More On the Enforcement of the PSA and GIPSA

[Econ101]

IG Charges GIPSA Failed to Enforce Law

Wed Jan 18, 2006 08:51 AM CST



-USDA Agency Failed to Enforce Packers and Stockyards Act



By Chris Clayton

DTN Staff Reporter



OMAHA (DTN) -- Top officials in the USDA's chief enforcement agency for Packers and Stockyards Act violations failed to create any kind of environment that allows the agency to enforce the law and inflated its investigation numbers in reports to Congress, according to an audit released Wednesday.



The U.S. Department of Agriculture's Office of Inspector General found the Grain Inspection Packers and Stockyards Administration had no official policy for defining what constitutes an "investigation." So agency staff labeled almost every activity staff engaged in as an "investigation." That included monitoring routine daily information or simply sending letters to companies requesting information.



James Link, who was appointed as GIPSA's new top administrator last October, said in an interview Tuesday he has clarified the way investigations should be conducted and GIPSA is now delegating more authority to regional office staff to conduct investigations. Lines of communication within the agency needed to be clarified, Link said.



The report was publicly issued just over a month after the deputy administrator who had been in charge of the Packers and Stockyards division since 2000, Joann Waterfield, resigned her office. GIPSA officials had received advance notification of what the report would contain. Waterfield has not responded to repeated attempts by DTN seeking comment.



GIPSA oversees the movement and storage of grain, as well as enforcing the 1921 Packers and Stockyards Act, a law meant to ensure there is a fair and competitive environment for producers selling livestock. Regional offices overseeing the Packers and Stockyards division are located in Atlanta, Denver and Des Moines.



GIPSA officials reported 1,842 Packers and Stockyards investigations in fiscal 2005, but the Inspector General's office could not identify the locations of work performed on 1,799 of those reported investigations. Records were also incomplete on more than half of the investigations reported by GIPSA.



After seeing the report, U.S. Sen. Tom Harkin, D-Iowa, called for "swift and substantial changes" within GIPSA. Harkin, who initially requested the Office of Inspector General audit last spring, said he intended to introduce legislation that would transfer some of GIPSA's activities into a different office possibly within the U.S. Department of Justice. The report showed GIPSA management had failed to protect competitive markets for livestock producers, he said.



"USDA has failed to fulfill its responsibility to enforce the Packers and Stockyards Act. This report clearly finds that top officials at GIPSA were blocking employees from pursuing investigations and then cooking the books to cover-up the agency's lack of enforcement action," Harkin said.



The Inspector General stated senior management's control for managing competition and complex investigations at GIPSA also inhibited the ability of staff to conduct such work, according to the report. A Senior Management Review Panel within GIPSA effectively inhibited investigations by failing to approve them or establishing any policies or procedures to approve such investigations. As of August, there were 50 potential investigations still waiting for the review panel to approve for staff to initiate the cases.



That meant GIPSA was not referring cases to the USDA's Office of General Counsel for possible prosecution. In February 2005, GIPSA referred one case to the General Counsel's office, the first in three years.



The Office of General Counsel has not issued an administrative action against any company since 1999 because of a lack of referrals from GIPSA.



Link said he did not think too much power over investigations had been concentrated in USDA headquarters, but it has become clear there needed to be better communication between regional employees and the Washington, D.C., office.



"I wouldn't say it was so much concentration, but I would say a little bit of confusion over who could make decisions over different levels of communication and we're trying to clarify that," Link said.



The audit also said GIPSA leaders basically ignored prior recommendations in audits from the Office of Inspector General and the Government Accountability Office dating back to 1998. GIPSA officials had basically failed to take action on 64 policy issues within the agency dealing with the way GIPSA would monitor day-to-day activities in the livestock industry or how GIPSA would conduct investigations. At least 55 of these potential regulations had been in review since 2004 with two of the proposals dating back to 2000.



In response the Inspector General's report, Link stated that GIPSA has now implemented specific guidelines for conducting investigations.



Chris Clayton can be contacted at [email protected].

 

[Mike]

GIPSA officials reported 1,842 Packers and Stockyards investigations in fiscal 2005, but the Inspector General's office could not identify the locations of work performed on 1,799 of those reported investigations. Records were also incomplete on more than half of the investigations reported by GIPSA.

Foxes I have seen do a better job of watching the henhouse than this.

