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text:
Audit of Cash Management Activities for a Sample of BlueCross and/or BlueShield Plans
U.S. OFFI
OFFICE OF AUDITS
Final Audit Report
AUDIT OF
CASH MANAGEMENT ACTIVITIES FOR A
SAMPLE OF BLUECROSS AND/OR BLUESHIELD
Report Number 1A-99-00-17-001
Report No. 1A-99-00-17-001                                                                          March 14, 2018
Why did we conduct the audit?             What did we find?
We conducted this limited scope audit     We questioned $6,315,970 in cash management activities and lost
to obtain reasonable assurance that the   investment income (LII) for seven BCBS plans. The BlueCross
BlueCross and/or BlueShield (BCBS)        BlueShield Association and applicable BCBS plans agreed with our
Plans are complying with the              audit findings and these plans returned all of the questioned amounts
provisions of the Federal Employees       to the FEHBP.
Health Benefits Act and regulations
pertaining to cash management that are    Our audit results are summarized as follows:
included in the Federal Employees
Health Benefits Program (FEHBP)           x   Excess Working Capital Deposits – We determined that
contract. The objective of our audit          Independence BC and BCBS of Wyoming held excess working
was to determine if the 20 BCBS plans         capital deposits of $3,242,641 in the plans' dedicated Federal
in our sample handled FEHBP funds in          Employee Program investment accounts ($1,877,171 by
accordance with the contract and              Independence BC and $1,365,470 by BCBS of Wyoming).
applicable laws and regulations
concerning cash management in the         x   LOCA Overdraws (Drawdown Errors) – We questioned
FEHBP.                                        $2,139,136 for LOCA overdraws by Independence BC and
$3,814 for applicable LII on these overdraws.
What did we audit?
x   Health Benefit Refunds – Our audit determined that Wellmark
Our audit covered cash management             BCBS and BCBS of Vermont had not returned health benefit
activities and practices related to           refunds, totaling $904,606, to the FEHBP as of June 30, 2016
FEHBP funds from 2015 through                 ($888,977 by Wellmark BCBS and $15,629 by BCBS of
June 30, 2016, for a sample of 20             Vermont). We also questioned $8,275 for LII on these refunds
BCBS plans. During our audit                  held by Wellmark BCBS and returned untimely to the FEHBP.
fieldwork phase, we also expanded the
scope for Independence BlueCross          x   Excess Funds in the Investment Accounts – Our audit determined
(BC) to include July 2016 through             that Excellus BCBS and BCBS of South Carolina held excess
March 2017 for specific types of letter       funds of $4,493 and $3,713, respectively, in the plans' dedicated
of credit account (LOCA) drawdown             Federal Employee Program investment accounts.
errors; BCBS of Wyoming to include
July 2016 through February 2017 for       x   Treasury Offsets – For BCBS of Michigan, we questioned $5,863
the plan's working capital deposit; and       for a United States Treasury offset against the LOCA and $873
Wellmark BCBS to include July 2016            for LII on offsets returned untimely to the FEHBP.
for LOCA drawdowns.
x   Unreturned Interest Income – BCBS of Vermont had not returned
interest income of $2,556 to the FEHBP as of June 30, 2016.
for Audits                                           i
Association   BlueCross BlueShield Association
BC            BlueCross
BCBS          BlueCross BlueShield or BlueCross and/or BlueShield
CFR           Code of Federal Regulations
Contract      Contract CS 1039
FAR           Federal Acquisition Regulations
FEHB          Federal Employees Health Benefits
FEHBAR        Federal Employees Health Benefits Acquisition Regulations
FEHBP         Federal Employees Health Benefits Program
FEP           Federal Employee Program
Guidelines    Letter of Credit System Guidelines
LII           Lost Investment Income
LOCA          Letter of Credit Account
OIG           Office of the Inspector General
OPM           U.S. Office of Personnel Management
Treasury      United States Treasury
EXECUTIVE SUMMARY ......................................................................................... i
ABBREVIATIONS ..................................................................................................... ii
I.     BACKGROUND ..........................................................................................................1
II.    OBJECTIVE, SCOPE, AND METHODOLOGY ....................................................3
III.   AUDIT FINDINGS AND RECOMMENDATIONS.................................................6
A.      Excess Working Capital Deposits........................................................................6
B.      Letter of Credit Account Overdraws (Drawdown Errors) ...................................8
C.      Health Benefit Refunds ......................................................................................11
D.      Excess Funds in the Investment Accounts .........................................................13
E.      Treasury Offsets .................................................................................................15
F.      Unreturned Interest Income................................................................................17
IV.    SCHEDULE A – QUESTIONED CHARGES
APPENDIX: BlueCross BlueShield Association's Draft Report Response, dated
REPORT FRAUD, WASTE, AND MISMANAGEMENT
limited scope audit of the Federal Employees Health Benefits Program (FEHBP) operations at a
sample of 20 BlueCross and/or BlueShield (BCBS) plans, pertaining to these plans' cash
management activities and practices related to FEHBP funds.
The audit was performed by the U.S. Office of Personnel Management's (OPM) Office of the
Inspector General (OIG), as established by the Inspector General Act of 1978, as amended.
The FEHBP was established by the Federal Employees Health Benefits (FEHB) Act (Public Law
86-382), enacted on September 28, 1959. The FEHBP was created to provide health insurance
benefits for federal employees, annuitants, and dependents. OPM's Healthcare and Insurance
Office has overall responsibility for administration of the FEHBP. The provisions of the FEHB
Act are implemented by OPM through regulations, which are codified in Title 5, Chapter 1, Part
890 of the Code of Federal Regulations (CFR). Health insurance coverage is made available
through contracts with various health insurance carriers.
The BlueCross BlueShield Association (Association), on behalf of participating BCBS plans, has
entered into a Government-wide Service Benefit Plan contract (CS 1039) with OPM to provide a
health benefit plan authorized by the FEHB Act. The Association delegates authority to
participating local BCBS plans throughout the United States to process the health benefit claims
of its federal subscribers. There are 36 BCBS companies participating in the FEHBP. These 36
companies include 64 local BCBS plans.
The Association has established a Federal Employee Program (FEP) Director's Office in
Washington, D.C. to provide centralized management for the Service Benefit Plan. The FEP
Director's Office coordinates the administration of the contract with the Association, member
BCBS plans, and OPM.
The Association has also established an FEP Operations Center. The activities of the FEP
Operations Center are performed by CareFirst BlueCross BlueShield, located in Owings Mills,
Maryland and Washington, D.C. These activities include acting as intermediary for claims
processing between the Association and local BCBS plans, processing and maintaining subscriber
eligibility, adjudicating member claims on behalf of BCBS plans, approving or disapproving the
reimbursement of local plan payments of FEHBP claims (using computerized system edits),
maintaining a history file of all FEHBP claims, and maintaining claims payment data and related
financial data in support of the Association's accounting of all program funds.
1                   Report No. 1A-99-00-17-001
Compliance with laws and regulations applicable to the FEHBP is the responsibility of the
management for the Association and each BCBS plan. In addition, working in partnership with
the Association, management of each BCBS plan is responsible for establishing and maintaining a
system of internal controls.
All findings from our previous audit of cash management activities for a sample of BCBS plans
(Report No. 1A-99-00-13-018, dated January 17, 2014), covering 2011 through September 30,
2012, have been satisfactorily resolved.
The results of this audit were discussed with the Association and applicable BCBS plan officials
throughout the audit and at an exit conference on June 21, 2017; and were presented in detail in a
draft report, dated October 13, 2017. The Association's comments offered in response to the draft
report were considered in preparing our final report and are included as an Appendix to this
report. Also, additional documentation provided by the Association and/or BCBS plans on
various dates through January 19, 2018, was considered in preparing our final report.
2                  Report No. 1A-99-00-17-001
II. OBJECTIVE, SCOPE, AND METHODOLOGY
The objective of this audit was to determine whether the 20 BCBS plans in our sample handled
FEHBP funds in accordance with Contract CS 1039 (contract) and the applicable laws and
regulations concerning cash management in the FEHBP.
We conducted our limited scope performance audit in accordance with generally accepted
government auditing standards. Those standards require that we plan and perform the audit to
obtain sufficient and appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objective. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit objective.
The audit covered cash management activities and practices from 2015 through June 30, 2016,
for a sample of 20 BCBS plans. Our sample included Premera BlueCross (BC) and most of the
BCBS plans with FEHBP health benefit payments of $400 million or less in contract year 2015
(except for BCBS of Rhode Island and several BCBS plans that are a part of multi-plan
companies, such as Anthem Inc. and Regence).1
Specifically, we reviewed the plans' letter of credit account (LOCA) drawdowns, working
capital calculations, adjustments and/or balances, United States Treasury (Treasury) offsets, and
interest income transactions from 2015 through June 30, 2016, as well as the plans' dedicated
FEP investment account transactions during the audit scope and balances as of June 30, 2016.
As stated above, our objective was to determine if the 20 BCBS plans in our sample handled
FEHBP funds in accordance with the contract and applicable laws and regulations concerning
cash management in the FEHBP. During our audit fieldwork phase, we also expanded the scope
for Independence BC to include July 2016 through March 2017 for specific types of LOCA
drawdown errors; BCBS of Wyoming to include July 2016 through February 2017 for the plan's
working capital deposit; and Wellmark BCBS to include July 2016 for LOCA drawdowns.
