U.S. government auditors are expanding their review of federal disaster aid mismanagement by the Chippewa Cree Tribe after finding fraud, waste and abuse in a project to demolish the Montana tribe's health clinic that was destroyed by flooding in 2010.
The Department of Homeland Security's inspector general's office recommended the Federal Emergency Management Agency deny the tribe's $3.9 million claim for the clinic's demolition, and the auditors now plan to examine all $31.6 million FEMA awarded the tribe after the flooding.
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The auditors also recommended that FEMA label the Chippewa as a high-risk grantee, meaning the tribe would be subject to strict conditions for future disaster aid.
The recommendations came in a report released this month detailing the findings of the health-center demolition project audit, which was prompted by the $3.9 million claim after FEMA estimated the project would cost $3.4 million.
FEMA has 90 days to respond to the recommendations. FEMA spokeswoman Brittany Trotter said agency officials are reviewing the report, and declined to comment further.
The tribe's governing Chippewa Cree Business Committee placed the blame on former state Rep. Tony Belcourt, who was convicted of corruption charges last year as the head of the tribe's main contractor, the Chippewa Cree Construction Corp.
"The Tribe and its members may now have to incur the costs of the demolition," interim chairman Ted Whitford said in a statement. "This is a very unfortunate situation, and the current Business Committee is deeply disappointed and angered by the actions of Mr. Belcourt and others who worked in concert to defraud the Tribe."
The audit found the tribe had poor accounting controls and procedures, which Belcourt exploited to embezzle money. He pleaded guilty in a deal with prosecutors to theft, bribery and tax-evasion charges and was sentenced in August to 7 ½ years in prison.
Seventeen other tribal officials, contractors and consultants have been convicted in the wide-ranging federal corruption investigation into that and other federally funded projects on the reservation
"Evidence indicates that these significant grant management problems may have also negatively affected the tribe's other projects, especially considering that the tribe used the same contractor," the audit report read.
The tribe's clinic was destroyed when more than 5 inches of rain fell in June 2010, flooding nearly all of the reservation. The damage prompted a presidential disaster declaration, opening the door for federal disaster aid.
Other funding affected by the expanded review includes $15.6 million approved for a new health clinic. That project was halted because of cost overruns and is expected to require more than $40 million to complete, according to the audit.
Whitford was unavailable for an interview Monday but told The Associated Press in a statement emailed by his public-relations firm that the tribe had hoped to use the $3.9 million from FEMA to help finish the new clinic.