They at LEAST get involved. :???:

 

[Tommy]

Livestock business watchdogs questioned

By Andrew Martin
Tribune national correspondent
Published January 18, 2006, 8:10 PM CST

WASHINGTON -- The Department of Agriculture has effectively blocked employees from pursuing complaints of anti-competitive behavior in the livestock industry and inflated the number of investigations it has conducted to make it appear it is vigorously upholding the law, the department's inspector general reported Wednesday.

At a time when the livestock industry is controlled by increasingly fewer companies, the USDA hasn't filed an administrative complaint for anti-competitive behavior in the meat or poultry industry since 1999, the audit found. In addition, the arm of the department charged with ensuring competition in the livestock industry, the Packers and Stockyards Program, rarely has conducted complex investigations that would involve large amounts of resources or focus on a major firm, the audit said.

Meanwhile, the record keeping of the monitoring arm was so inadequate that the office of Inspector General Phyllis Fong could not track the progress of some investigations and couldn't figure out why others were started in the first place. Of the 1,842 investigations that were under way in June 2005, the records were incomplete in 973 of those cases.

The Packers and Stockyards Program's "tracking system could not be relied upon, competition and complex investigations were not being performed and timely action was not being taken," the report said.

The program, according to the report, had no formal definition for what constituted an investigation. As a result, employees counted routine correspondence to companies and the tracking of public data as full-fledged investigations.

In one instance, the deputy administrator reprimanded a regional office for logging too few investigations. To make up for the deficiency, the office began logging activities that previously had not counted.

"The region climbed from last to first among the three regions by reclassifying over 300 routine activities as investigations," the report said.

That deputy administrator, JoAnn Waterfield, urged her managers to "perform their functions in more of a 'big picture' view and to evaluate the repercussions that their decisions have on the agency and the livestock and poultry industries," the report said.

Waterfield, who resigned last month, could not be located for comment.

In instances where employees initiated investigations about competition in the marketplace, the probes often languished in Washington waiting for approval, the report found. In August, 50 investigations were awaiting approval, some of them dating back two or three years.

Because USDA lawyers have received so few referrals for action from the Packers and Stockyards Program, they have not pursued an anti-competition complaint in the livestock industry since 1999, the report said.

The Packers and Stockyards Program has about 150 employees and an annual budget of about $20 million.

The inspector general's audit is not the first time the Agriculture Department has been criticized for lackluster enforcement of competition in the livestock industry. The inspector general made similar remarks in 1997, as did the General Accounting Office in 2000. But according to the most recent report, USDA's actions to address the problems were not sufficient.

James Link, who was hired as the administrator of the Grain Inspection, Packers and Stockyards Administration in October, said he agreed with the findings, and vowed to change the agency's culture to encourage vigorous enforcement.

"I don't think it's quite as ineffective as the report shows, but it can be a lot more effective," Link said. "Part of the problem was it was mired down in paperwork and a lack of communications between different portions of the administration, and we are trying to streamline that."

Link said he was also moving authority back to the regional offices to give them more autonomy to investigate complaints.

"We put the authority back out in the field and turned them loose to let them do the job," he said. "A lot of the people told us that they didn't feel like they had the freedom to do their job."

Sen. Tom Harkin (D-Iowa), who requested the audit, called for sweeping changes at the Agriculture Department, including creating an office of special counsel to oversee matters of competition in the marketplace.

"America's producers have faced an increasingly integrated and consolidated market, but in the past five years, USDA has made virtually no attempt to investigate or take action against unfair and anti-competitive market changes," Harkin said.

Family farm groups and rural advocates said the inspector general's report confirms their longtime contention that Agriculture is too cozy with agribusiness. Numerous top officials at USDA have been hired from agribusiness companies or trade groups representing the meat industry.

"USDA leadership defrauded farmers," said Michael Stumo, who represents the Organization for Competitive Markets in Omaha, a not-for-profit group that fights for more competitive markets. "Farmers and ranchers complaining to USDA about unlawfulness of [meatpackers] had their complaints buried due to USDA cronyism."

The inspector general's report was released after years of intense consolidation in the livestock industry, both at the farm and processor level. Increasingly, farmers are raising pigs and chickens under contract with a livestock company, rather than owning them themselves, a trend that critics say has driven down prices and decreased the influence of spot markets.

 

[Cowpuncher]

There are a lot of people that are not surprised at this. By the time this issue has been discussed, a lot of rotten dealings by those that are supposed to be supporting GIPSA will be exposed.

 

[Anonymous]

You can't find violations where none exist.