Our sample consisted of the following BCBS plans: BCBS of Arkansas, BCBS of Hawaii, BCBS of Idaho,
Wellmark BCBS (Iowa and South Dakota), BCBS of Kansas, BCBS of Louisiana, BCBS of Michigan, BCBS of
Mississippi, BCBS of Kansas City (Missouri), BCBS of Nebraska, BCBS of North Dakota, BCBS of Western New
York, Excellus BCBS (New York), Capital BC (Pennsylvania), Independence BC (Pennsylvania), Triple-S, Inc. of
Puerto Rico, BCBS of South Carolina, BCBS of Vermont, Premera BC (Washington and Alaska), and BCBS of
Wyoming.
3                     Report No. 1A-99-00-17-001
We did not consider each BCBS plan's internal control structure in planning and conducting our
auditing procedures. Our audit approach consisted mainly of substantive tests of transactions
and not tests of controls. Therefore, we do not express an opinion on each BCBS plan's system
of internal controls taken as a whole.
We conducted tests to determine whether the applicable BCBS plans had complied with the
contract provisions, the applicable procurement regulations (i.e., Federal Acquisition Regulations
(FAR) and Federal Employees Health Benefits Acquisition Regulations (FEHBAR), as
appropriate), and the laws and regulations governing the FEHBP that relate to cash management
of FEHBP funds. The results of our tests indicate that, with respect to the items tested, seven
BCBS plans in our sample did not fully comply with all provisions of the contract and federal
procurement regulations relative to cash management of FEHBP funds. Exceptions noted in the
areas reviewed are set forth in detail in the "Audit Findings and Recommendations" section of
this report. With respect to the items not tested, nothing came to our attention that caused us to
believe that the applicable BCBS plans had not complied, in all material respects, with those
In conducting our audit, we relied to varying degrees on computer-generated data provided by
the FEP Director's Office and the BCBS plans. Due to time constraints, we did not verify the
reliability of the data generated by the various information systems involved. However, while
utilizing the computer-generated data during our audit, nothing came to our attention to cause us
to doubt its reliability. We believe that the data was sufficient to achieve our audit objective.
The audit was mostly performed at our office in Jacksonville, Florida from February 2, 2017,
through June 21, 2017. During our audit fieldwork phase, we also made short on-site visits to
Independence BC from February 22 through February 23, 2017; BCBS of Western New York
from April 18 through April 19, 2017; and Excellus BCBS from April 20 through April 21,
2017. Throughout the audit process, the FEP Director's Office and BCBS plans did a good job
providing complete and timely responses to our requests for supporting documentation. We
greatly appreciated the cooperation and responsiveness by the FEP Director's Office and
applicable BCBS plans during the pre-audit and fieldwork phases of this audit.
To test each of the 20 BCBS plans' compliance with the contract provisions relative to cash
management activities, we selected and reviewed a judgmental sample of 20 – 30 LOCA
drawdowns from each plan (except for Triple-S, Inc.) for the purpose of determining if the
LOCA drawdowns were appropriate and adequately supported. Our sample included a week of
LOCA drawdowns for each BCBS plan (usually representing five LOCA drawdowns),
judgmentally selected from each of the six quarters in the audit scope.2 We did not project the
sample results to the universe of LOCA drawdowns. In total for these 20 BCBS plans, we
selected and reviewed 566 LOCA drawdowns, totaling $425 million (from a universe of 6,143
LOCA drawdowns, totaling $5.4 billion), during the period 2015 through June 30, 2016. These
566 LOCA drawdowns consisted of the following:
x   20 drawdowns, totaling $17,438,572 (out of $225,705,644), for BCBS of Arkansas;
x   28 drawdowns, totaling $1,911,280 (out of $25,977,259), for BCBS of Hawaii;
x   29 drawdowns, totaling $14,507,973 (out of $170,105,206), for BCBS of Idaho;
x   30 drawdowns, totaling $28,321,408 (out of $378,653,537), for Wellmark BCBS;
x   30 drawdowns, totaling $14,787,447 (out of $202,487,644), for BCBS of Kansas;
x   30 drawdowns, totaling $32,458,040 (out of $395,119,772), for BCBS of Louisiana;
x   30 drawdowns, totaling $34,916,380 (out of $483,464,670), for BCBS of Michigan;
x   30 drawdowns, totaling $11,552,255 (out of $325,061,888), for BCBS of Mississippi;
x   30 drawdowns, totaling $22,706,476 (out of $317,893,716), for BCBS of Kansas City;
x   29 drawdowns, totaling $19,189,460 (out of $255,303,644), for BCBS of Nebraska;
x   30 drawdowns, totaling $8,501,534 (out of $74,249,231), for BCBS of Western New York;
x   30 drawdowns, totaling $12,168,921 (out of $152,643,593), for Excellus BCBS;
x   30 drawdowns, totaling $9,206,871 (out of $118,300,564), for BCBS of North Dakota;
x   30 drawdowns, totaling $25,670,691 (out of $341,872,339), for Capital BC;
x   30 drawdowns, totaling $50,128,765 (out of $433,388,647), for Independence BC;
x   10 drawdowns, totaling $1,518,744 (out of $5,059,775), for Triple-S, Inc. of Puerto Rico;
x   30 drawdowns, totaling $33,405,097 (out of $475,752,038), for BCBS of South Carolina;
x   30 drawdowns, totaling $6,893,126 (out of $97,409,209), for BCBS of Vermont;
x   30 drawdowns, totaling $68,945,748 (out of $826,688,804), for Premera BC; and,
x   30 drawdowns, totaling $10,912,129 (out of $112,009,064), for BCBS of Wyoming.
We also reviewed each BCBS plan's working capital calculations, adjustments and/or balances,
Treasury offsets, and interest income transactions from 2015 through June 30, 2016, and each
plan's dedicated FEP investment account activity during the scope and balance as of June 30,
For Triple-S, Inc., our sample included 10 LOCA drawdowns because the plan only made 1 or 2 drawdowns a
week for each of the six weeks selected for review.
IV. AUDIT
MAJORFINDINGS AND RECOMMENDATIONS
CONTRIBUTORS  TO THIS REPORT
A. Excess Working Capital Deposits 	                                              $3,242,641
Based on our review of the BCBS plans' working capital deposits, we determined that
Independence BC and BCBS of Wyoming held excess working capital deposits of
$3,242,641 in the dedicated FEP investment accounts ($1,877,171 by Independence BC and
$1,365,470 by BCBS of Wyoming). As a result, Independence BC and BCBS of Wyoming
returned $3,242,641 to the FEHBP for these questioned excess working capital deposits.
OPM's "Letter of Credit System Guidelines" (Guidelines), dated May 2009, state: "Carriers
should maintain a working capital balance equivalent to an average of 2 days of paid claims.
The working capital fund should be established using federal funds. Carriers are required to
monitor their working capital fund on a monthly basis and adjust if necessary on a quarterly
basis. . . . The working capital is not required but strongly recommended." Based on these
Guidelines, the Carrier's working capital calculation must also exclude electronic fund
transfers.
Based on the regulations governing the financing of Federal programs by the letter of credit
method, as established in 31 CFR 205 (Treasury Department Circular No. 10750), EFTs
should not be included in the working capital calculation. These instructions are established
under the provisions of Treasury Department Circular No. 1083 (Regulations Governing the
Utilization of the U.S. TFCS), 5 CFR Part 890, and 48 CFR Chapter 16.
For the period 2015 through June 30, 2016, we reviewed the working capital calculations,
adjustments and/or balances for the BCBS plans in our sample. Based on our review, we
determined that Independence BC and BCBS of Wyoming held excess working capital
deposits in the FEP investment accounts as of June 30, 2016. When reviewing these plans'
working capital calculations, we also determined that Independence BC and BCBS of
Wyoming inappropriately included electronic fund transfers in the calculations.
x	 Independence BC held a working capital deposit amount of $2,517,826 in the dedicated
FEP investment account as of June 30, 2016. To determine if Independence BC
maintained an appropriate working capital deposit amount, we recalculated what the
plan's working capital deposit should be and determined that, as of June 30, 2016, the
plan should have only maintained a deposit of $640,655. Our calculation excluded
electronic fund transfers. Therefore, we determined that, as of June 30, 2016,
Independence BC held a working capital deposit with an excess amount of $1,877,171
($2,517,826 minus $640,655) over the amount actually needed to meet the plan's daily
6	                 Report No. 1A-99-00-17-001
cash needs for FEHBP claim payments. Because of this finding, Independence BC
returned these excess funds of $1,877,171 to the LOCA on March 22, 2017.
x   BCBS of Wyoming recalculated the working capital deposit (excluding electronic fund
transfers) during our fieldwork phase and determined that, as of February 28, 2017, the
deposit should only be $311,445. However, BCBS of Wyoming held a working capital
deposit of $1,676,915. We reviewed and accepted the plan's calculation. Therefore, as
of February 28, 2017, the plan held a working capital deposit with an excess amount of
$1,365,470 ($1,676,915 minus $311,445) over the amount actually needed to meet the
plan's daily cash needs for FEHBP claim payments. Because of this finding, BCBS of
Wyoming returned these excess funds of $1,365,470 to the FEHBP via multiple LOCA
drawdown adjustments in April 2017.
In total, we are questioning $3,242,641 ($1,877,171 plus
Independence BC and
$1,365,470) for excess working capital deposits that
BCBS of Wyoming held
were held by Independence BC and BCBS of Wyoming.
excess working capital
Since each of these plans maintained the questioned
deposits of $3,242,641 in
excess funds in the dedicated FEP investment account,
the plans' FEP investment
lost investment income (LII) is not applicable for this
finding.
