Two Bank Executives Charged for Conspiring to Launder Hundreds of Millions of Dollars Through U.S. Financial System in Connection with Odebrecht Bribery and Fraud Scheme

An Austrian man was arrested today in the United Kingdom on criminal charges related to his alleged participation in a conspiracy to launder hundreds of millions of dollars through the U.S. financial system as part of a scheme to pay bribes around the world and defraud the Brazilian government. 

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    Four components—Transportation Security Administration, Coast Guard, Customs and Border Protection, and the Countering Weapons of Mass Destruction Office—within the Department of Homeland Security (DHS) implemented the process to formally nominate and designate Component Acquisition Executives (CAE). However, four of the five individuals filling the CAE role—three as acting CAE—in the Management Directorate have not been subjected to this process (see figure). The process, described in guidance, entails preparing a nomination package for DHS to vet candidates' qualifications against criteria, and designating the selected individual in writing. Nomination and Designation Status of Department of Homeland Security's Management Directorate Component Acquisition Executives as of April 2020 Note: Non-major acquisitions are those with an expected life-cycle cost of less than $300 million. DHS indicated that the direct reporting relationship of acting CAEs to the DHS Chief Acquisition Officer makes designating CAEs in the Management Directorate through this process unnecessary. Without using the nomination and designation process, DHS officials lack a standard way to gain insight into the background of the acting CAEs and whether any gaps in experience need to be mitigated. For example, the CAE for the Coast Guard was nominated and designated, but the CAE did not have the acquisition experience that guidance suggests for the position. In the nomination documentation, the Coast Guard identified this issue and described the experienced staff that will support the nominated CAE. However, DHS cannot be confident that the acting CAEs in the Management Directorate are taking mitigation steps, because they have not been subject to this process. Until DHS consistently executes the nomination and designation process described in its guidance, the Chief Acquisition Officer cannot be assured that all acquisition programs are receiving oversight by individuals qualified for the CAE position. DHS invests billions of dollars each year in its major acquisition programs—such as systems to help secure the border, increase marine safety, and screen travelers—to help execute its many critical missions. In fiscal year 2020 alone, DHS planned to spend more than $10 billion on major acquisition programs, and ultimately the department plans to invest more than $200 billion over the life cycle of these programs. A critical aspect of DHS's acquisition process is oversight of this portfolio by the CAEs. Most CAEs are senior acquisition officials below the department level, within the components. The CAEs have oversight responsibilities over the components' major and non-major acquisition programs, among other duties. GAO was asked to review DHS's CAE functions. This report assesses the extent to which selected CAEs are nominated and designated to execute oversight responsibilities, among other objectives. GAO selected five DHS components, including the department-level Management Directorate, based, in part, on their number and type of acquisitions. GAO reviewed DHS's acquisition policy, guidance and documentation from the selected DHS components and interviewed CAEs, CAE support staff, and other DHS officials. GAO is making four recommendations, including that DHS execute the CAE nomination and designation process consistently as defined in its guidance. DHS concurred with all four recommendations. For more information, contact Marie A. Mak at (202) 512-4841 or makm@gao.gov.
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    The Navy and Marine Corps continue to face significant readiness challenges that have developed over more than a decade of conflict, budget uncertainty, and reductions in force structure. These challenges prevent the services from reaping the full benefit of their existing forces and attaining the level of readiness called for by the 2018 National Defense Strategy. Both services have made encouraging progress identifying the causes of their readiness decline and have begun efforts to arrest and reverse it (see figure). However, GAO's work shows that addressing these challenges will require years of sustained management attention and resources. Recent events, such as the ongoing pandemic and the fire aboard the USS Bonhomme Richard affect both current and future readiness and are likely to compound and delay the services' readiness rebuilding efforts. Selected Navy and Marine Corps Readiness Challenges Continued progress implementing GAO's prior recommendations will bolster ongoing Navy and Marine Corps efforts to address these readiness challenges. The 2018 National Defense Strategy emphasizes that restoring and retaining readiness is critical to success in the emerging security environment. The Navy and Marine Corps are working to rebuild the readiness of their forces while also growing and modernizing their aging fleets of ships and aircraft. Readiness recovery will take years as the Navy and Marine Corps address their multiple challenges and continue to meet operational demands. This statement provides information on readiness challenges facing (1) the Navy ship and submarine fleet and (2) Navy and Marine Corps aviation. GAO also discusses its prior recommendations on Navy and Marine Corps readiness and the progress that has been made in addressing them. This statement is based on previous work published from 2016 to November 2020—on Navy and Marine Corps readiness challenges, including ship maintenance, sailor training, and aircraft sustainment. GAO also analyzed data updated as of November 2020, as appropriate, and drew from its ongoing work focused on Navy and Marine Corps readiness. GAO made more than 90 recommendations in prior work cited in this statement. The Department of Defense generally concurred with most of GAO's recommendations. Continued attention to these recommendations can assist the Navy and the Marine Corps as they seek to rebuild the readiness of their forces. For more information, contact Diana Maurer at (202) 512-9627 or maurerd@gao.gov.