~SH~

 

[Econ101]

You can't find violations where none exist.


~SH~

There are none as blind as those who will not see.

At least we have jurors who can see.

 

[Anonymous]

When you bring proof of these violations, NOT THEORIES, you will be taken seriously. Until then, YOU GOT NOTHING CONMAN!


~SH~

 

[Anonymous]

There are a lot of people that are not surprised at this. By the time this issue has been discussed, a lot of rotten dealings by those that are supposed to be supporting GIPSA will be exposed.

I wonder if the climate in D.C. may not take a drastic change? No one there right now wants to associate themselves with Corporate or Big Business money- trying to put up the front of being out there representing the back home constituent.....

Then there is Bonilla :???:

 

[flounder]

Audit: USDA blocks real probes, records fake ones

By Andrew Martin
Washington Bureau
Published January 19, 2006


WASHINGTON -- The Department of Agriculture has effectively blocked employees from pursuing complaints of anti-competitive behavior in the livestock industry and inflated the number of investigations it has conducted to make it appear it is vigorously upholding the law, the department's inspector general reported Wednesday.

At a time when the livestock industry is controlled by increasingly fewer companies, the USDA hasn't filed a formal complaint for anti-competitive behavior in the meat or poultry industry since 1999, the audit found. In addition, the arm of the department charged with ensuring competition in the livestock industry, the Packers and Stockyards Program, rarely has conducted complex investigations that would involve large amounts of resources or focus on a major firm, the audit said.

Meanwhile, the record keeping of the monitoring arm was so inadequate that the office of Inspector General Phyllis Fong could not track the progress of some investigations and couldn't figure out why others were started in the first place. Of the 1,842 investigations that were under way in June 2005, the records were incomplete in 973 of those cases.

The Packers and Stockyards Program's "tracking system could not be relied upon, competition and complex investigations were not being performed and timely action was not being taken," the report said.

The program, according to the report, had no formal definition for what constituted an investigation. As a result, employees counted routine correspondence to companies and the tracking of public data as full-fledged investigations.

In one instance, the deputy administrator reprimanded a regional office for logging too few investigations. To make up for the deficiency, the office began logging activities that previously had not counted.

"The region climbed from last to first among the three regions by reclassifying over 300 routine activities as investigations," the report said.

That deputy administrator, JoAnn Waterfield, urged her managers to "perform their functions in more of a `big picture' view and to evaluate the repercussions that their decisions have on the agency and the livestock and poultry industries," the report said.

Waterfield, who resigned last month, could not be located for comment.

In instances where employees initiated investigations about competition in the marketplace, the probes often languished in Washington waiting for approval, the report found. In August, 50 investigations were awaiting approval, some of them dating back two or three years.

Because USDA lawyers have received so few referrals for action from the Packers and Stockyards Program, they have not pursued an anti-competition complaint in the livestock industry since 1999, the report said.

The Packers and Stockyards Program has about 150 employees and an annual budget of about $20 million.

Latest in series of criticisms

The inspector general's audit is not the first time the Agriculture Department has been criticized for lackluster enforcement of competition in the livestock industry. The inspector general made similar remarks in 1997, as did the General Accounting Office in 2000. But according to the most recent report, USDA's actions to address the problems were insufficient.

James Link, who was hired as the administrator of the Grain Inspection, Packers and Stockyards Administration in October, said he agreed with the findings, and vowed to change the agency's culture to encourage vigorous enforcement.

"I don't think it's quite as ineffective as the report shows, but it can be a lot more effective," Link said. "Part of the problem was it was mired down in paperwork and a lack of communications between different portions of the administration, and we are trying to streamline that."

Link said he was also moving authority back to the regional offices to give them more autonomy to investigate complaints.

"We put the authority back out in the field and turned them loose to let them do the job," he said. "A lot of the people told us that they didn't feel like they had the freedom to do their job."

Harkin urges big changes

Sen. Tom Harkin (D-Iowa), who requested the audit, called for sweeping changes at the Agriculture Department, including creating an office of special counsel to oversee matters of competition in the marketplace.

"America's producers have faced an increasingly integrated and consolidated market, but in the past five years, USDA has made virtually no attempt to investigate or take action against unfair and anti-competitive market changes," Harkin said.

Family farm groups and rural advocates said the inspector general's report confirms their longtime contention that Agriculture is too cozy with agribusiness. Numerous top officials at USDA have been hired from agribusiness companies or trade groups representing the meat industry.

