BNUMBER:  B-271896
DATE:  March 4, 1997
TITLE:  [Letter]

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B-271896

March 4, 1997

Sidney Kaplan
Chairman             
Committee of Inquiry Into Fiscal Irregularities
Department of State       

Dear Mr. Kaplan:

This is in response to your request that we grant relief from 
liability under 31 U.S.C.  sec.  3527 to Ms. Vilma Gautreau, Class B 
Cashier, at the American Embassy in Santo Domingo, Dominican Republic, 
for the unexplained loss of 119,036 Dominican Republic pesos, worth 
$15,835, from her account.  As explained in further detail below, we 
grant relief because we agree with your finding that Ms. Gautreau's 
actions were not the proximate cause of this loss.  

As noted above, the exact cause and nature of this loss is not known 
despite an Embassy investigation following the discovery of the loss.  
What is known is that on April 28, 1992, an unannounced audit of Ms. 
Gautreau's cash account was conducted by the Embassy's Budget and 
Fiscal Officer, revealing a shortage of  local currency funds worth 
$15,835.  (The United Stated currency account did not have a 
shortage.)  The audit consisted of a cash count of both the local and 
U.S. currencies, and a reconciliation of the paid vouchers, 
"in-transit vouchers," and collections.  The cash count was repeated a 
few days later, with no success at reconciling the shortage.  
Unfortunately, the budget officer departed for a planned vacation 
shortly after he discovered the loss and was not available to help the 
cashier in her efforts to reconcile the shortage.  Upon returning from 
his vacation, the budget officer reported the shortage on June 9, 
1992.  

Following a review of the situation, the Regional Administrative 
Management Center for the American Embassy, Federal District of 
Mexico, (RAMC) was not convinced that a shortage actually existed.  
RAMC advised the Embassy to limit cashier hours and activate an 
alternate cashier to receive consular receipts in order to alleviate 
the extremely heavy workload with which Ms. Gautreau had to deal.  
This recommendation was based, in part, on a prior fact-finding trip 
conducted between October 28 and November 8, 1991.  (A disbursing 
official of RAMC conducted a fact finding trip to review the cashier 
functions at the American Embassy in Santo Domingo.)  The RAMC report 
concluded that the cashier, Ms. Gautreau, faced a heavy workload, 
there was insufficient staffing which caused delays in processing 
transactions, and deposits were not made on a timely basis.  RAMC 
recommended that the Embassy ensure that the cashier was able to keep 
the documentation current and that the cashier have sufficient 
uninterrupted time to keep up with her paperwork.    

Based on your Committee's review of the circumstances of this 
shortage, you have concluded that the loss occurred in the performance 
of Ms. Gautreau's official duties and was not the result of an illegal 
or incorrect payment.  Rather, you have  concluded that the loss 
occurred because of the pervasive laxity with which the Embassy 
managed the cashier's office.  The Committee recommended that        
Ms. Gautreau be relieved of liability for the loss and that the 
Embassy's Budget and Fiscal Officer be reprimanded for failure to 
follow prescribed procedures.  The Committee also noted the lack of 
effective oversight provided by Embassy management officials, and, in 
particular, Embassy management's repeated failure to implement the 
applicable fiscal regulations or follow the Committee's 
recommendations for corrective action.

This Office is authorized to grant relief from liability upon its 
concurrence with determinations by the department or agency that (1) 
the loss or deficiency occurred while the accountable officers or 
agents were acting in the discharge of their official duties, or that 
it occurred by reason of the acts or omissions of subordinates, and 
(2) that the loss or deficiency occurred without fault or negligence 
on the part of the accountable officers.  31 U.S.C.  sec.  3527(a) (1994).  
As stated above, this shortage is an "unexplained loss."  A loss of 
funds without explanation gives rise to a rebuttable presumption of 
negligence on the part of the officers accountable for the funds.  
B-235147, August 14, 1991.  The accountable officer must rebut this 
presumption with evidence to the contrary.  Id.  We have relieved 
accountable officers from liability even if they are found to have 
neglected their duties, if their negligence is not the proximate cause 
of the loss or shortage.  E.g., 63 Comp.    Gen. 489, 492 (1984).  
Thus, where the facts and circumstances surrounding a loss indicate 
pervasive laxity in the supervision and management of the cashier's 
office and neither the acts nor omissions of the accountable officer 
can reasonably be said to have been proximate cause of the loss, we 
have relieved the accountable officer.  B-232744, Dec. 9, 1988.   

The record clearly evidences the lack of concern on the part of  
Embassy management for the security and proper management and 
operation of the cashier's office.[1]  Among the findings documented 
in the record of the Department's investigations was that RAMC 
continually reminded the Embassy of its responsibilities, but Embassy 
management continually ignored both State Department regulations and 
RAMC recommendations to take corrective action.  In particular, 
Embassy management did not provide proper safeguards for the cashier's 
office.  For example, it allowed Embassy employees access to the cash 
area of the cashier's office and the cashier's safe combination lock 
was broken for more than a week.  RAMC also found that insufficient 
staffing caused delays in processing transactions and that deposits 
were not made on a timely basis.  Embassy management did not ensure 
that the alternate cashier was sufficiently trained.  It did not allow 
the cashier's office to close early enough to conduct daily 
reconciliations of the office's transactions.  Most significant, 
however, is the fact that top-level officers of the Embassy did not 
take any corrective action in response to repeated admonishments from 
the RAMC to correct these problems.[2]

You have advised us that new internal control procedures for cashiers 
have been implemented in the Santo Domingo Embassy in order to avoid 
future problems.  These new procedures include (1) providing two Class 
B cashiers, a primary and an alternate, who are now responsible for 
making daily collections and reconciliations;  (2) closing the 
cashier's office early while daily reconciliations are prepared;       
(3) providing of proper safeguards, including a separate office and 
safe for the cashiers; and (4) performing monthly reconciliations by 
the Embassy's new Budget and Fiscal Officer.  Memorandum to Cheryl 
Kelley, International Financial Services Branch, Department of State, 
from Roman Otchych, Budget and Fiscal Officer, U.S. Embassy, Santo 
Domingo (Jan. 22, 1997).  

Since the proximate cause of this loss was not the negligent acts of 
Ms. Gautreau, but rather the general lack of concern and the sense of 
laxity which pervaded the Embassy's operation and management of the 
cashier's office, relief is granted pursuant to 31 U.S.C.  sec.  3527(a).  
You should take action to ensure that any amounts collected from Ms. 
Gautreau are reimbursed to her.

Sincerely, 

Gary L. Kepplinger
Associate General Counsel

B-271896

March 4, 1997

DIGEST

Relief is granted to State Department Class B Cashier where proximate 
cause of loss was not negligent practices of the cashier, but the 
laxity that pervaded the Embassy's operation and management of its 
cashier's office.

1. The 1991 field report on the cashier's office filed by the RAMC 
disbursing official  stated that Ms. Gautreau "has 12 years of banking 
experience . . . I saw her work with professionalism and a great deal 
of responsibility . . . ."

2. Accordingly, RAMC recommended that Ms. Gautreau be relieved of all 
responsibility for the loss. RAMC also recommended that the Embassy's 
Budget and Fiscal Officer be reprimanded and a demand for restitution 
be made for failure to follow prescribed procedures.  Lastly, RAMC 
recommended that the previous Ambassador be reprimanded for assessing 
administrative penalties against          Ms. Gautreau without 
adjudication and for his lack of oversight of the above-named parties.