Association Response:
The Association agrees with the finding and recommendations. The Association also
states that Independence BC and BCBS of Wyoming have implemented procedures to
ensure that the working capital deposit is properly calculated.
As part of our review, we verified that BCBS of Wyoming returned the questioned excess
working capital funds of $1,365,470 to the FEHBP in April 2017. We also noted that
Independence BC returned the total working capital deposit amount of $2,517,826 to the
FEHBP in March 2017, which included the questioned excess working capital funds of
$1,877,171.
We recommend that the contracting officer require the applicable BCBS plans to return
$3,242,641 to the FEHBP for the questioned excess working capital deposits ($1,877,171 by
Independence BC and $1,365,470 by BCBS of Wyoming). However, since we verified that
Independence BC and BCBS of Wyoming returned $3,242,641 to the FEHBP for these
excess deposits, no further action is required for this questioned amount.
We recommend that the contracting officer verify that Independence BC and BCBS of
Wyoming implemented corrective actions to ensure that the working capital deposit (if
applicable) is properly calculated in accordance with the Guidelines and applicable
regulations.
B. Letter of Credit Account Overdraws (Drawdown Errors)                                $2,142,950
Our audit determined that Independence BC
Our audit identified LOCA
inadvertently overdrew $2,139,136 in funds from the
overdraws, totaling
LOCA during the period 2015 through March 31, 2017.
$2,139,136, which
As a result of this finding, Independence BC returned
Independence BC then
$2,142,950 to the FEHBP, consisting of $2,139,136 for
returned, along with LII of
these questioned LOCA overdraws and $3,814 for
$3,814, to the FEHBP.
applicable LII.
Contract CS 1039, Part III, section 3.2 (b)(1) states, "The Carrier may charge a cost to the
contract for a contract term if the cost is actual, allowable, allocable, and reasonable."
Regarding reportable monetary findings, Contract CS 1039, Part III, Section 3.16 (a) states,
"Audit findings . . . in the scope of an OIG audit are reportable as questioned charges unless
the Carrier provides documentation supporting that the findings were already identified and
corrected . . . prior to audit notification."
FAR 52.232-17(a) states, "all amounts that become payable by the Contractor . . . shall bear
simple interest from the date due . . . The interest rate shall be the interest rate established by
the Secretary of the Treasury as provided in 41 U.S.C. 7109, which is applicable to the period
in which the amount becomes due, as provided in paragraph (e) of this clause, and then at the
rate applicable for each six-month period as fixed by the Secretary until the amount is paid."
8                    Report No. 1A-99-00-17-001
When reviewing the sample of LOCA drawdowns for Independence BC, we identified
several instances where there were variances between the actual checks-presented amounts
reported on the bank statement and the amounts included on the plan's LOCA drawdown
worksheets and withdrawn from the LOCA. We followed-up with Independence BC to
obtain an understanding for these variances. Independence BC researched these variances
and identified a systematic error in the plan's LOCA drawdown process for certain checks-
presented amounts. In certain instances, the checks-presented amounts were duplicated in
the plan's daily checks-clearing report, resulting in these check amounts being included twice
in the plan's LOCA drawdown worksheets. This error occurred when Independence BC
migrated to a new claims processing system.
Due to these variances identified in our sample, we expanded the scope of the plan's LOCA
drawdowns to include 2015 through March 31, 2017, for this type of "duplicate" LOCA
overdraw error. For this period, Independence BC performed an analysis and identified 19
instances where claim payment check amounts were duplicated in the plan's daily checks-
clearing reports and LOCA drawdown worksheets, resulting in excess LOCA drawdowns of
$682,042. Independence BC also calculated LII of $3,814 on these LOCA overdraws. We
reviewed and accepted Independence BC's analysis of these LOCA overdraws and
calculation of LII. We also verified that Independence BC returned these LOCA overdraws
of $682,042 and applicable LII of $3,814 to the FEHBP, via several LOCA drawdown
adjustments from March 2017 through May 2017.
While researching the "duplicate" LOCA overdraw error, Independence BC also identified
two additional (but different) LOCA overdraw errors. Specifically, the plan self-disclosed
that in two instances the plan inadvertently overdrew funds, totaling $1,457,094 ($1,034,094
plus $423,000), from the LOCA for claims payments. These LOCA overdraws resulted from
x	 On September 14, 2016, Independence BC inadvertently withdrew $4,419,263 from
the LOCA for the claim payment amounts, instead of the actual amounts of
$3,385,169. This overdraw amount resulted in an overcharge of $1,034,094
($4,419,263 minus $3,385,169) to the FEHBP.
x   On January 11, 2017, Independence BC also inadvertently withdrew $470,008 from
the LOCA for the claim payment amounts, instead of the actual amounts of $47,008.
This overdraw amount resulted in an overcharge of $423,000 ($470,008 minus
$47,008) to the FEHBP.
We verified that Independence BC returned these two additional LOCA overdraws, totaling
$1,457,094, to the FEHBP in March 2017. Since Independence BC held these two LOCA
overdraw amounts in the dedicated FEP investment account, LII is not applicable.
In total, we are questioning $2,142,950 for this audit finding, consisting of $2,139,136
($682,042 plus $1,457,094) for the LOCA overdraws and $3,814 for applicable LII.
The Association agrees with the finding and recommendations.
As part of our review, we verified that Independence BC returned $2,142,950 to the FEHBP,
consisting of $2,139,136 for the questioned LOCA overdraws and $3,814 for applicable LII.
In response to the draft report, the Association provided a summary of the corrective actions
that Independence BC has implemented to prevent these types of LOCA overdraws (as
reported in the audit finding) from occurring again. However, the Association did not
provide supporting documentation ensuring that Independence BC has actually implemented
these corrective actions.
We recommend that the contracting officer require Independence BC to return $2,139,136 to
the FEHBP for the questioned LOCA overdraws. However, since we verified that
Independence BC returned $2,139,136 to the FEHBP for these LOCA overdraws, no further
action is required for this questioned amount.
We recommend that the contracting officer require Independence BC to return $3,814 to the
FEHBP for LII on the applicable LOCA overdraws. However, since we verified that
Independence BC returned $3,814 to the FEHBP for LII on the applicable LOCA overdraws,
no further action is required for this questioned LII amount.
10                  Report No. 1A-99-00-17-001
We recommend that the contracting officer require Independence BC to provide evidence or
supporting documentation ensuring that the plan has implemented the necessary corrective
actions to prevent these types of LOCA overdraws (as reported in the audit finding) from
occurring in the future. At a minimum, the contracting officer should require Independence
BC and the Association to each provide a certification that the plan has implemented these
corrective actions.
C. Health Benefit Refunds                                                              $912,881
Our audit determined that Wellmark BCBS and BCBS of Vermont had not returned health
benefit refunds, totaling $904,606, to the FEHBP as of June 30, 2016 ($888,977 by
Wellmark BCBS for 186 refunds and $15,629 by BCBS of Vermont for 1 refund). As a
result of our audit, Wellmark BCBS returned $897,252 to the FEHBP, consisting of
$888,977 for the questioned refunds and $8,275 for applicable LII. BCBS of Vermont also
returned $15,629 to the FEHBP for the questioned refund. In total, we are questioning
$912,881 for this audit finding, consisting of $904,606 ($888,977 plus $15,629) for these
previously unreturned health benefit refunds and $8,275 for applicable LII.
Contract CS 1039, Part II, Section 2.3 (i) states, "All health benefit refunds and recoveries,
including erroneous payment recoveries, must be deposited into the working capital or
investment account within 30 days and returned to or accounted for in the FEHBP letter of
credit account within 60 days after receipt by the Carrier."
Regarding reportable monetary findings, Part III,
Because of our audit,
Section 3.16 (a) of Contract CS 1039 states, "Audit
Wellmark BCBS and
findings . . . in the scope of an OIG audit are
BCBS of Vermont returned
reportable as questioned charges unless the Carrier
health benefit refunds, totaling
provides documentation supporting that the findings
$904,606, to the FEHBP.
were already identified and corrected (i.e., . . .
untimely health benefit refunds were already processed and returned to the FEHBP) prior to
audit notification."
As previously cited from FAR 52.232-17(a), all amounts that become payable by the Carrier
should include simple interest from the date due.
Wellmark BCBS
In response to our Audit Information Request (during our pre-audit phase), Wellmark BCBS
self-disclosed that while preparing for the audit, the plan identified 186 health benefit refunds
from 2015 and 2016, totaling $888,977, that had not been returned to the FEHBP due to a
systematic error. The plan stated, "Effective October 1, 2015, Wellmark implemented a new
system to track both claims related accounts receivables and incoming claims related cash
receipts. Recently, Wellmark discovered that the new system was not properly identifying
certain FEP related system claim adjustments, thus dollars related to these adjustments were
not being remitted back to FEP through the LOCA."
As part of our review, we verified that Wellmark BCBS returned these health benefit refunds
to the FEHBP via a LOCA drawdown adjustment on August 30, 2016, after receiving our
audit notification letter (dated July 1, 2016). The plan also returned LII of $8,275 to the
FEHBP in August 2016, calculated on these refunds that were returned untimely to the
FEHBP. We reviewed and accepted the plan's LII calculation. In total, Wellmark BCBS
returned $897,252 to the FEHBP for this self-disclosed finding, consisting of $888,977 for
the questioned health benefit refunds and $8,275 for applicable LII on these refunds.