"USDA leadership defrauded farmers," said Michael Stumo, an attorney who represents the Organization for Competitive Markets in Lincoln, Neb., a not-for-profit group. "Farmers and ranchers complaining to USDA about unlawfulness of [meatpackers] had their complaints buried due to USDA cronyism."

The inspector general's report was released after years of intense consolidation in the livestock industry, both at the farm and processor level. Increasingly, farmers are raising pigs and chickens under contract with a livestock company, rather than owning them themselves, a trend that critics say has driven down prices and decreased the influence of spot markets.

----------

[email protected]







Copyright © 2006, Chicago Tribune




http://www.chicagotribune.com/news/nationworld/chi-0601190076jan19,1,4542627.story?coll=chi-newsnationworld-hed



Inspector general blasts GIPSA; Johanns promises changes by Pete Hisey on 1/20/2006 for Meatingplace.com


Phyllis Fong, the Agriculture Department's inspector general, issued a report on Wednesday criticizing the Grain Inspection, Packers and Stockyards Administration (GIPSA) for sloppy management policies and oversight of its investigations. In particular, the report accused GIPSA of:

an inability to track investigations because it classified all activities related to the Packers and Stockyards programs as investigations;

weak management control, with 50 investigations up to three years old stalled because a senior management review panel had not set standards for conducting investigations;

no decision-making on policy, in that requests for guidance and policy decisions from P&SP staff went unanswered, making timely investigations impossible. Even a new policy group set up in summer 2005 had no real mandate;

failure to implement prior recommendations, in that earlier advice to better manage resources to monitor the market for anti-competitive behavior was not followed. Specifically, P&SP did not, as it agreed to, integrate economists into investigations, empower legal specialists to consult with OGC, hire experienced managers to oversee P&SP investigations, and develop a teamwork approach among the mentioned economists and legal experts.
The net effect, OIG said, was that GIPSA in effect blocked its own investigations of stockyards and meat companies, sometimes by forcing employees to create a false impression of strong enforcement activity by referring to routine paperwork as investigations.

Secretary of Agriculture Mike Johanns said that while he was mystified by some of agency's actions, he would "recognize the report and then fix the problems."

GIPSA employees had complained that they felt management was tying their hands and that they couldn't perform their jobs. JoAnn Waterfield, deputy administrator of GIPSA, resigned suddenly at the end of 2005. Johanns said he didn't ask for her resignation.

One industry source suggested that the upgrading of routine letters to investigations may have another interpretation: Frustrated GIPSA investigators, unable to extract information from packers and stockyards, upgraded the status of the paperwork as an investigative tool.


http://www.meatingplace.com/MembersOnly/webNews/details.aspx?item=15426



TSS

 

[the chief]

You can't find violations where none exist.


~SH~

My sig speaks for many of us.

 

[Anonymous]

The chief: "My sig speaks for many of us."

Your sig speaks for you and a handful of other packer blamers that have the same "PRESUMPTION OF GUILT" mentality that you do.

Until you have proof of violations you don't have sh*t.


Flounder found an opinion that supports his own, whooopdido!

WHERE'S THE PROOF OF VIOLATIONS?

WHAT WERE THE VIOLATIONS?

The devil is in the details not the "PRESUMPTION OF GUILT" allegations by those who need someone or something to blame.



~SH~

 

[flounder]

Livestock Market Reporting: USDA Has Taken Some Steps to Ensure Quality, but Additional Efforts Are Needed, GAO-06-202, December 9, 2005


Abstract
Livestock Market Reporting: USDA Has Taken Some Steps to Ensure Quality, but Additional Efforts Are Needed, GAO-06-202, December 9, 2005
Highlights-PDFPDFAccessible Text


Livestock producers, with gross income of $63 billion in 2004, depend on USDA's daily, weekly, and monthly livestock market news reports. These reports provide them and others in the industry with livestock and meat prices and volumes, which are helpful as they negotiate sales of cattle, hogs, lamb and meat products. Packers also use the average prices in these reports as a basis for paying some producers with whom the packers have contracts. In 1999, the Livestock Mandatory Reporting Act was passed to substantially increase the volume of industry sales transactions covered by USDA's market news reports and thereby encourage competition in the industry. In the context of ongoing discussions about the renewal of this act, GAO reviewed (1) USDA's efforts to ensure the quality of its livestock market news reports and (2) the coordination between two USDA agencies that are responsible for promoting competition in livestock markets.

