Grand Theft Government

by David Wyld 9 months ago in corruption

A recent case of a secretary bilking the U.S. Air Force out of well over a million dollars in fraudulent pay illustrates just why there is the need for all the pesky control and oversight mechanisms in any organization—not just in government. However, when is too much control a bad thing?

Grand Theft Government

In my experience as a management consultant and professor, I have found that there really are three types of executives. Whether in the private or public sectors—and in the largest and smallest of organizations—the people who manage people really are of three basic mindsets when it comes to being in charge—and responsible for—the actions of others.

First, there are the true entrepreneurs, people who concentrate on what the now late President George H.W. Bush called "the vision thing." They focus on the big picture, leaving the details to others, and just care—above all—about getting things done and seeing accomplishments. In short, they don't "sweat the small stuff."

Next, we have the mainstream middle—the folks who focus on getting things done, but who also pay attention—to varying degrees—on processes, policies and rules. Depending on the person and the situation—and even the task at hand—they take a situational approach to managing things, and while they focus on results, they still want things done according to procedures. They do sweat the small stuff—and at times will even focus on those "small stuff" things, but overall, they do maintain an orientation—and focus—on the overall big picture.

Finally, there are the "gotcha" managers. In this case, the label says it all. They are the supervisor, the manager, the administrator, whatever their particular title might be, whose calling in life seems to be to call employees out the very second they step across a boundary. If there is a policy, a procedure, a guideline, etc. that applies to a given situation—or that they believe applies to the situation, they know it and almost take delight in acting as the football referee throwing the penalty flag or the umpire calling a strike. Whether a first-line supervisor or top executive, they live for the small stuff—and see nothing more important than always, always doing things "by the book!"

While some employees may describe these "third way" managers as strict, anal, or something a whole lot worse, one thing is for certain. These are the administrators who lie awake at 3 AM convinced that somewhere, somehow, someone is trying to pull-off something nefarious on the organization. They see as their primary task in supervising the work of one, two, 2000, or 10,000 other people to prevent that "something bad" from happening on their watch! They may not be the most effective of managers when it comes to the performance of their particular unit and the people within it, but gosh darn it, they always earn a clean audit! While no one employee in their charge may become a spectacular success, none of their employees do anything that ends up trending on social media for the wrong reasons. And when they see that "something bad" happens in any organization, they are the first to share a news story on it with their administrative peers and with their own employees as a "see, I told you so" kind of moment!

And so some of you reading this may already have had a story shared with you by your own supervisor or by a fellow manager who operates in that "gotcha" mode about the story that is the subject of this article. It is a story that is almost unbelievable in terms of how long it went on, how much money was involved, and how it happened in an environment where there is expected to be a ton of oversight and checks and balances for everything. It is a tale that would validate the darkest accounting fantasies of a "gotcha" manager, where with just a little ingenuity, a low-ranking employee is able to commit fraud on a massive scale and bring the reputation of the entire organization into disrepute. Indeed, the saga of Michelle Holt is one that many in the gotcha managerial mindset may keep on file for many years to come to share on as needed basis to buttress their way of overseeing others, as it is Exhibit A as to how things can go wrong if a single individual has the means, motive, and opportunity to embezzle from even the best of organizations.

The Secretary's Tale

Michelle Holt: The 52 year-old secretary who faked overtime to the tune of well over a million dollars over 17 years working as a civilian employee for the U.S. Air Force

Not in any disparaging way, but Michelle Holt would appear to be your average, 52-year-old administrative assistant who could be found in almost any office across America. She was a longtime secretary at Langley Air Force Base, which is adjacent to Hampton and Newport News, Virginia. In fact, Ms. Holt had been a civilian employee at this prestigious and strategic military base since 1992.

