Answers to Questions on the Use of Corporation Funds, Property, and Employees by the Chairman, Board of Directors, Federal Deposit Insurance Corporation
FOD-77-14: Published: Nov 29, 1977. Publicly Released: Nov 29, 1977.
- Full Report:
Allegations were made concerning the improper use of Federal Deposit Insurance Corporation (FDIC) funds, property, and employees by Robert E. Barnett, Chairman of the Board of Directors. FDIC's budget is not subject to congressional approval, and it has statutory authority to determine expenses to be paid.
FDIC's travel regulations allow payment for an employee's spouse when this is determined to be in the corporation's best interest. Mr. Barnett's wife accompanied him on 7 of 40 trips he made as corporation chairman at corporation rather than Government expenses. Barnett did not itemize travel expenses according to regulations and he used corporation vehicles for some personal purposes. He did not receive salary advances nor special checks increasing his salary, but he did use the petty cash fund for both personal and corporate expenditures. The corporation paid for installing storm windows and door and window locks as security devices on Barnett's house and for his membership in a private tennis club. No substantiation was found for allegations that employee salary adjustments were related to work performed at the Barnett home or that corporation furniture or other items were taken by him for home use. Some of Mr. Barnett's actions were not clearly within the corporation's standards governing employee responsibilities and conduct. On leaving the corporation, he acknowledged that personal benefits of some expenditures outweighed corporation benefits, and he refunded $1,667.30 of $2,461.13 in petty cash expenses and later repaid the remainder of these expenses.
Recommendation for Executive Action
Comments: Please call 202/512-6100 for additional information.
Recommendation: The Controller of the Federal Deposit Insurance Corporation should strengthen internal controls and procedures that permit personal use of corporation funds and property to prevent future occurrences of this nature.