While the U.S. Department of Agriculture (USDA) took important actions to produce quality livestock market news reports, GAO found that USDA could improve the reports' transparency. Although packers with large plants must report all of their livestock transactions to USDA, GAO found that USDA market news reporters regularly excluded some transactions as they prepared USDA's reports. For example, GAO's analysis showed that from April through June 2005, USDA reporters excluded about 9 percent of the cattle transactions that packers had reported. When USDA excluded transactions, this sometimes changed the low, high, and average prices that USDA would have otherwise reported. However, USDA has not informed its readers of the extent of this practice. Moreover, USDA's instructions for guiding its market news reporters as they prepared their reports lacked clarity and precision, leading to inconsistency in their reporting decisions. In addition, GAO found the accuracy of USDA's livestock market news reports is not fully assured. About 64 percent of 844 USDA audits of packers--conducted over 36 months ending in April 2005--identified packers' transactions that were inaccurately reported, unsupported by documentation, or omitted from packers' reports. Moreover, some packers have not promptly corrected problems. Since 2002, USDA has sent 11 packers 21 letters urging the packers to correct longstanding problems and warning them of the consequences of delay. Twice USDA has levied $10,000 fines on packers, but suspended the fines when these packers agreed to comply. As of September 2005, USDA had continuing issues with 2 of the 11 packers. USDA officials noted that packers' errors are relatively few compared to the large volumes of data that packers report daily. However, USDA has not (1) assessed the overall quality of packers' data, (2) used its audit results to help focus future audit efforts, and (3) ensured that follow-up promptly resolves problems. Two USDA agencies have addressed competition in livestock markets--the Agricultural Marketing Service (AMS) and the Grain Inspection, Packers and Stockyards Administration (GIPSA). GAO found the coordination between these agencies to be limited, primarily due to the legal authority within which each operates. AMS has implemented the Livestock Mandatory Reporting Act. That act did not provide authority for AMS to share individual packer transaction data within USDA except for enforcement purposes. In two investigations, AMS provided packers' data to GIPSA. On the other hand, GIPSA enforces the Packers and Stockyards Act and is responsible for addressing unfair and anti-competitive practices in the marketing of livestock. Furthermore, GAO found that GIPSA monitors cattle and hog markets by analyzing publicly available livestock market news reports--an approach that has limitations because it lacks the company-specific information that would be useful for detecting anti-competitive behavior.

Subject Terms

Cattle
Competition
Prices and pricing
Reporting requirements
Sales
Swine
Government information dissemination
Government publications
Food industry

http://www.gao.gov/docsearch/abstract.php?rptno=GAO-06-202



Results in Brief AMS took several steps for producing quality livestock mandatory market news reports. Among other things, AMS developed a near real-time Web-based reporting system with automated and manual screening of packers' transaction data, and established an audit surveillance program to ensure that packers report accurately. While important steps have been taken, AMS has not yet fully assured the transparency and accuracy of these reports. Concerning transparency, AMS has not informed readers of livestock mandatory market news reports that it regularly excluded certain transactions in an effort to present prevailing market conditions. Our analysis of AMS market news data shows, for example, that from April through June 2005, AMS reporters excluded about 9 percent of the cattle transactions that packers reported to AMS. AMS officials explained that, in general, AMS excluded transactions that were outside the prevailing market price ranges to avoid reporting price ranges that would be too broad to be useful to market participants. They also said that AMS market news reports were intended to convey overall market conditions rather than precise statistics. According to our interviews with some agricultural economists, they and other readers of AMS market news reports were unaware of the extent of this practice and the effect this practice has on the





