The Federal Emergency Management Agency (FEMA) funds that were originally provided to help with disaster relief ended up going to an unauthorized casino repair and an additional $300,000 worth of “bonus” to the contractor who was assigned for the repairs, according to an audit conducted by the inspector general.
A grant worth $14 million were questioned by the inspector general of the Department of Homeland Security, which was awarded to the Omaha Tribe present in Nebraska and Iowa for flood damage repairs in the year 2011. The audit report, which was released last week, found evidence for “serious and pervasive” misrepresentation of the spending of federal funds by the tribe.
“The Omaha Tribe’s accounting system and supporting documentation were so unreliable and in such disarray that the only amounts we were able to verify with any degree of confidence were $2.8 million of unneeded funds; $165,000 of unclaimed insurance coverage; and about $74,749 of eligible and supported costs,” the inspector general had said in a statement. “We question the remaining $13.9 million as unsupported.”
The inspector general had further said that he had “little confidence” in any of the transactions that have been listed in its accounting system by the tribe.
The Omaha Tribe claims that it spent a sum of $168,764 in taxpayer funding for “ineligible expenditures to repair its old casino” and further awarded $312,282 to itself as a “bonus.”
FEMA had approved the construction of a new casino, making funds on the repairing of the old casino, ineligible. The Omaha Tribe had more money left over from the new casino project, which was then used to pay its own contracting company an extraordinary bonus.
“When the Omaha Tribe’s wholly-owned construction management contractor spent less than the amount FEMA estimated for the new casino, the tribe simply paid $312,282 to the contractor as a ‘bonus’ outside the terms of the contract for ‘savings realized,’” the inspector general had added.
“Of course, a payment to its wholly-owned contractor is essentially a payment to itself,” the inspector general said.
The total amount for the construction of a new casino was also questioned, as the tribe “could not provide the adequate invoices and canceled checks for $5.9 million of the $8.5 million” in their construction costs.
The Omaha Tribe went on to further make a $210,000 payment to its own construction management contractor.
The inspector general placed the blame for the misuse of funds on the Omaha Tribe and their use of tribal law, rather than strictly adhering to the federal regulations.
“These problems occurred for many reasons; however, the Tribal Emergency Management Director said that the principle of tribal sovereignty overrides Federal regulation and allowed the tribe to manage its grant through tribal law,” the inspector general said.
“Tribal sovereignty is the inherent authority of indigenous tribes to govern themselves,” the inspector general continued saying, “However, the principle of tribal sovereignty does not allow Native American tribes to poorly manage their finances, profit from Federal grants, pay themselves bonuses, or disregard Federal regulations.”
The inspector general also went on to recommend that FEMA identifies the tribe to be a “high-risk grantee” and has discontinued any more funds that may have gone to any more unauthorized work.