B-237975, Nov 23, 1990, 70 Comp.Gen. 102

B-237975: Nov 23, 1990

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For dollars at a Navy disbursing office is indebted to the United States for the $29. Has requested our decision concerning the validity of a claim the Navy is asserting against Captain Don W. That was based on an erroneous exchange rate. /1/ For the reasons set forth hereafter. We concur with the Navy's position that Captain Medara is indebted to the United States for the $29. We are unaware of any legal basis that would authorize the Navy to waive Captain Medara's indebtedness. The Navy advised Captain Medara that the disbursing officer should have used an exchange rate of $1.65 per pound and that his unwarranted reliance on a higher rate had resulted in an $29. 000 overpayment that Captain Medara was required to repay.

B-237975, Nov 23, 1990, 70 Comp.Gen. 102

MILITARY PERSONNEL - Pay - Overpayments - Error detection - Debt collection - Waiver MILITARY PERSONNEL - Relocation - Reimbursement - Payments - Foreign currencies - Exchange rates A Navy Captain who exchanged British pounds sterling, representing the proceeds from the sale of his London home, for dollars at a Navy disbursing office is indebted to the United States for the $29,000 overpayment he received as a result of the disbursing officer's use of an erroneous currency exchange rate that violated the applicable provisions in the Navy Comptroller Manual.

Captain Don W. Medara, USN-- Currency Exchange Rates:

The Office of the Comptroller, Department of the Navy, has requested our decision concerning the validity of a claim the Navy is asserting against Captain Don W. Medara to recover an overpayment he received as a result of a currency exchange at a Navy disbursing office in London, England, that was based on an erroneous exchange rate. /1/ For the reasons set forth hereafter, we concur with the Navy's position that Captain Medara is indebted to the United States for the $29,000 overpayment he received as a result of the erroneous currency exchange. Furthermore, we are unaware of any legal basis that would authorize the Navy to waive Captain Medara's indebtedness.

BACKGROUND

On July 18, 1988, pursuant to a scheduled permanent change of station to the United States, Captain Medara exchanged 116,000 British pounds sterling, representing the proceeds from the sale of his England residence, for dollars at the Navy disbursing office in London, England. The disbursing officer made the currency exchange based upon the $1.90 per pound rate at which the disbursing office had acquired its holdings in pounds. Accordingly, Captain Medara received $220,400 for the 116,000 pounds he exchanged.

Subsequently, the Navy advised Captain Medara that the disbursing officer should have used an exchange rate of $1.65 per pound and that his unwarranted reliance on a higher rate had resulted in an $29,000 overpayment that Captain Medara was required to repay. After Captain Medara questioned the Navy's claim against him, the Navy agreed to ask us to determine the validity of its position and whether any basis exists for waiving Captain Medara's indebtedness.

ANALYSIS

The rules and procedures governing the procurement, custody, and disposition of funds by Navy disbursing officers are set forth in Volume 4, Navy Comptroller's Manual (Manual), /2/ Chapter 2. The Manual's introduction states that the Manual is issued by the Comptroller of the Navy for the information and guidance of "all persons in the Department of the Navy" and that compliance with its instructions is "mandatory except in the case of specific authority for deviation therefrom." According to the Navy, the disbursing office violated two separate provisions in the Manual when it made the currency exchange in question. First, under paragraph 042551-3c(4) disbursing officers are authorized to exchange foreign currency for military personnel departing an overseas area pursuant to a permanent change of station, subject to certain limitations. Under this paragraph disbursing officers cannot exchange foreign currency in an amount which exceeds an individual's monthly pay unless the individual had acquired the excess foreign currency as the result of rental refunds or from the authorized sale of personal property. Since the 116,000 pounds sterling that Captain Medara exchanged represented the proceeds from the sale of real property, the exchange appears to have violated this restrictive provision. However, the Navy's claim against Captain Medara is not based on the disbursing officer's apparent violation of this provision. Although the exchange of such a large amount of foreign currency may have been unauthorized, /3/ the Navy would not have suffered a loss and would have no claim against Captain Medara if the disbursing officer had used the correct exchange rate.

