliminate WAF activities in your organization: have stronger internal controls, establish and enforce a code of ethics, require employees to look for ways to eliminate WAF activities, and have a system for employees to report those activities without fear of reprisal.

If we all work together to eliminate this community “cancer,” we will improve our ability to pull out of this economic nosedive. If Waste, Abuse & Fraud continues to be tolerated, then brace yourself for the ride ahead.

[I](Rik is a business instructor at Northern Marianas College and Janel is the owner of Positively Outrageous Results. They can be contacted at: biz_results@yahoo.com)[/I]