BCBS of Vermont
BCBS of Vermont had not returned a health benefit refund, totaling $15,629, to the FEHBP
as of June 30, 2016. The plan subsequently returned this health benefit refund to the LOCA
on September 23, 2016, more than 60 days after receipt (i.e., 95 days late) and after receiving
our audit notification letter (dated July 1, 2016). Therefore, we are questioning this amount
as a monetary finding. Since the plan held this health benefit refund in the dedicated FEP
investment account, LII is not applicable for this finding.
We verified that Wellmark BCBS returned $897,252 to the FEHBP, consisting of $888,977
for the questioned health benefit refunds and $8,275 for applicable LII. We also verified that
BCBS of Vermont returned $15,629 to the FEHBP for the questioned health benefit refund.
In response to the draft report, the Association provided a summary of the procedures that
Wellmark BCBS has implemented to correct the systematic error (as reported in the audit
finding). However, the Association did not provide supporting documentation ensuring that
Wellmark BCBS has actually implemented these procedures.
$904,606 ($888,977 by Wellmark BCBS and $15,629 by BCBS of Vermont) to the FEHBP
for the questioned health benefit refunds. However, since we verified that Wellmark BCBS
and BCBS of Vermont returned $904,606 to the FEHBP for these questioned health benefit
refunds, no further action is required for this questioned amount.
We recommend that the contracting officer require Wellmark BCBS to return $8,275 to the
FEHBP for the questioned LII on the health benefit refunds that were returned untimely to
the FEHBP. However, since we verified that Wellmark BCBS returned $8,275 to the
FEHBP for the questioned LII, no further action is required for this LII amount.
We recommend that the contracting officer require Wellmark BCBS to provide evidence or
supporting documentation ensuring that the plan has implemented the necessary changes to
correct the systematic error (as reported in the audit finding). At a minimum, the contracting
officer should require Wellmark BCBS and the Association to each provide a certification
that the plan has implemented the necessary changes to correct the systematic error.
D. Excess Funds in the Investment Accounts                                              $8,206
Our audit determined that two BCBS plans held excess FEHBP funds, totaling $8,206, in the
dedicated FEP investment accounts as of June 30, 2016. These excess FEHBP funds
consisted of $4,493 by Excellus BCBS and $3,713 by BCBS of South Carolina. As a result
of this finding, Excellus BCBS and BCBS of South Carolina returned these questioned
excess funds to the FEHBP.
As previously cited from Contract CS 1039, all health benefit refunds and recoveries must be
deposited into the FEP investment account within 30 days and returned to the FEHBP within
60 days after receipt by the Carrier.
The plan's FEP investment account generally includes working capital funds, approved
LOCA drawdowns, health benefit refunds and recoveries from providers and subscribers,
interest income earned, and other cash identified as due to the FEP. Based on Contract CS
1039, all funds deposited into the plan's FEP investment account, such as health benefit
refunds, interest income and excess working capital, should be returned to the FEHBP by
adjusting the LOCA within 60 days after receipt by the BCBS plan. In addition, approved
reimbursements from the LOCA that are deposited into the FEP investment account should
be timely transferred from the FEP investment account to the plan's corporate account.
In our Audit Information Request, we requested each of the 20 BCBS plans in our sample to
provide a detailed itemization of the funds in the plan's dedicated FEP investment account as
of June 30, 2016, including an aging of these funds.3 Based on our review of these FEP
investment account itemizations, we determined that two of these BCBS plans (Excellus
BCBS and BCBS South Carolina) were holding a total of $8,206 in excess FEHBP funds in
the FEP investment accounts as of June 30, 2016. These excess FEHBP funds consisted of
$4,493 by Excellus BCBS and $3,713 by BCBS of South Carolina.
The Association agrees with the finding and recommendations. For Excellus BCBS and
BCBS of South Carolina, the Association states that these plans' FEP investment account
variances are reported to OPM during the quarterly cash management reporting.
As part of our review, we verified that Excellus BCBS returned the excess FEHBP funds of
$4,493 to the LOCA in July 2017. We also verified that BCBS of South Carolina returned
the excess FEHBP funds of $3,713 to the LOCA in November 2017.
$8,206 ($4,493 by Excellus BCBS and $3,713 by BCBS of South Carolina) to the FEHBP
for the questioned excess funds held in the plans' FEP investment accounts. However, since
we verified that Excellus BCBS and BCBS of South Carolina returned these excess funds to
the FEHBP, no further action is required for this questioned amount.
Each BCBS plan in our sample provided an itemization of the FEP investment account balance as of June 30, 2016
(except for BCBS of Western New York, Triple-S, Inc. of Puerto Rico, and Premera BC since these plans did not
maintain working capital deposits and dedicated FEP investment accounts as of June 30, 2016).
14                    Report No. 1A-99-00-17-001
We recommend that the contracting office require the Association to provide evidence or
supporting documentation ensuring that Excellus BCBS and BCBS of South Carolina are
performing FEP investment account reconciliations at least on a quarterly basis. However,
since the Association provided documentation ensuring that Excellus BCBS and BCBS of
South Carolina are performing FEP investment account reconciliations on a quarterly basis,
no further action is required for this procedural recommendation.
E. Treasury Offsets                                                                      $6,736
BCBS of Michigan had not returned $5,863 to the FEHBP for an offset taken from the
LOCA by the Treasury on February 12, 2016. The plan self-disclosed this exception during
our pre-audit phase. The plan also identified five Treasury offsets that were returned late to
the FEHBP during the audit scope. As a result, BCBS of Michigan returned $6,736 to the
FEHBP for this audit finding, consisting of $5,863 for the questioned Treasury offset against
the LOCA and $873 for applicable LII on the Treasury offsets returned untimely to the
FEHBP.
As previously cited from Contract CS 1039, costs charged to the FEHBP must be actual,
allowable, allocable, and reasonable. Also, as previously cited from FAR 52.232-17(a), all
amounts that become payable by the Carrier should include simple interest from the date due.
Regarding reportable monetary findings, Contract CS 1039, Part III, Section 3.16 (a), states,
The Treasury will occasionally recover non-FEHBP debts from a BCBS plan by reducing
LOCA drawdowns made to the plan for FEHBP claim payments. If this occurs, the BCBS
plan should make the FEHBP whole by transferring funds into the dedicated FEP investment
account to replenish the funds that were taken.
During our review of Treasury offsets for a sample of 20 BCBS plans, we only noted
exceptions for BCBS of Michigan. While preparing for our audit, BCBS of Michigan
identified and returned a Treasury offset, totaling $5,863, to the FEHBP on August 12, 2016,
more than 153 days late and after receiving our audit notification letter (dated July 1, 2016).
For this exception, although BCBS of Michigan did not withdraw additional funds from the
LOCA to cover the shortage caused by the Treasury offset, the plan inadvertently did not
transfer funds into the FEP investment account to cover this Treasury offset, which left the
FEP investment account short by $5,863 as of June 30, 2016. Therefore, we are questioning
this exception as a monetary finding, consisting of $5,863 for a Treasury offset returned to
the FEHBP after our audit notification date and $57 for applicable LII on this Treasury offset
returned untimely to the FEHBP.
When responding to our Audit Information Request (during our pre-audit phase), BCBS of
Michigan also self-disclosed that five Treasury offsets, totaling $45,807, were returned
untimely to the FEHBP during the audit scope. For these five Treasury offsets, we noted that
the plan transferred the applicable funds into the FEP investment account from 218 to 412
days late. Since the plan returned these funds to the FEHBP during the audit scope and prior
to receiving our audit notification letter, we did not question this principal amount as a
monetary finding. However, we are questioning LII of $816 on these five Treasury offsets,
because BCBS of Michigan transferred the applicable funds untimely into the FEP
investment account.
OIG Comments:
As part of our review, we verified that BCBS of Michigan returned $6,736 to the FEHBP for
this audit finding, consisting of $5,863 for the questioned Treasury offset against the LOCA
and $873 ($57 plus $816) for applicable LII on Treasury offsets returned untimely to the
FEHBP. We reviewed and accepted the plan's LII calculations.
In response to the draft report, the Association provided a copy of BCBS of Michigan's
updated Treasury offset procedures. However, the Association did not provide supporting
documentation ensuring that the plan has implemented these updated procedures.
We recommend that the contracting officer require BCBS of Michigan to return $5,863 to the
FEHBP for the questioned Treasury offset. However, since we verified that the plan returned
$5,863 to the FEHBP for the questioned Treasury offset, no further action is required for this
amount.
16                 Report No. 1A-99-00-17-001
We recommend that the contracting officer require BCBS of Michigan to return $873 to the
FEHBP for the questioned LII on the Treasury offsets returned untimely to the FEHBP.
However, since we verified that the plan returned $873 to the FEHBP for this questioned LII,
no further action is required for this LII amount.
We recommend that the contracting officer verify that BCBS of Michigan has implemented
the necessary procedures to ensure that Treasury offsets are timely returned to the FEHBP.
At a minimum, the contracting officer should require BCBS of Michigan and the Association
to each provide a certification that the plan has implemented these procedures.
