Senate committee sounds alarm over Defence credit card spending controls

Defence Department bureaucrats have been rebuked over lax financial safeguards and credit card use, a year after a scathing audit report uncovered $3.3 million in inappropriate spending of taxpayer funds.

A parliamentary committee considering Defence's management of credit cards and other official spending said the department was unable to provide confidence in its management of corporate expenses and was unwilling to explain millions in misused funds identified by the Australian National Audit Office in 2015.

The latest report from a Senate committee said Defence did not provide information about $15,000 in travel card spending over eight years in categories barred by the rules, or how more than $3 million was spent through purchase cards on similar expenses without triggering internal "red flags".

The committee, chaired by Labor South Australian senator Alex Gallacher, said it was unacceptable Defence spent nearly $900,000 on interest for cash advances to personnel on official travel in 2014-15 without independent checks on acquittals, suggesting the excuse that cash advances were required as a condition of employment did not reflect best practice in the public and private sectors.

Defence failed to provide reassurances that spending on taxis and hire cars was only allowed when the most effective use of public funds, and the committee remained concerned about the high use of specific individual taxis, multiple expensive fares and "small hours travel".

Among major concerns outlined in the report was a lack of accountability about the proper use of Defence money, suggesting there was disregard for or intention to circumvent official policies for credit cards without any consequences.


In one instance, $1.1 million in provisions for a major military exercise was paid for with a credit card, resulting in more than $18,000 in interest charges. Officials told the inquiry the cost should have been paid using an invoice, prompting retraining for some staff.

In January, Defence told the inquiry of 20 instances of fraud last year involving 89 transactions, amounting to $26,000.

The Australian National Auditor's Office report last year revealed staff billed taxpayers more than $3.3 million for events at private golf courses, sports memberships and entertainment over three years, and even spent more than $35,000 of taxpayer money to pay for traffic fines.

The department has turned to a contractor to bring order to its fuel card use since the audit, and has tightened some controls for taxi fares.

After $585,000 in fuel fraud was detected in 2013-14, it contracted fleet management company SG Fleet to report unusual card use and vet staff member explanations.

The agency told the Senate committee its forensic team was monitoring credit card transactions focusing on consecutive spending, cash advances and withdrawals, taxi fares, infringements and "high risk" types of spending.

Among the report's six recommendations were calls for Defence to be more transparent in reporting disciplinary action taken against staff found to be rorting credit cards or committing fraud, and for adequate controls to manage economical use of taxis and car hires.

The committee said Defence Minister Marise Payne should direct the audit office to monitor Defence credit card spending through biennial reviews and for an overhaul of the department's training.

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