Page 4 GAO-06-202 Livestock Market Reporting prices that AMS reports. In addition, we found that AMS's instructions to reporters for excluding transactions lacked clarity and precision, and differed for cattle, hogs, lamb, beef, and lamb meat. AMS officials said that as a result of the information that we brought to their attention, they started improving AMS's instructions to reporters. AMS officials also said they would consider providing market news report readers with additional information about AMS's reporting practices. Concerning accuracy, the quality of AMS reports depends on the extent to which packers submit correct transaction information. However, AMS audits have frequently identified instances when packers incorrectly reported transactions. Of 844 AMS audits of packers, which were conducted over the 36 months ending in April 2005, 540—64 percent—identified instances when packers did not report data to AMS correctly. AMS officials said that packers' reporting errors were of concern, but that considering the hundreds of thousands of pieces of transaction data that packers report each day, the errors identified by AMS audits were proportionately few. Nevertheless, a closer look at 86 AMS audits from June through September 2004 shows that AMS identified 46 instances when 22 packers submitted incorrect transaction data that AMS classified as possibly affecting the accuracy of AMS reports. Moreover, some packers did not promptly correct the problems that AMS identified. Between 2002 and September 2005, AMS sent 11 packers 21 warning letters because these packers delayed making corrections in their reporting of transactions. Eight of these warning letters were sent to six packers from January 2004 through September 2005; six letters involved cattle and two involved hogs. AMS twice levied $10,000 fines on packers, but suspended these fines provided the packers went a year without additional violations. Despite this record, AMS officials said that they have seen improvement in packers' reporting of transactions over the past 4 years, and that they believed that most packer transactions were accurately reported to AMS. However, AMS has not developed a method for evaluating the overall accuracy of the transaction data. To lend greater reliability to the reports, AMS officials said they would consider (1) auditing a statistical sample of transactions as a basis for assessing the overall quality of the transaction data, and (2) further assessing their audit results to develop strategies for improving packers' reporting of transactions.Coordination between GIPSA and AMS has been limited, primarily due to the legal authority within which each operates. AMS implemented and enforced the Livestock Mandatory Reporting Act while GIPSA implements and enforces the Packers and Stockyards Act. The Livestock Mandatory





Page 5 GAO-06-202 Livestock Market Reporting Reporting Act did not provide authority for AMS to share confidential packer transaction data within USDA unless the Secretary of Agriculture or the Attorney General directed AMS to disclose the information for enforcement purposes. GIPSA monitors cattle and hog markets by analyzing publicly available AMS livestock reports. This approach to market monitoring has limitations because it does not include company-specific transaction data that would be useful for detecting anti-competitive behavior. AMS provided packers' transaction data to GIPSA for two investigations after formal GIPSA requests for those data. Both investigations were closed by GIPSA without finding potential violations of the Packers and Stockyards Act. Nevertheless, in one of those investigations, which GIPSA closed in 2005, GIPSA found that a packer reported transactions to AMS that were not fully supported by documentation. Since our review of that case indicates there may be a further role for both agencies, we suggested, and GIPSA and AMS officials agreed, that both should consider further investigation on the propriety of certain low-price and other transactions. In November 2005, an AMS official also told us that AMS started to obtain information from the packer to address these transactions.In anticipation of the extension of the Livestock Mandatory Reporting Act, we are making a number of recommendations to the Secretary of Agriculture to improve the transparency and accuracy of AMS livestock mandatory market news reports.BackgroundThe





SNIP...



FULL TEXT 52 PAGES;



http://www.gao.gov/new.items/d06202.pdf



TSS

 

[flounder]

Audit Report

Grain Inspection, Packers and Stockyards Administration's Management and Oversight of the Packers and Stockyards Programs

Report No. 30601-01-Hy January 2006



UNITED STATES DEPARTMENT OF AGRICULTURE

OFFICE OF INSPECTOR GENERAL

Washington D.C. 20250

January 10, 2006

REPLY TO

ATTN OF: 30601-01-Hy

TO: James E. Link

Administrator

Grain Inspection, Packers and Stockyards Administration

ATTN: S. Brett Offutt

Director

Policy and Litigation Division

FROM: Robert W. Young /s/

Assistant Inspector General

for Audit

SUBJECT: Grain Inspection, Packers and Stockyards Administration's Management and Oversight of the Packers and Stockyards Programs

This report presents the results of our audit of the Grain Inspection, Packers and Stockyards Administration's management and oversight of the Packers and Stockyards programs Your response to the official draft, dated January 5, 2006, is included as exhibit A. Excerpts of your response and the OIG's position are incorporated into the Findings and Recommendations section of the report. Based on your response, we were able to reach management decision on the report's ten recommendations. Please follow your agency's internal procedures in forwarding documentation for final action to the Office of the Chief Financial Officer.

We appreciate the courtesies and cooperation extended to us by members of your staff during this audit.

USDA/OIG-AUDIT No. 30601-01-Hy Page i

Executive Summary

Grain Inspection, Packers and Stockyards Administration's Management and Oversight of the Packers and Stockyards Programs (Audit Report No. 30601-01-Hy)

Results in Brief The Grain Inspection, Packers and Stockyards Administration has not established an adequate control structure and environment that allows the agency to oversee and manage its investigative activities for the Packers and Stockyards Programs (P&SP). Our review identified three material weaknesses that have not been previously disclosed in the agency's annual Federal Managers Financial Integrity Act (FMFIA) report. We found that P&SP had difficulties:


• Defining and tracking investigations,


• Planning and conducting competition and complex investigations, and

• Making agency policy.

