Accounts Found to Be $2 Million in the Red : Aircraft Carrier Kitty Hawk Sailing in Troubled Financial Seas
Imagine a company with 5,000 employees and a $300-million inventory that uses pads and pencils to keep track of purchases, fails to balance its books each month and acts as though it has a fat bank account when it is really hundreds of thousands of dollars in the red.
Now you can understand why the aircraft carrier Kitty Hawk has troubles these days.
Shaken by revelations that its supply system was secretly used to funnel prohibited F-14 fighter parts to agents of Iran, and now facing questions raised by a June internal audit, the San Diego-based carrier has become a case study in the problems haunting the military supply system as a whole. Those problems raise disturbing questions about the system’s vulnerability to unauthorized penetration.
Some in Pencil, Others Not at All
The audit of the reserve account of the carrier’s commanding officer by Petty Officer 2nd Class Robert Jackson found dozens of purchases written in pencil, others not recorded at all. Although the captain’s purchasing records showed a remaining balance of $793,493, auditors found the account $141,556 in the hole. And that is just in the captain’s books; accounts for the whole vessel were found to be at least $2 million in the red, according to Jackson’s audit.
The audit also turned up $2.4 million in supplies that were received by the Kitty Hawk but not billed to the ship’s internal accounting system.
To the Navy’s top brass, such discoveries have not diminished the Kitty Hawk’s standing. Last spring it won the coveted Navy “E” award for running the most efficient supply operation of six aircraft carriers in the Pacific Fleet over an 18-month period.
Others take a more critical view.
Navy sources told The Times that disarray in the Kitty Hawk’s bookkeeping system stems in part from widely varying accounting practices within the ship’s 90 supply divisions; some keep official ledgers, some scribbled figures in green note pads and a few cannot produce any records at all, the sources said.
“How well these departments keep their books probably reflects the whole state of bookkeeping on the ship itself. At a time like this, people who don’t ensure good record keeping . . . send a bad signal of poor management and a careless attitude,” said a Navy commander in San Diego.
Bookkeeping irregularities, persisting despite previous warnings to the ship’s accountants to clean up the records, reflect a “total lack of command supervision,” said Eugene R. Carroll, deputy director of the Defense Information Institute in Washington and a retired rear admiral who once served as the Kitty Hawk’s executive officer.
“To have complete line items missing is unimaginable,” said Carroll, who had 37 years in the Navy, including service as commanding officer of the carrier Midway. “That shouldn’t happen more than once.”
The commander of the Kitty Hawk, Capt. Phillip R. Wood, has refused to be interviewed by The Times. Cmdr. Tom Jurkowsky said that Wood would have no comment on his division’s purchasing records because they are being reviewed by Navy investigators.
The condition of the purchasing records is just one example of a wide variety of Kitty Hawk supply problems revealed in recent months. A January drug raid uncovered evidence that the ship’s supply system was used to steal 31 silver ingots worth about $1,000 apiece. In July, a Kitty Hawk storekeeper was among seven persons charged in the Iran arms case.
1,100 Pages of Documents
Navy investigators also are reviewing allegations by Jackson, a financial auditor on the Kitty Hawk for 21 months, who has turned over 1,100 pages of documents detailing charges of waste and fraud. In a statement prepared for Congress, Jackson said the ship’s books for fiscal year 1983 showed supply expenditures of $10 million when, in fact, $12 million had been spent.
A recent audit found that the Kitty Hawk could not account for spare parts totaling $14 million--a substantial amount, though it compares favorably with the average of $20 million in parts listed as missing aboard the Navy’s 13 deployable aircraft carriers, according to figures released by Sen. Pete Wilson.
Navy officials, defending the Kitty Hawk while trying to find ways to improve inventory control, stressed that monitoring the movement of missile system parts on an aircraft carrier is not the same as keeping tabs on lawn mowers at Montgomery Wards.
“Applying normal business principles to the military can only go so far,” one veteran Navy officer in Washington said. “Combat effectiveness and cost effectiveness are not the same. . . . The types of environments are not the same.”
