Farm Service Agency:

Additional Actions Needed to Address Employee Conflict-of-Interest Issues

RCED-97-104: Published: Apr 25, 1997. Publicly Released: May 27, 1997.

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GAO reviewed conflicts of interest in the Farm Service Agency's (FSA) farm loan program, focusing on the: (1) number of FSA's federal and nonfederal employees and county committee members who have FSA farm loans; (2) comparative size and repayment history of farm loans to FSA's federal employees, FSA's nonfederal employees, county committee members, and other FSA borrowers; (3) number of cases FSA has identified requiring action to avoid conflicts of interest; and (4) actions FSA has taken to address these cases.

GAO noted that: (1) as of September 30, 1996, FSA's loan portfolio indicated that 414 of about 16,300 FSA federal and nonfederal employees and 1,209 of about 8,150 members of county committees had 4,089 FSA farm loans; (2) while the outstanding principal of the loans of FSA's federal and nonfederal employees and county committee members was about $265 million of FSA's outstanding loan principal of $16.9 billion, these employees' loans differed in size when compared with the loans of other FSA borrowers; (3) as of September 30, 1996, the loans of FSA's federal employees averaged about $197,700 per borrower, the loans of nonfederal employees averaged about $127,000, the loans of FSA's county committee members averaged about $183,500, and the loans of all other borrowers averaged about $145,200 per borrower; (4) with respect to repayment history, FSA's federal and nonfederal employees and county committee members were delinquent and needed debt relief on their farm loans less often than other borrowers; (5) however, when these employees received debt relief, it was greater than the relief granted other borrowers, 53 percent, on average, for FSA's federal employees, and 7 percent and 2 percent, respectively, for nonfederal employees and county committee members; (6) as of March 1997, FSA had identified 1,767 cases in which its federal and nonfederal employees or county committee members had loans or relationships with other borrowers that required action to avoid conflicts of interest; (7) these cases were identified through FSA's review of 3,622 cases in which FSA's federal and nonfederal employees and county committee members reported that they or their relatives or business associates had FSA farm loans; (8) the total number of cases is likely to increase as FSA proceeds with its efforts to identify cases requiring action to avoid conflicts of interest; (9) although FSA has made progress in dealing with conflicts of interest, it has not provided its state offices with clear and consistent guidance on how to identify and address conflict-of-interest cases; (10) furthermore, FSA headquarters has not reviewed the state offices' efforts to address conflicts of interest; and (11) as a result, FSA's state offices vary in the extent to which they have identified and taken action on cases to avoid conflicts of interest.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Subsequent to this review, the Office of Government Ethics informed the Farm Service Agency that its conflicts of interest requirements did not meet government standards. On March 24, 2000, the Farm Service Agency issued new regulations to meet Office of Government of Ethics requirements on the avoidance of conflicts of interest by its federal employees. The guidance does provides some clarifications as GAO recommended, but agency officials said that it does not fully resole the issues. In addition, the guidance does not address the agency's non-federal employees or county committee members. It is not clear that further action will be taken.

    Recommendation: The Secretary of Agriculture should direct the Administrator, FSA, to clarify FSA's policy and guidance that define situations constituting potential conflicts of interest and the actions that are needed for addressing such cases.

    Agency Affected: Department of Agriculture

  2. Status: Closed - Not Implemented

    Comments: Agency guidance does not address non-federal employees which is a prerequisite for implementation of the recommendation. The agency is reviewing employee conflict of interest disclosures annually and when an employee informs the agency of a business relationship that requires review. FSA plans no further action at this time.

    Recommendation: The Secretary of Agriculture should direct the Administrator, FSA, to require all state offices to address conflict-of-interest cases using the revised policy and guidance.

    Agency Affected: Department of Agriculture

  3. Status: Closed - Implemented

    Comments: USDA has partially addressed this issue.

    Recommendation: The Secretary of Agriculture should direct the Administrator, FSA, to monitor and review state and county offices' actions to ensure that the efforts to address conflicts of interest are adequate and thorough.

    Agency Affected: Department of Agriculture

 

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