As a result, P&SP's tracking system could not be relied upon, competition and complex investigations were not being performed, and timely action was not being taken on issues that impact day-to-day activities. These material weaknesses should be reported in the agency's next FMFIA report because they represent essential activities for administering and enforcing the Packers and Stockyards Act of 1921 (Act). The Act prohibits unfair, unjustly discriminatory, and deceptive acts and practices, including certain anti-competitive practices. We also found that the agency has not taken sufficient actions to strengthen operations in response to findings previously reported by the Office of Inspector General (OIG) in February 1997 and the Government Accountability Office (GAO) in September 2000. Our current work was initiated in response to concerns raised by a U.S. Senator in April 2005.

P&SP is responsible for maintaining fair trade practices in the marketing of livestock, providing financial protection for participants in livestock transactions, and ensuring open competitive marketing conditions for livestock and meat. To accomplish our work, we evaluated P&SP's management and oversight of its competition and complex investigations. We also examined P&SP's ability to track its investigations (i.e., financial protection, trade practice, and competition). We did not evaluate P&SP's management and oversight of its financial protection and trade practice investigations.

According to established standards for internal control,1 P&SP managers and staff should establish and maintain an environment throughout the organization that sets a positive and supportive attitude. This type of environment is the foundation for effective internal control and provides the discipline, structure,

1 GAO's Standards for Internal Control in the Federal Government, dated November 1999, and the Office of Management and Budget's Circular No. A-123, Management's Responsibility for Internal Control, dated December 2004.

USDA/OIG-AUDIT No. 30601-01-Hy Page ii

and climate that influence quality performance. We found that this type of environment did not exist between P&SP managers and staff.

2 P&SP's inability to accurately and completely track its inventory of investigations limited the scope of our work. See Scope and Methodology for additional details.

3 The control is the SMRP, which includes the Deputy Administrator and the Division Directors for Policy and Litigation, Industry Analysis, and Regional Operations.

4 P&SP defines complex investigations as those that involve (1) more than one unit or region, (2) a substantial number or amount of resources, (3) a major firm, or (4) a novel legal theory.

Inability to Track Investigations. P&SP's tracking system counted all P&SP activities as "investigations" because there was no policy to define investigations. These activities included monitoring publicly available data, sending routine letters to request company-specific information, and performing onsite reviews of companies. In addition, records in the tracking system were not complete because there were no procedures for validating the accuracy and completeness of information recorded. Consequently, data fields were left blank. As a result, the system could not be relied upon as a control for managing P&SP investigations.2

According to P&SP data, the agency was tracking a total of 1,842 investigations as of June 30, 2005. The records, however, could not be used to identify the location of work performed (i.e., the P&SP office or the regulated entity's place of business) for 1,799 of the 1,842 investigations. In addition, agency records were incomplete for 973 of the 1,842 investigations.

Weak Management Control. As implemented, P&SP's control3 for managing competition and complex4 investigations inhibits the agency's ability to investigate them. The Senior Management Review Panel (SMRP) does not clearly establish a process for identifying the work to be performed, approving work plans, performing the fieldwork and analysis, and reporting on the results. Consequently, no competition and complex investigations were being completed. As of August 29, 2005, all of these investigations, a total of 50, were engaged in the process of being approved by SMRP. Three of these investigations were opened in 2003, and one was opened over 3 years ago in July 2002.

Since P&SP is not performing competition and complex investigations, no referrals were being made to the Office of the General Counsel (OGC) for formal administrative action. In February 2005, P&SP referred one competition investigation to OGC. The most recent referral prior to February 2005 was November 2002, over 2 years earlier. OGC filed no administrative complaints against market participants for anti-competitive practices since 1999 due to the lack of referrals by P&SP.

No Decisions on Policy. Due to P&SP's inadequate control structure, the agency was not making decisions on policies and requests for guidance from P&SP staff. A policy group was created in June 2005; however, P&SP has not

USDA/OIG-AUDIT No. 30601-01-Hy Page iii

established the structure this group will use for receiving, reviewing, and acting on policy questions raised by P&SP staff. As a result, timely action is not being taken on issues that impact the day-to-day business activities of producers and the entities P&SP regulates (e.g., packers, stockyards, and live poultry dealers).