F. Unreturned Interest Income                                                            $2,556
Our audit determined that BCBS of Vermont had not returned interest income of $2,556 to
the FEHBP as of June 30, 2016. This interest income was earned on funds held in the plan's
dedicated FEP investment account from 2015 through June 30, 2016. As a result of our
audit, the plan returned this interest income to the FEHBP in August 2016 and June 2017.
48 CFR 1652.215-71 states, "(a) The Carrier shall invest and reinvest all FEHB funds on
hand that are in excess of the funds needed to promptly discharge the obligations incurred
under this contract . . . (b) All investment income earned on FEHB funds shall be credited to
the Special Reserve on behalf of the FEHBP."
OPM's Guidelines (dated May 2009) also state, "Excess funds must be held in a separate
interest-bearing account. The interest earned on these funds must be credited to the FEHBP,
by reducing the amount of a draw, at least on a monthly basis and used by the Carrier to pay
only FEHBP expenses."
From 2015 through June 30, 2016, BCBS of Vermont earned interest income of $2,556 on
FEHBP funds in the plan's dedicated FEP investment account, but had not returned this
interest income to the FEHBP. After receiving our audit notification letter (dated July 1,
2016) and because of our audit, BCBS of Vermont returned $253 of this questioned interest
income to the FEHBP in August 2016 and $2,303 to the FEHBP in June 2017. Since the
plan held this interest income in the dedicated FEP investment account, LII is not applicable
for this audit finding.
As part of our review, we verified that BCBS of Vermont returned $2,556 to the FEHBP in
August 2016 and June 2017 for the questioned interest income.
In response to the draft report, the Association provided a copy of BCBS of Vermont's
updated interest income procedures. However, the Association did not provide supporting
We recommend that the contracting officer require BCBS of Vermont to return $2,556 to the
FEHBP for the questioned interest income. However, since we verified that the plan returned
$2,556 to the FEHBP for this questioned interest income, no further action is required for this
We recommend that the contracting officer verify that BCBS of Vermont has implemented
the necessary procedures to ensure that interest income earned on the FEP investment
account is timely returned to the FEHBP. At a minimum, the contracting officer should
require BCBS of Vermont and the Association to each provide a certification that the plan
has implemented these procedures.
IV. SCHEDULE A – QUESTIONED CHARGES
CASH MANAGEMENT ACTIVITIES
SAMPLE OF BLUECROSS AND/OR BLUESHIELD PLANS
QUESTIONED CHARGES
AUDIT FINDINGS                                                                            2015                  2016                   2017               TOTAL
A.    Excess Working Capital Deposits
Independence BC                                                                                $0           $1,877,171                    $0             $1,877,171
BCBS of Wyoming                                                                                0                    0             1,365,470              1,365,470
Total Excess Working Capital Deposits                                                               $0           $1,877,171            $1,365,470             $3,242,641
B.    Letter of Credit Account Overdraws (Drawdown Errors)
Independence BC *                                                                                $0           $1,034,094            $1,108,856             $2,142,950
Total Letter of Credit Account Overdraws (Drawdown Errors)                                          $0           $1,034,094            $1,108,856             $2,142,950
C.    Health Benefit Refunds
Wellmark BCBS *                                                                           $172,650              $724,602                     $0             $897,252
BCBS of Vermont *                                                                                0                15,629                      0               15,629
Total Health Benefit Refunds                                                                 $172,650              $740,231                     $0             $912,881
D.    Excess Funds in the Investment Accounts
Excellus BCBS                                                                                $0                $4,493                    $0                $4,493
BCBS of South Carolina                                                                            0                 3,713                     0                 3,713
Total Excess Funds in the Investment Accounts                                                       $0                $8,206                    $0                $8,206
E.    Treasury Offsets
BCBS of Michigan *                                                                            $816                 $5,920                    $0                $6,736
Total Treasury Offsets                                                                           $816                 $5,920                    $0                $6,736
F.    Unreturned Interest Income
BCBS of Vermont                                                                              $2,183                 $373                     $0                $2,556
Total Unreturned Interest Income                                                                $2,183                 $373                     $0                $2,556
TOTAL QUESTIONED CHARGES                                                                      $175,649            $3,665,995            $2,474,326             $6,315,970
* We included lost investment income (LII) within audit findings B ($3,814), C ($8,275), and E ($873). Therefore, no additional LII is applicable for these audit findings.
Report No. 1A-99-00-17-001
1310 G Street N.W.
, Group Chief                                Washington, D.C. 20005
Experience-Rated Audits Group                                         202.942.1000
Office of the Inspector General                                       Fax 202.942.1125
1900 E Street, Room 6400
Washington, DC 20415-11000
Reference:                 OPM DRAFT AUDIT REPORT
For a Sample of Blue Cross Blue Shield Plans
Audit Report Number 1A-99-00-17-001
Dear                 :
This is the Blue Cross and Blue Shield Association's response to the above referenced
U.S. Office of Personnel Management (OPM) Draft Audit Report covering the Federal
Employees' Health Benefits Program (FEHBP) Cash Management activities for a sample
of Blue Cross Blue Shield Plans. Our comments concerning the findings in the report
are as follows:
Excess Working Capital Deposits                                                $3,242,641
$3,242,641 to the FEHBP for the questioned excess WC deposits ($1,877,171 by IBC
and $1,365,470 by BCBS of Wyoming). However, since we verified that IBC and BCBS
of Wyoming returned $3,242,641 to the FEHBP for the excess WC deposits, no further
BCBSA Response
BCBSA agrees with this recommendation.
We recommend that IBC and BCBS of Wyoming implement corrective actions to ensure
that the WC deposit is properly calculated in accordance with the Guidelines and
applicable regulations.
BCBSA agrees with this recommendation. IBC and BCBSWY have implemented new
procedures to ensure Working Capital is properly calculated. See Attachment A.
Letter of Credit Account Overdraws (Drawdown Errors)                             $2,142,950
We recommend that the contracting officer require IBC to return $2,139,136 to the
FEHBP for the questioned LOCA overdraws. However, since we verified that IBC
returned $2,139,136 to the FEHBP for these LOCA overdraws, no further action is
required for this questioned amount.
We recommend that the contracting officer require IBC to return $3,814 to the FEHBP
for LII on the questioned LOCA overdraws. However, since we verified that IBC returned
$3,814 to the FEHBP for LII on the LOCA overdraws, no further action is required for this
questioned LII amount.
We recommend that the contracting officer require IBC to provide evidence or
supporting documentation ensuring that the Plan has implemented the necessary
corrective actions to prevent these types of LOCA overdraws (as reported in the audit
finding) from occurring in the future
BCBSA agrees with this recommendation and provided additional documentation.
Reference Attachment A.
Health Benefit Refunds                                                         $912,881
$904,606 ($888,977 by Wellmark BCBS and $15,629 by BCBS of Vermont) to the
FEHBP for the questioned health benefit refunds. However, since we verified that
Wellmark BCBS and BCBS of Vermont returned $904,606 to the FEHBP for the
questioned health benefit refunds, no further action is required for these questioned
refund amounts.
We recommend that the contracting officer require Wellmark BCBS to return $8,275 to
the FEHBP for the questioned LII on the health benefit refunds that were returned
untimely to the FEHBP. However, since we verified that Wellmark BCBS returned
$8,275 to the FEHBP for the questioned LII, no further action is required for this LII
We recommend that the contracting officer require Wellmark BCBS to provide evidence
or supporting documentation ensuring that the Plan has implemented the necessary
changes to correct the systematic error (as reported in the audit finding).
BCBSA agrees with this recommendation and has provided updated procedures.
Reference Attachment B
Excess Funds in the Investment Account                                          $8,206
Recommendation 9 [Combined]
We recommend that the contracting officer require Excellus BCBS to return $4,493 to
the FEHBP for the questioned excess funds that were held in the Plan's FEP
investment account. However, since we verified that Excellus BCBS returned $4,493 to
the FEHBP for these excess funds, no further action is required for this questioned
We recommend that the contracting officer require BCBS South Carolina to immediately
return the questioned excess funds of $3,713 to the FEHBP (unless the Plan can provide
evidence or supporting documentation that these funds are not FEHBP funds).
The Plan has returned the funds to the Program (Reference Attachment C).
However, the Plan suggests a tolerance be set to determine when reimbursement is
required in the future. The OIG auditors identified the variance while reviewing the
Plan's reconciliation of working capital to FEP investment account balance. Because
BCBSSC settles the bulk of FEP payments weekly, the Plan uses the second
method to calculate their working capital base. The second method uses estimation.
In this method, working capital is a calculated number based on one week's claims,
and not based on actual daily benefits reported. This method inherently creates a
variance each quarter.
We recommend that the contracting office require the Association to provide evidence
or supporting documentation ensuring that Excellus BCBS and BCBS of South
Carolina are performing FEP investment account reconciliations at least on a
quarterly basis. We also recommend that the contracting office require the
Association to provide evidence or supporting documentation ensuring that these
BCBS Plans are not maintaining and/or commingling the Plans' corporate funds in the
FEP investment accounts.
BCBSA agrees with this recommendation and actually implemented this
recommendation in 2012. In the case of these two Plans, variances in the account are
reported to OPM during the Quarterly OPM Cash Management Reporting on a semi-
annual basis. Reference Attachment D
We recommend that the contracting officer require BCBS of Michigan to return $5,863
to the FEHBP for a Treasury offset against the LOCA. However, since we verified that
the Plan returned $5,863 to the FEHBP for this Treasury offset against the LOCA, no
further action is required for this questioned amount.
