Dollar shuffle leaves MWR fund without cash

European Stars and Stripes, Darmstadt, Germany

FRANKFURT, Germany – The Frankfurt military community is being in­vestigated for spending at least $435,000 of morale, welfare and recreation money on such items as executive furniture, computers and a paper shredder.

The purchases, which came from Frank­furt’s fiscal 1991 MWR fund, have left the account without cash reserves, one commu­nity official said, and MWR facilities are operating on a day-to-day basis.

The fund, which one congressman calls “soldier dollars” comes from money that military community members spend at on­base MWR facilities, and profits are in­tended to go toward improving military quality of life.

Frankfurt tried to reimburse the pur­chases with tax dollars, but nearly all the requests were refused, according to Frankfurt and V Corps officials. Now the community is unable to proceed with such projects as a major renovation of the Plan­tation Club at Betts Casern, a source said.

The financial dealings came under in­vestigation last week following inquiries by The Stars and Stripes.

Among the Frankfurt MWR expenses being scrutinized:

⦁ $63,765 for furniture, carpeting, computers and other office equipment for the civilian personnel office, including a $5,000 desk and chair for the director.

⦁ More than $100,000 for expansion and new equipment for a weight room at the V Corps headquarters in the Abrams Building.

⦁ $24,600 for 12 air conditioners for the Scheduled Airlines Travel Offices and Merchants Bank in the Frankfurt shopping complex.

⦁ $18,000 for “brochures, etc.” for the civilian personnel office.

⦁ $1,800 for three-color T-shirts for the “U-Do-It” self-help store.

⦁ $1,700 for a paper shredder for the central accounting division.

Officials with Frankfurt’s community base support battalion and area support group have refused to disclose details about their budgets, but a source said the $435,000 represents half the annual net proceeds of Frankfurt MWR operations. The community reportedly is asking the U.S. Army Europe for a loan or grant of up to $800,000.

The outcome of the current investiga­tion may determine whether such a loan or grant is approved, said Lt. Col. Dick Dridges, a V Corps spokesman.

High-level sources in Frankfurt, who spoke to the newspaper on the condition that they not be identified, said the deal­ings violate Army regulations. They also said the situation resulted from the desire by some community officials to spend all available appropriated funds by the end of fiscal 1991 rather than lose them to other communities.

Such end-of-year spending, as long as it does not violate regulations, is an ac­ceptable way of doing business, Bridges said.

The problem facing Frankfurt was that complex appropriated-fund rules made it difficult to spend the money by Sept. 30, the end of the fiscal year, sources said. So the community chose to spend its MWR money – subject to fewer controls – on projects that normally would be financed by appropriated funds, these sources said.
The community then sought re­imbursement from appropriated funds – tax dollars – to replenish the MWR ac­counts, Bridges said.

The plan worked for a while, but it col­lapsed when V Corps finance officials stopped the reimbursements. By then, much of the MWR money had either been spent or contracts were already in place, sources said.

Misuse of MWR money in the past has led Washington politicians to seek stiffer controls on the system, said Will Cofer, a staff member of the House Armed Serv­ices Committee panel on morale, welfare and recreation.

“Just this kind of thing, if the allega­tions are true, are why we are introducing criminal penalties for people who abuse NAF money,” Cofer said. Non-appropri­ated funds are supposed to be used to support MWR programs.

Cofer said the 1993 Defense Appro­priations Act calls for criminal penalties similar to those already in place for abuses of appropriated tax dollars.

Non-appropriated funds arc earned by MWR facilities in military communities, including exchanges, bowling alleys and the club system.

Rep. Martin Lancaster, D-N.C., who chairs the House Armed Services Com­mittee’s MWR panel, calls such MWR funds “soldier dollars.” By regulation, MWR profits are supposed to be spent on projects that improve the quality of life for military people and their families.

Appropriated funds are tax dollars al­located by Congress for the military in the annual defense budget.

Frankfurt officials were aware as early as last January that the purchases and re­quests for reimbursement may have vio­lated Army regulations, sources said. One of these officials brought the matter of the failed reimbursements to the at­tention of Alan Smith, currently director of personnel and community activities for the Frankfurt region. His office is in charge of MWR funds in the Frankfurt area, which includes Darmstadt and Wiesbaden.