The Navy's claim against Captain Medara is based on the Manual, paragraphs 042591-1a and 2a, the relevant portions of which read as follows:

"1. a. ... Except as provided in subpar. 2, fluctuating currencies will not be revalued, but will be expended from the disbursing officer's account at the average purchase rate of such currency on hand. ...

"2. a. ... In certain of the countries which have fluctuating currencies, the concentration of military disbursing officers, military banking facilities, and nonappropriated fund activities has necessitated that an official uniform rate or series of rates be promulgated and adhered to by all concerned. Accordingly, on installations served by military banking facilities under contract with the Department of Defense, disbursing offices located on those installations shall value their holdings at the rates used by the military banking facility."

The American Express Bank is the military banking facility that services Navy personnel based in London, England. Under paragraph 042591-2a, the Navy disbursing office in London is required to use the same exchange rate the military banking facility uses in determining the value of its holdings in pounds and in making currency exchanges. /4/ The obvious purpose of this requirement is to prevent the very situation that occurred here, in which the military banking facility and the Navy disbursing office at an installation use different exchange rates, thus allowing individuals to "shop" for the most favorable rate whenever they exchange currency. /5/

Captain Medara claims that the waiver he requested was granted by the Commander of the United States Naval Activities in England with full knowledge of the procedures the disbursing office was using to determine the currency exchange rate. Not only is this contention unsupported by any evidence, but even if true, the Commander had no more authority than the disbursing officer did to approve an exchange rate that was not consistent with the rate determining mechanism provided for in the Manual.

The record shows that in clear contravention of the express provision in the Manual, compliance with which is mandatory by all Navy personnel, the Navy disbursing officer made currency exchanges based on the average rate at which the disbursing office had acquired its holdings in pounds. As a result, Captain Medara received $220,400 for the 116,000 pounds he exchanged instead of the $191,400 to which he was entitled based on the rate used by the military banking facility at the time the exchange was made. This $29,000 overpayment represents a debt Captain Medara owes to the United States which he is legally required to repay. In addition, we note that the disbursing officer who was responsible for the overpayment is personally liable to the United States for any amount that is not recovered from Captain Medara unless the disbursing officer is relieved of liability by the Comptroller General in accordance with 31 U.S.C. Sec. 3527(c).

While we sympathize with Captain Medara's plight and recognize that in making the currency exchange he relied upon the advice and actions of government officers and employees, it is well established that the "government is not liable for the erroneous advice or authorizations of its agents." 66 Comp.Gen. 642, 644 (1987). Moreover, we are not aware of any legal basis that would allow the Navy's claim against Captain Medara to be waived. In particular, the waiver authority provided under 10 U.S.C. Sec. 2774 is not applicable here because the overpayment in question does not constitute an erroneous payment of pay or allowance or travel and transportation allowances. Accordingly, we conclude that the Navy's claim against Captain Medara is valid and that the Navy should proceed expeditiously to collect the amount in question from him.

/1/ In addition to the Navy's claim against Captain Medara, the Navy is asserting similar claims against other individuals who received overpayments resulting from foreign currency exchanges at the same disbursing office that were based on erroneous exchange rates. While this decision deals specifically with the Navy's claim against Captain Medara, our analysis and conclusions would be applicable to other Navy claims that arose under similar circumstances.

/2/ Although an updated edition of Volume 4 of the Manual was issued in May 1990, all Manual references in this decision are based on the edition of the Manual in use when the transaction in question took place.

/3/ We note that Captain Medara's request for a waiver of the restriction limiting the amount of foreign currency disbursing officers could exchange was granted by the Commander of the United States Naval Activities in England before the exchange was made. We need not consider the validity of the waiver since our decision does not require resolution of this issue.

/4/ While paragraph 042591 of the Manual specifically focuses on the exchange rate to be used when foreign currency is disbursed rather than when it is acquired, paragraph 042551-3c(1) specifies that the exchange rate a disbursing officer must use when he purchases local currency "will be the same rate as that which he uses for sale of local currency on that particular transaction day."

/5/ By letter dated September 13, 1989, to the Secretary of the Navy, Captain Medara admits that he made the currency exchange at the disbursing office because it was offering a more favorable exchange rate than the military banking facility that he had gone to initially.