We recommend that the contracting officer require BCBS of Michigan to return $873 to
the FEHBP for the questioned LII on the Treasury offsets that were returned untimely to
the FEHBP. However, since we verified that the Plan returned $873 to the FEHBP for
this questioned LII, no further action is required for this LII amount.
We recommend that the contracting officer require BCBS of Michigan to provide
evidence or supporting documentation demonstrating that the plan has implemented the
necessary corrective actions to ensure that Treasury offsets against the LOCA are
timely returned to the FEHBP.
BCBSA agrees with this recommendation. Reference Attachment F for the Plan's
updated Treasury Offset Procedures
We recommend that the contracting officer require BCBS of Vermont to return $2,556 to
the FEHBP for interest income earned on funds in the dedicated FEP investment
account from January 2015 through June 2016. However, since we verified that the
plan returned $2,556 to the FEHBP for this interest income, no further action is required
for this questioned amount.
We recommend that the contracting officer require BCBS of Vermont to provide
necessary corrective actions to ensure that interest income earned on the FEP
investment account is timely returned to the FEHBP.
BCBSA agrees with this recommendation. Reference Attachment G for the Plan's
updated procedures.
We appreciate the opportunity to provide our response to this Draft Audit Report and
request that our comments be included in their entirety as an amendment to the Final
Audit Report.
Executive Director, Program Integrity

Report Fraud, Waste, and
Fraud, waste, and mismanagement in
Government concerns everyone: Office of
the Inspector General staff, agency
                      employees, and the general public. We
actively solicit allegations of any inefficient
and wasteful practices, fraud, and
mismanagement related to OPM programs
and operations. You can report allegations
to us in several ways:
By Internet: 	        http://www.opm.gov/our-inspector-general/hotline-to-
report-fraud-waste-or-abuse
By Phone: 	         Toll Free Number:                  (877) 499-7295
Washington Metro Area:             (202) 606-2423
By Mail:           Office of the Inspector General
1900 E Street, NW

redpajama_set_name: RedPajamaCommonCrawl


The controversial 'Muslim Council of Britain' (MCB), which has previously been criticised for not representing the views of ordinary Muslims, have used the Finsbury Park terror attack to smear a prominent critic of radical Islam.
Miqdaad Versi, the Assistant General Secretary of the MCB, told the Daily Politics: "Many parts of the media spread this hate. You talk very much about hate speech being unacceptable and not tolerated and now we know the BBC and others will not have Anjem Choudary on the TV, despite having them on in the past.
"What about the same people on the right? What about people like Douglas Murray who just last week came on this show and said less Islam is the answer to terrorism.
"Giving a platform to people like that to spread their hate is unacceptable," he concluded.
Douglas Murray, for those who don't know, is probably Britain's most astute and articulate critic of radical Islam since the late Christopher Hitchens.
To try and use this tragedy to shut down critics of radical Islam is despicable, and the MCB should be ashamed.


text:
Opening Bell: 02.23.09
William Richards
UBS Shares Dive On Tax News (Reuters)
The willingness of UBS to give the United States the names and money in settlement form has pissed off investors - though I can't imagine why - and led to calls for the resignation of UBS leadership from some parliamentarians. It's funny how short memories are, as Reuters has it the settlement was backed by the Swiss government.
Citi Scammed By Nigerians. Seriously. (NYT)
Swindles in which someone overseas seeks access to a person's bank account are so well known that most potential victims can spot them in seconds.
But one man found success by tweaking the formula, prosecutors say: Rather than trying to dupe an account holder into giving up information, he duped the bank. And instead of swindling a person, he tried to rob a country -- of $27 million.
To carry out the elaborate scheme, prosecutors in New York said on Friday, the man, identified as Paul Gabriel Amos, 37, a Nigerian citizen who lived in Singapore, worked with others to create official-looking documents that instructed Citibank to wire the money in two dozen transactions to accounts that Mr. Amos and the others controlled around the world.
The money came from a Citibank account in New York held by the National Bank of Ethiopia, that country's central bank. Prosecutors said the conspirators, contacted by Citibank to verify the transactions, posed as Ethiopian bank officials and approved the transfers.
Slumdog Millionaire Big Winner (CNBC)
The Oscars are a huge event for millions yearly, and given the recent downturns in the market and shortages in liquidity the timing seems pretty good - if only there were weekly events like this to keep consumers interests off daily happenings. Aside, Slumdog Millionaire seems to have taken the night by storm (though I'm not sure that was unexpected..) and I have it on good authority that Penelope Cruz was just hot enough to buckle your knees a little.
Also, importantly, CNBC has it that "Madea Goes to Jail" has locked up number 1 at the box office.
East Europe Looks For More Money (WSJ)
"European leaders called for doubling the International Monetary Fund's war chest to $500 billion for bailing out financially stricken nations, amid new signs that Europe's former Communist east is sliding into a full-blown crisis.
Europe's developing economies are facing their worst economic trauma since the fall of the Berlin Wall 20 years ago. Capital is fleeing Europe's east, sending currencies sliding and threatening the region with deep declines in output and employment, and a deluge of debt defaults. Poland's industrial output in January fell at a painful 15% annual rate; its currency last week hit an all-time low against the Swiss franc."
Of Budgets And Tax (FT)
"His first budget, released on Thursday, will show the deficit falling to $533bn (€415bn, £369bn) by fiscal year 2013, compared with an inherited deficit aides estimate at $1,300bn.
Revenue from the sale of emissions permits under a cap-and-trade system will help pay for the deficit reduction, along with reductions in spending on the war in Iraq and higher taxes on wealthy individuals and businesses.
The budget will allow the Bush tax cuts for those earning more than $250,000 to expire after 2010. The top marginal income tax rate will rise to 39.6 per cent. The top capital gains tax rate will be set at 20 per cent.
However, hedge fund and private equity executives will be taxed on "carried interest" - their share of profits on investments - at the higher income tax rate rather than the lower capital gains tax rate as at present."
SEC Faces Scrutiny Over Trading Inquiry At Lehman (NYT)
"In a letter sent to the commission last Thursday, Charles E. Grassley, the Iowa Republican who is the ranking member of the Senate Finance Committee, asked Mary L. Schapiro, the chairwoman of the S.E.C., whether it had followed up on allegations that were brought to its attention last spring involving a unit at Lehman Brothers. Employees in the unit, known as the Product Management Group, appear to have tipped off clients and traders about the content of the firm's research reports before they were released, a former Lehman analyst said.
According to the letter, the documents provided by Mr. Parmigiani indicate that officials in Lehman's Product Management Group routinely received research reports before they were made public. The case also raises questions of whether the content or gist of the reports was disseminated to select traders in advance."
UAE Steps In, Buys Dubai Debt (Bloomberg)
No one's having a good day, but Dubai is taking it as bad as anyone else -- not to mention I understand they still have debtors' prison.
"Dubai shares surged the most in three months after the United Arab Emirates' central bank bought $10 billion of Dubai bonds, easing concern that the emirate's companies will be unable to refinance debt.
Dubai, home to the world's tallest building, most expensive hotel suite and largest manmade islands, needs help to repay $15 billion of debt maturing this year, Moody's Investors Service said this month. The U.A.E. central bank is charging Dubai annual interest of just 4 percent on the five-year unse


Jumping on an exercise bike might help burn that stubborn, beach body-ruining fat, but it can also be the most boring experience in the world. So how do you spice your stationary cardio up a little? How about a piece of custom software, Google Street View and a VR headset?
That's what one Adam Puzey did, and he's using the setup to cycle from Lands End in Cornwall to John O'Groats in Scotland. Yup, that's a simulated cycle running the entire length of our nation. "I want to become the first person to cycle through Britain in virtual reality. I really, really do. In fact I might be the first person to cycle any great distance in VR," comments Puzey in a post on his personal blog.
Using a standard Samsung Gear VR headset, Puzey has developed a bespoke app that takes panoramas in Google Street View and stitches them into a rideable virtual route. He also used a Bluetooth-enabled cadence sensor to track how fast he's pedalling, which then enables said software to warp the panoramas so it feels like he's actually riding through each locale.
For Puzey, the inspiration came from the possibility that Street View contained 3D data that could be extracted and used for such a purpose. "When you use Streetview you'll notice that when you hover your cursor over the scene it brings up a rectangle that angles correctly to the building your hovering over," he comments in his blog. "When I saw this I realised the scene must also store some 3D information. Some quick research revealed a method of extracting this information and building up a 3D scene. It was then a simple matter of moving the camera through space as I pedal."
Puzey started his journey in May and he's recording each step of the way on YouTube with a map showing his current location, what he can see through his Gear VR headset and a webcam to remind us all how knackering using an exercise can be for long periods of time.
Check out the videos in this story to see how he's getting on. Just be thankful he hasn't got to fork out a small fortune on expensive lycra and a flashy helmet.


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Trishala Dutt's Heartbreaking Post On Death Of Boyfriend: 'I Love You And Will Miss You'
Actor Sanjay Dutt's daughter Trishala Dutt has penned a note mourning the demise of her boyfriend.
She took to Instagram on Thursday, and shared two photographs. One of the pictures is a cropped image of the boy, while another picture features Trishala hugging him.
She wrote: "My heart is broken. Thank you for loving me, protecting me, and taking care of me. You have made me the happiest I've ever been in my life. I'm the luckiest girl in the world to have met you and beyond blessed to have been yours.