Now, how Ms. Holt came to be in the media spotlight is because she found a way to supplement her income on her job. The only problem was that it was illegal. And earlier this month, she pleaded guilty to federal charges of computer fraud and theft of government property. What she had done was commit payroll fraud—and not just a little bit of it, but a lot of it—and for a long time. All told, she was found to have used a supervisor's password to access her account to approve overtime that she had not actually worked to her paycheck. How much? Well, what started out as a few hours to bump her pay up a bit in 2002 kept growing as she became more and more daring in her payroll fraud. In fact, in 2017, Ms. Holt’s base salary was $51,324. However, she took home a whopping additional $119,585 in overtime pay—enough to approximately triple her base pay last year! In all over the course of the 17 year time span—before she was let go this past August, the Air Force's Inspector General's Office determined that Ms. Holt had racked-up a whopping $1.46 million in fraudulent overtime, holiday pay, and sick and annual leave. Now, she faces 15 years in jail for her crimes and will have to repay the ill-gotten funds, but she hopes that by cooperating with the government, she can reduce her sentence.

Analysis

So what are we to make of this story, and what are the lessons to be learned? What I would point to are a couple of things. First, this is just the kind of unfortunate story that hits our 24/7 news cycle today and paints all government employees—not just feds—with a bad, broad brush. Michelle Holt is an anomaly—an outlier. Her story—fortunately—is indeed a statistical rarity, as in the public sector in general, and in the federal government in particular, there are usually enough checks and balances in place, both in terms of processes—such as payroll, purchasing, travel, and much, much more—and in the technology used to execute them. While hers is certainly an extreme case, given the length of time that it went on undetected and the amount of money that she stole (apparently just to help pay her family's bills), it is just the kind of case that government critics will point to say we need much more oversight and controls over just what those working in the public sector are actually "doing."

Certainly, her case will cause changes to occur within the Air Force and most likely, make the military and other federal agencies make certain—darn certain—that such an extensive and long-standing payroll fraud could not be undertaken in their own areas. It may also make those in charge of other public sector agencies, regardless of how big and/or at what level they are, to reexamine their processes, procedures, and tech protocols to make certain that they can assure both their actual bosses and the taxpayers that no, this cannot happen here—and that's a good thing!

However, I also know that this is just the kind of story that the "gotcha" managers secretly love. It is extreme, and extreme cases, while rare, can be used by administrators with this mindset to justify not just prudent safeguards, but extreme ones. You want to make certain that no financial shenanigans go on, well, that's possible in any kind of organization, whether for-profit, non-profit, or governmental. However, you may find that all the measures, all the processes, all the oversight that you put in place to make certain that it is not your organization and any employee within it that makes news for a misspent cent can yes, assure that from not happening. And yet, at the same time, you really can't get much else done besides having that clean audit! That may be your personal goal as a manager, but in the end, is that what is good for the overall organization?

I would caution any organization from going to extremes, "laissez-faire" does not work, but neither does "lockdown mode." There is a constant tension present in organizations of all kinds and all sizes between those with the three mindsets toward such matters, and things may ebb and flow over time. Yes there can, and should, be steps taken to prevent abuse from occurring. No one can argue against that. However, we all know how very difficult it is to actually eliminate processes, rules, procedures, guidelines, etc. once they are put in place. It is far, far easier to come-up with such things—with good and reasonable intentions—than to eliminate them when either no longer needed or when it is found that the prevention is worse than the disease.

Not that organizations can or should tolerate stealing, embezzlement, harassment, lawbreaking, etc., but one of the great realities of human interactions are that they are indeed "messy." You simply can not anticipate each and every occurrence, circumstance, problem etc. and have a corresponding policy or procedure in place. Even in the era when employee handbooks are increasingly only in .pdf form online and rarely even seen in printed form, it is still far easier to choke down and hold back an organization and the employees within it with too many "thou shalts" and "thous shalt nots" than to empower workers to actually get things done by removing obstacles and the "gunk" that often develops over time even in the best of companies and government agencies. If more executives took the long view and truly better balanced the necessary tension between focusing on the small stuff and the big picture, we could have organizations with not just the safeguards, but the culture, to be better performers overall.

Sources

Langley Air Force Base secretary faked payroll for 17 years, giving herself an extra $1.46 million

Civilian Air Force employee accused of stealing $1.4 million from U.S. government

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David Wyld

Professor, Consultant, Doer. Founder/Publisher of The IDEA Publishing (http://www.theideapublishing.com/) & Modern Business Press (http://www.modernbusinesspress.com)

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