HUD Weaknesses Haven’t Been Fixed, GAO Says

Congressional investigators said Wednesday that underlying problems that allowed so many abuses to occur at the scandal-plagued Department of Housing and Urban Development have not been corrected.

Problems in such areas as management, accounting and computer systems continue to beset the agency, the General Accounting Office told a House subcommittee.

The report was delivered at a hearing at which Housing Secretary Jack Kemp and House members were heaping praise on each other for their handling of HUD scandals disclosed two years ago.

At the hearing, Rep. Tom Lantos (D-San Mateo) said, “If I had to give a grade to Secretary Kemp, it would be an A plus.” Lantos is chairman of the House Government Operations subcommittee that investigated HUD.

Kemp was a bit more modest: “I think it’s probably closer to a B plus.” He commended the subcommittee and its members for helping to root out the troubles at the department.

Two years ago, HUD was at the center of investigations by congressional committees after disclosures of influence peddling, mismanagement and theft that pervaded the department during the tenure of Secretary Samuel J. Pierce Jr., who was in charge during the eight years of the Ronald Reagan Administration.

Developers paid well-connected Republicans, including former Interior Secretary James G. Watt, consulting fees for using their Administration connections to help obtain contracts and subsidies. In some cases, the consultants did little more than make a phone call.

Elsewhere in the department, millions of dollars was stolen by people who were collecting money for HUD on the sales of homes but failing to pay it to the U.S. Treasury.

The GAO, the investigative arm of Congress, said the department needed better organization, improved computers, better internal control, better financial management and more people.

If that’s not done, “HUD’s actions for individual programs, no matter how extensive, cannot be fully effective in preventing the same kinds of problems that were uncovered during the scandals of two years ago,” J. Dexter Peach, the GAO’s assistant comptroller general, told the subcommittee.