Smith held the same title for the Frankfurt community hst year, but said that in June 1991, he was detailed as act­ing chief of staff of the newly created 103rd Area Support Group.

His MWR fund manager, Bill Parsons, then became the acting director and was responsible for NAF spending. Parsons has since moved to Fort Belvoir, Va., and could not be reached for comment.

Smith said Thursday that he learned of possible reimbursement problems early this year and informed his boss, Curtis Clark, of the matter. Clark is now the chief of staff of the support group and was formerly the budget officer for the Frankfurt military community at the time the purchases were initiated.

Smith and Clark also said Thursday that they had conducted inquiries into the reimbursement matter but never in­formed the support group commander, Col. Kenneth Hibl. Smith and Clark would not say why they failed to tell the commander, nor would they comment on whether they knew the purchases were improper or who had authorized them.

Several weeks after the reimbursement process was called into question, an addi­tional $49,510 of MWR money was spent on unspecified items, according to sources.

Both Smith and Clark said they did not know about the specifics of the purchases before January. However, Clark acknowl­edged that he had signed some checks as­sociated with the purchases.

Staff members took their concerns to Col. William Alexander, the new com­mander of the 103rd Area Support Group, after reporters began asking com­munity employees about the matter two weeks ago. Clark said, however, that he had told Alexander about the matter a few days after the colonel assumed com­mand of the support group on June 9.

“I am aware of the allegations, and the matter is under an independent investi­gation,” Alexander said in a statement is­sued through a public affairs spokesman.

The spokesman would not say what agency is conducting the investigation.
However, The Stars and Stripes has learned that a U.S. Army Europe inspec­tor general team has been investigating earlier allegations that community offi­cials diverted $2,000 of MWR money to pay for flags for Alexander’s change-of­-command ceremony.

Alexander has reported the new allegationsto the inspector general team, sources said. A spokesman with the U.S. Army Europe IG would not confirm or deny that information.

Hibl, the support group’s previous commander, reported to work this month in the Army office of plans and opera­tions at the Pentagon. He said last week that he was unaware of investigations into Frankfurt finances, although he was aware of some of the purchases involved.

“Certainly, I was aware of the work,” Hibl said. “But I am not familiar with the funding.”

That funding involved several commu­nity agencies. According to Frankfurt ac­counting documents, officials issued NAF purchase orders through the MWR con­tracting office. Once an item arrived or – in the case of the weight room – con­struction was complete, community ac­counting officials paid the bills with MWR money.

They then requested that V Corps re­imburse the MWR fund, records show.
Sources said that V Corps finance offi­cials halted the reimbursements early this year after discovering the nature of the funding requests. The corps paid about $43,500 before stopping the reimburse­ments, according to sources and account­ing reports.

Army Regulation 215-1 limits appro­priated fund reimbursements to those services that appropriated fund employ­ees provide to MWR agencies.
However, the provision for such re­imbursements was eliminated on Oct. 1, 1991, because of abuses of the system, said Cofer, the Washington MWR panel staff member.

Even before the revision, the regula­tion did not allow reimbursements for construction expenses or the purchase of equipment or fixed assets.

By initially submitting purchase orders through MWR channels and later receiv­ing reimbursement from appropriated funds, Frankfurt officials hoped to de­plete the appropriated fund account and avoid losing the money at the end of the year, sources said. Had all the reimburse­ments been completed, the MWR fund would not show a loss.

Community MWR funds can be spent much faster than appropriated funds, said an official with the U.S. Army Con­tracting Comd in Europe. That is because the authority to spend MWR money is consolidated in the community command staff, whereas an outside source must ap­prove appropriated fund contracts.

As a result of the halted reimburse­ments, the Frankfurt MWR fund is short on cash, and facilities are operating off daily profits, a source said. Commumty officials have asked USAREUR headquarters for a loan or grant to cover the losses, the source said.

“We need about $700- or $800,000 to be viable again,” the source said, adding that the regional command has asked USAREUR headquarters for $1.2 mil­lion.
Of this, $800, 000 would shore up the Frankfurt community fund, the source said, and the remainder would go to the communities of Darmstadt and Wiesba­den.

There is no evidence that the other two communities were involved in the Frank­furt purchases, sources said.

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