"You will live in me for eternity. I love you and I will miss you. Until we meet again. Forever yours, your Bella Mia. RIP October 7, 1986 0 July 2, 2019. 'I love you more than yesterday but not as much as tomorrow."
Trishala's verified profile has over 300,000 followers.
She is Sanjay's eldest child whom he had with the late Richa Sharma.
Trishala has had a tumultuous relationship with her father, although they are in a much better space now. There was much speculation as to why Sanju, the Raj Kumar Hirani directed film on Sanjay's controversial life, made no mention of Richa and Trishala. She said in a recent Instagram AMA session that her relationship with Sanjay is extremely 'normal'
There Are Only Positives Being SRK's Wife: Gauri Khan
Interior designer Gauri Khan says there are only positives as far as being the wife of superstar Shah Rukh Khan is concerned. She says he is a great father and husband.
He Is Flawed, So Are We All: Shahid On 'Kabir Singh'
Despite being panned by critics as normalising misogyny and glorifying toxic masculinity, Kabir Singh has scored a double century in 13 days
#Twinning: Malaika Arora, Arjun Kapoor Paint NYC Neon
Actors Malaika Arora and Arjun Kapoor are giving some serious couple goals. The two were spotted twinning in neon clothes.
PIC: Anushka, Virat 'Seal The Silly Moments'
Indian skipper Virat Kohli caught up on some fun moments off field with his actress wife Anushka Sharma, ahead of team India's 2019 ICC Cricket World Cup clash with Sri Lanka.
Would Love To Play More Challenging Roles: Rajkummar
National Award-winning actor Rajkummar Rao, who is receiving a positive response for his new look in the upcoming film "Judgmental Hai Kya", says he would love to play characters that challenge him to work harder.
Mr And Mrs Jonas: Joe Shares First Wedding Picture
American pop singer Joe Jonas shared the first photograph from his wedding with "Game Of Thrones" star Sophie Turner.


On a final note, I find your insistence on the rightness of your worldview to be just as arrogant as those of the innumerable Christians who stand on street corners and shout at people to repent. I do not think myself to be superior to you or of greater mental capacity than you in any way. I will cling to my mindvirus while you discover enlightenment and frolick in the flowers with your pig and octopus brethren.
I am in a certain dilemma which has been incoming for some time. I believe it is already established that I am the ultimate hyper-realist in politics, willing to justify nearly any murder, theft, or injustice in the name of either political expediency or historical causality. Of course I stipulate, always, that the perpetrators of all such injustices will have their checklists of good and evil blotted beyond repair, that the good prince will rarely be a good person, and that the expert of politics will always find himself tormented at least by Purgatory, if not by Hell, upon entry to the next life. But nonetheless I condemn all those who seek, in politics, a perfect world; and I treat as ignorant all those who believe that by a single generous act they effect a true change in the nature of reality. Thus is detailed my political yardstick, which presently forms the core of my intellect and inclinations.
Yet I am no Nietzche- I am no godless beast devoid of all principles, believing that at the final judgment we shall be judged merely by the measure of our expediency on Earth. While certainly that must form a part of my morality, I ought to be damned to Hell right now should I decide that that should be the whole of it. I am not only a citizen, but also a man. I live, as all men, not solely in the political sphere of things, but in a whole host of other spheres of things. And while my analytic specialization, and perhaps someday my career, revolves around a realistic interpretation of the political affairs of Mankind, too deep an intrusion of this specialty into my conscience would be an imbalance of tremendous proportion- and I have already discerned that a just balance is the greatest of blessings in all political projects, and perhaps in all other projects, too.
It is interesting that I should have thus far made the mistake of discerning a universe devoid of principles solely to refute the rhetoric of the liberals and the universalists. For from the beginning of my conscious life, up to the beginning of my political evolution (and in subtler ways throughout my political evolution) the primary moral purpose which I discerned for myself and pursued with the best of my meager ability has been TO BECOME THE BEST POSSIBLE INDIVIDUAL I CAN BE by ALIGNING MYSELF WITH SUCH PRINCIPLES as to PROPERLY DEVELOP A SOUND, STRONG CHARACTER while CULTIVATING A PERSONALITY PROPER TO MY ASPIRATIONS AND SITUATION. I have certainly not accomplished this goal, for it is one which must be pursued throughout life, and is never fully accomplished; but I have certainly attained higher heights than I would have without it, and in those times in which my pursuit has been weakened by intrigues with girls and circumstances of prolonged depression and more intense focuses upon studies, my previous cultivation of virtue has yet served me as a habit ineradicable in those short periods. I have certainly been a greater hypocrite than most people, for in assuming myself to be upon a quest to virtue, I have therefore assumed upon myself an air of self-percieved greatness which, invariably, is quite visible to others and is quite contradictory to the virtue of humility. And I have failed to destroy my typical human flaws and my unique personal flaws, all the while pursuing greater goods- Kipling, Bennett, Washington, Franklin, and the Scout Oath and Law have been my guides on this journey, yet I am in no way a model of any of them, nor have I accurately emulated their precepts in my life. And more seriously, in my pursuit of virtue I have failed to learn any usable and useful skills. The desolation of uselessness haunts me; in a way, scholarship of politics has been my attempt at escape into the economy of worth.
But forgive my self-deprecating drivel. I hope merely to show you my personal tendency, the one which exhibits my behavior better than any other one.
It has not escaped my perception, that this pursuit of moral betterment by aligning myself with moral codes and acting their precepts in my life, relies on the concept of OBJECTIVE MORALITY. By one measure, it shows a belief that there is an objective objective towards which to strive, a 'better' not in the sense that a person may be more fit to fulfill a purpose as a tool, but in the sense that a person may be measurably better in one phase of life than in another. I look within myself and I find this belief strongly in my mind. By another measure, it supposes that certain actions- not all, but certain ones- are good in themselves, not because they make an individual a better person or because they increase goodwill between people, but because they are simply good. These actions might include loving another person, loving oneself, showing mercy or compassion, being fair in dealings, and a host of other ones which doubtless just about every rational moral code ever conceived would agree to and submit to. It would seem, if these two beliefs which I generally hold to be true are true, that there IS an objective morality. Perhaps I sound much like CS Lewis at the moment.
Yet I recall writing against this very concept in another message to a different friend, arguing that the differences between moral codes are so significant as to render them all, in general, perpetually at war with each other in the field of discussion and debate. And, truth be told, I believe I find myself reverting to the ultimate conclusion which I reached in that previous message- that an objective morality exists, and we know it because we can feel it with our moral sense; but that we cannot know it in full, and as it is, and must always know only a subjective and personal account of it in our lives, which nonetheless is a sufficiently powerful compass as to bring happiness and meaning to human life, in whatever way it is found. Perhaps this is a mystic's answer; but it nonetheless, as I think on it, seems more proper than establishing a codex of moral laws, or a code of moral principles. I tend to poke at the flaws in the codes I follow.
And now to the dilemma itself.
Politics supposes that there is a set of objective natural laws governing human nature; Ethics supposes that there is a set of objective positive laws governing human behavior. It is clear, by any observation of the history of the world, that these two approaches are incompatible at the largest scale. History marches over the bodies of the defeated, and the Engine of Progress is fueled by the blood of the vanquished. The attempts at ethical restructurings of human affairs have, in general, either failed completely, failed and resulted in greater injustice than before, or most commonly, succeeded only partly and resulted in great hypocrisy on the part of those who benefited from them. Successes in ethics seem evident only in the smallest of groups, or else more commonly, at the level of individuals- and even these successes are fraught with inconsistencies and flaws. Yet the ethical impulses are never removed, and indeed are powerful; for it is a truism, that a good man will stand before kings; and the best leaders are never simply cunning, but possess charismatic qualities which seem to bespeak of an inner benevolence and love for their followers which the cynic would dismiss as useless. The heroes of popular culture are always morally excellent. It would seem that the moral sense is at least a factor in politics; yet to ultimately relegate it to that level would be to dismiss its providence in the conscience.
And so looking upon my previous actions now, I find it somewhat foolish that I have always so callously dismissed the liberals, who place a greater influence of moral law upon politics. Indeed, we follow the same moral law; but I believe that in general, they hold a skewed sense of the political laws which govern man's actions. I find that I agree with them in more ways than I previously had, on the surface morality of political action. Yet the political analyst in me causes me to disagree due to the consequences of such action. I must acknowledge that they tend to be more moral than me, for their cries for justice are pure and good. But, (while in full doubt of whatever mean wisdom I may have,) I question whether they are wiser than me. Nonetheless they likely stand a higher chance of entering Heaven, for they align their principles with their actions. I, on the other hand, partake in the very bloodbath which moral codes have since time immemorial have sought to eliminate.
It seems, then, an interesting place- to be an individual striving for moral excellence and excellent citizenship, yet a political analyst and aspiring political actor aware of the wretchedness of the life of Man.
A Letter to a Friend- What is Freedom?
Well, ever since my political evolution began in earnest, I have never particularly concerned myself with that concept. One of the important early distinctions I made was the notion that every right is a power, and freedom in itself is the degree to which an entity's power goes unchecked by other forces. They say the slave is not free; they also say the slave is powerless; are these not the same thing?
'All men desire power,' says Tolkien. 'All men yearn for freedom,' says the Jeffersonian, or otherwise American, thinker. And these two urges are one. They certainly seem to manifest themselves in different ways when observed by different ideologies and modes of thought, but in practice there is little difference observable. Power and freedom seem to be one and the same- not power in Morgenthau's sense, as in power over others, but power in a broader sense- power over one's self. And to have another's services at your 'liberty-' is that not to hold power over them?