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  • Medicare Part B: Payments and Use for Selected New, High-Cost Drugs
    In U.S GAO News
    Hospital outpatient departments perform a wide range of procedures, including diagnostic and surgical procedures, which may use drugs that Medicare considers to function as supplies. If the drug is new, and its cost is high relative to Medicare's payment for the procedure, then hospitals can receive a separate “pass-through” payment for the drug in addition to Medicare's payment for the procedure. These pass-through payments are in effect for 2 to 3 years. When the pass-through payments expire, Medicare no longer pays separately for the drug, and payment for the drug is “packaged” with the payment for the related procedure. The payment rate for the procedure does not vary by whether or not the drug is used. Medicare intends this payment rate to be an incentive for hospitals to furnish services efficiently, such as using the most cost-efficient items that meet the patient's needs. Examples of Types of Drugs that Medicare Considers to Function as Supplies GAO's analysis of Medicare data showed that higher payments were associated with six of seven selected drugs when they were eligible for pass-through payments versus when their payments were packaged. For example, one drug used in cataract removal procedures was eligible for pass-through payments in 2017. That year, Medicare paid $1,824 for the procedure and $463 for the drug pass-through payment—a total payment of $2,287. If a hospital performed the same cataract removal procedure when the drug was packaged the following year, there was no longer a separate payment for the drug. Instead, Medicare paid $1,921 for the procedure whether or not the hospital used the drug. Of the seven selected drugs, GAO also reviewed differences in use for four of them that did not have limitations on Medicare coverage during the time frame of GAO's analysis, such as coverage that was limited to certain clinical trials. GAO found that hospitals' use of three of the four drugs was lower when payments for the drugs were packaged. This was consistent with the financial incentives created by the payment system. In particular, given the lower total payment for the drug and procedure when the drug is packaged, hospitals may have a greater incentive to use a lower-cost alternative for the procedure. Hospitals' use of a fourth drug increased regardless of payment status. The financial incentives for that drug appeared minimal because the total payment for it and its related procedure was about the same when it was eligible for pass-through payments and when packaged. Other factors that can affect use of the drugs include the use of the drugs for certain populations and whether hospitals put the drugs on their formularies, which guide, in part, whether the drug is used at that hospital. The Department of Health and Human Services reviewed a draft of this report and provided technical comments, which GAO incorporated as appropriate. Medicare makes “pass-through” payments under Medicare Part B when hospital outpatient departments use certain new, high-cost drugs. These temporary payments are in addition to Medicare's payments for the procedures using the drugs. They may help make the new drugs accessible for beneficiaries and also allow Medicare to collect information on the drugs' use and costs. The Consolidated Appropriations Act, 2018 included a provision for GAO to review the effect of Medicare's policy for packaging high-cost drugs after their pass-through payments have expired. This report describes (1) the payments associated with selected high-cost drugs when eligible for pass-through payments versus when packaged, and (2) hospitals' use of those drugs when eligible for pass-through payments versus when packaged. GAO reviewed federal regulations on pass-through payments and Medicare payment files for all seven drugs whose pass-through payments expired in 2017 or 2018 and that were subsequently packaged. All of these drugs met Medicare's definition for having a high cost relative to Medicare's payment rate for the procedure using the drug. GAO also reviewed Medicare claims data on the use of the drugs for 2017 through 2019 (the most recent available). To supplement this information, GAO also interviewed Medicare officials, as well officials from 11 organizations representing hospitals, physicians, and drug manufacturers, about payment rates, use, reporting, and clinical context for the drugs. For more information, contact James Cosgrove at (202) 512-7114 or cosgrovej@gao.gov.
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