An observation of liberty in free societies ought to begin with the recognition that it is essentially the individual's power over themself, rather than some mystical cosmic good spoken by sages and prophets.
At the Lincoln Memorial in Washington D.C., the savior of the Union's right hand and left wrist rest upon pillars of fasces- the Romans' symbol of unlimited political power.
In a sense, all entities are free, and all are enslaved. The areas in which they are either, and the degrees to which they are either, seem to vary on sliding scales, and are probably best seen as relative to various situations. For example, if freedom were measured by a woman's power to choose to have abortions, then the claim that North Carolina and Texas oppress women is assuredly true, at least in comparison to California and New York. But if freedom were measured by a business entity's power to do business and keep the highest percentage possible of its earnings without fear of high taxes, then the claim that California and New York oppress businessmen is assuredly true, at least in comparison to Texas and North Carolina. And if freedom were measured by an individual's power to speak ill of their government, then certainly all citizens of the United States would be free, and all citizens of China and Russia oppressed. And if freedom were measured by an individual's power to work for their government and defect to a foreign government and release the secrets of their government for the world to see, certainly there is not a free patch of territory on this Earth!
I say again- freedom, in my opinion, is essentially indistinguishable from power, in a basic dictionary of political terms. Power is the ability to shape reality, and freedom is the state of lacking constraints to do so. When an individual argues for their freedom to do something, they are arguing for their power to do it. When a people fights for their freedom, they are fighting for their power. Or in a more accurate terminology, they are fighting for a removal of restraints upon their power.
So natural, so immanent is power to the human condition, that those who would wish its extinguishment in human affairs clothe it, incense it, adorn it in a cloak of many colors, rechristen it 'Liberty,' and proceed to oppress their nearby fellows in the name of their own freedom. But such is human nature, that those things most fundamental to our being, when possessing two sides, one good, one evil, are so hideous to us that we would prefer to forget their true nature and call them by a nicer name, all the while using them exactly as our ancestors did for all the millennia in which those very things served them well. I will be the first to say that I love liberty, and to wish it upon all Mankind; yet in doing so I do not relieve them of the dual pleasures and agonies of their existence which have plagued them since time immemorial, but condemn them to the same for all eternity.
When I think of why I am proud to be an American, after having underwent my political evolution, I realize it would be foolish to say because I am proud of what America has done. States don't work that way, I don't think, and in any case America is enough of a state that its survival has bloodied its hands with the blood of millions. Democracy is a fun illusion. Freedom is power reserved to oneself. I don't think any of the normal reasons for being proud to be an American can apply, when I have the understanding of politics I choose to hold.
My reason, I think, is partly tribal- It is MY country, and I am of it, just as I am part of my family and I love it, and I am part of my university, and I love it- and partly symbolic- I love the mythology, the symbols, the aura, and the rituals, and they are a part of my identity and therefore something to be celebrated. Consequently all parts of American heritage are important to me, and when I say I am proud of my country's past, I don't mean I think it was perfect and ought to be repeated- I mean I am proud of it similar to the way I would say I am proud of the life I have lived. Of course I don't think it was the best thing that could of happened, or the definition of perfection. But it was MINE, and all I have- and therefore I ought to own it.
As regards American Exceptionalism- what a tricky, sticky topic! Of course I think, with Adams, that there is nothing particularly unique about the American experience, some metaphysical truth, some divine intervention, that somehow makes Americans better than any other nation or people on the planet. To cultivate such an idea is necessary for national pride, but I cannot believe it to be more than an extremely fortunate accident of fate, wrought in the geography and ecology of the continent, etched in the history of the world at the continent's settlement and then at the nation's birth, penned in the magnanimous lives of its wisest men. A miracle, by some counts- history, by others.
But when I consider this accident, I must consider also the nature of the way things work. I am inclined to believe there is a God in Heaven above, who governs the universe by his Providence, whose purpose is benevolent but essentially unreachable by us mere mortals who quake in awe of Him. 'All things happen for a reason;' and as all affairs can be placed, thereby, in a divine context, it would follow that the life of the nation, of all nations, is also thereby placed. So it would be foolishness to say that there is no divine providence, and no divine plan for America!
At the same time, I find it foolhardy to believe that God is as much an interventionist as he has been characterized. If he is an interventionist, I would assume him to be so at the level of individuals, not nations. If all the fate of America has been the intervened work of God, then it would seem that God has a sickly mind indeed. And I will not believe that a just God would favor one nation over another as a matter of Providence.
Rather, I think it would be wiser to laud the accidents of American history, rather than suppose it all part of a plan which never could have gone wrong due to the grace of God. And it seems that in the ironic accidents of American history, she achieved her greatest ideal victories- the things that have caused those who love her to rejoice. The vision of America taught to our children and proclaimed in our anthems is a beautiful one indeed, and it was forged in those ironic accidents which now define our heritage. 1776 (what a beautiful number) marked the secession; and it was probably bound to happen, but it happened in so epic a method. The geographical, or rather political, imbalance was absurd (though skewed in modern measurements) and made for stories painting America as the underdog. The Constitutional Convention created an imperfect document not by wise design, but by raucous political compromise. The following growth of America fostered the image painted by de Tocqueville. And what a wonderful picture indeed! The Westward Movement, the day of the pioneer, expressed the entrepreneurial spirit more clearly than any treatise could or has. The Civil War saw a crusade, the first this nation undertook, against an undeniable evil, yet nearly rent the nation asunder. It made for a perfect Aeneid. Millions from every nation poured into her ports, and proved the attractiveness of the American way of life, if not in its reality then in its promise. The Twentieth Century was spent fighting tyranny, advancing equality, and developing technology. By the end of it America stood atop the world order, and what appeared a glorious past lay behind it, a promising future before it. I will not deny- the historical idea, in itself, its essence, is a beautiful one. And it is generally so wrongly remembered as to nearly constitute a lie- but the fact that it is so widely believed and cherished makes it a truth of our identity.
I have referenced Adams, who stipulated that nothing made Americans unique from any other people but their unique situation and descent; and Franklin was wise, in predicting that the United States would one day fall, as every nation does; but all things considered, it seems that the United States will leave, upon the world's heritage, a love of liberty, as surely as the Roman Republic left upon it a love of justice. And liberty being one of the various political goods which may be striven for in the concrete, America is therefore not quite only another nation. It possesseth not the divine guidance it is at times attributed. Yet that special heritage- the culture of liberty- defines, I believe, America's 'purpose' if such a thing exists. But that will be for posterity to judge.
Why are you guys so sad??? Yes there are scandals and overreaches and abuses of power and failures to act… but these are flaws inherent to the human condition, natural to the political assembly, and moreover familiar to every great American statesmen- ESPECIALLY the founding fathers! There is not a single issue discussed today that was not, in its fundamentals, discussed in Philadelphia, and later dealt with in the national capitals. And moreover, those founding fathers who first discussed those issues were later the ones directly involved with those same issues- bear in mind we can thank Hamilton for the unconstitutional expansion of federal powers, Jefferson for the divisive two-party system, and Adams for annoying rambling as a political institution.
Perhaps it is true, that the intellectual capacity of our leaders today is somewhat below that of those of the 18th and 19th centuries. (I would argue that the expansion of democracy is partly responsible for this, and thus it is both a good thing and a bad thing.) But however different the system is today, and however changed our political situation is today, there are two great strengths created at Philadelphia that preserve for us a perpetually grand opportunity. First, it is hard for change in the national system to come quickly. Factions are balanced and a ridiculously slow legislative process impedes the sort of change one might expect from a dictatorial revolutionary regime. The cases when change came most quickly were the cases of the greatest extremes- namely, the end of the Civil War and the dissolution of the South as a power base, and the onset of the Great Depression and the dramatic expansion of the federal government. Other, less severe cases can be observed throughout history. Second, regardless of how divided the American people are- ideologically, culturally, politically, demographically, economically, etc- they have, since 1776, possessed a common set of ideals which the grand majority of them generally subscribe to. And thus, though Republicans slash Democrats and vice-versa, they all do so in the name of Liberty, Equality, and Justice; and they all wave the flag and hail the Eagle.
These two great strengths, combined with a tradition of rule of law, a geography blessed with oceanic isolation and rich natural resources, and a coincidental point in the history of the modern age, have ensured for this union a raucous perpetuity not afforded to most nations of this Earth.
I, therefore, am of the opinion that we have nothing to worry about in the big picture. Many decades have resembled this one- the 1970s, the 1920s, the 1890s, etc- and we came out of each of those stronger and more prepared to meet with future challenges, and grand adventures and dramas followed each. So long as nothing directly threatens the core interests of our nation, and no threat, internal or external, proves able to bite a chunk of our territory or population, or bring down our institutions, I foresee that we will continue the great national story we have experienced since those gold miners came ashore in Virginia, and those pilgrims came ashore in Massachusetts. Of course it will not be pretty- the stuff of history never is. But it will make for one hell of a good story.
And, we may well be surprised. Perhaps after a decade or so of their memory being nothing but embarrassment and ridicule, Bush or Obama or McCain will go down as a Calhoun or a Jackson or a Webster or a Polk- perhaps more, or less. But regardless, the men of our day will only decide their actions. History will decide their destiny, and our posterity will decide their memory.


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Published by Samantha Watkins on February 1, 2014
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