We identified 64 policy issues that were awaiting decisions in P&SP Headquarters as of September 30, 2005. These issues cover all types of P&SP investigations (e.g., trade practice, financial protection, and competition) and a variety of topics to be addressed by the Deputy Administrator and the Policy and Litigation Division. For 55 of the 64 issues, guidance was requested prior to 2004, with 2 submitted in 2000.

Prior Advice Not Implemented. In prior reports, OIG and GAO advised on ways for P&SP to better allocate its resources to monitor the market for anti-competitive behavior. In response, P&SP initiated actions to strengthen program operations. We found that P&SP reorganized its operations in 1998 and charged the three Regional Offices with maintaining a high level of expertise in one or more species of livestock. In addition, P&SP assessed its staff's qualifications and hired staff with legal, economic, and statistical backgrounds.

We found that the actions taken in four areas, however, were not sufficient. P&SP did not identify this because the agency did not have a process for ensuring that agreed upon corrective actions were implemented. We found that P&SP did not: (1) effectively integrate economists into the investigations, (2) empower the agency's legal specialist to consult with OGC, (3) hire a manager with experience in leading P&SP investigations, and (4) develop a teamwork approach for investigations with P&SP's economists and OGC's attorneys.

Because of the weaknesses in P&SP's control for managing competition and complex investigations and P&SP's lack of action to prior advice from OIG and GAO, we did not further examine the agency's allocation and use of resources for P&SP investigations.

Recommendations

In Brief P&SP needs to implement a policy for defining investigations, which requires P&SP personnel to differentiate between activities to perform onsite reviews of companies from those to monitor publicly available data and send routine letters to request company-specific information. P&SP also needs to implement procedures for recording data in the agency's tracking system and for validating the accuracy and completeness of the information recorded. The agency needs to implement a well defined process for timely identifying the work to be performed, preparing and approving work plans, performing the fieldwork and analysis, and reporting on the results. In order to appropriately and timely respond to policy issues and requests for guidance, the agency needs to develop

USDA/OIG-AUDIT No. 30601-01-Hy Page iv

and implement a structure for receiving, reviewing, and acting on them. Finally, P&SP needs to develop and implement an internal review function to monitor and report on agency activities.

Agency Response GIPSA agreed with the report's recommendations. We have incorporated the agency's response in the Findings and Recommendations section of this report, along with the OIG position. The response is included as Exhibit A.

OIG Position Based on the response, we were able to reach management decision on the report's 10 recommendations.

USDA/OIG-AUDIT No. 30601-01-Hy Page v

Abbreviations Used in This Report

Act Packers and Stockyards Act of 1921

FMFIA Federal Managers Financial Integrity Act

FY Fiscal Year

GAO Government Accountability Office

GIPSA Grain Inspection, Packers and Stockyards Administration

OCFO Office of the Chief Financial Officer

OGC Office of the General Counsel

OIG Office of Inspector General

P&SP Packers and Stockyards Programs

PLD Policy and Litigation Division

SMRP Senior Management Review Panel

USDA U.S. Department of Agriculture

...................snip.........full text 36 pages ;

http://www.usda.gov/oig/webdocs/30601-01-HY.pdf



TSS

 

[Anonymous]

That deputy administrator, JoAnn Waterfield, urged her managers to "perform their functions in more of a `big picture' view and to evaluate the repercussions that their decisions have on the agency and the livestock and poultry industries," the report said.

Waterfield, who resigned last month, could not be located for comment.

I wonder who JoAnn will be working for in the months to come- Tyson or Cargill?- maybe a paid lobbyist for the AMI or NCBA? Maybe Dittmer will take on a staff? :wink:

Lets see, Ann Veneman got a political appointment to head UNICEF for her Packerbacking---this stonewalling and making a sham of the GIPSA program should be worth something.....

 

[Jason]

That deputy administrator, JoAnn Waterfield, urged her managers to "perform their functions in more of a `big picture' view and to evaluate the repercussions that their decisions have on the agency and the livestock and poultry industries," the report said.

Waterfield, who resigned last month, could not be located for comment.

I wonder who JoAnn will be working for in the months to come- Tyson or Cargill?- maybe a paid lobbyist for the AMI or NCBA? Maybe Dittmer will take on a staff? :wink:

Lets see, Ann Veneman got a political appointment to head UNICEF for her Packerbacking---this stonewalling and making a sham of the GIPSA program should be worth something.....

Tyson and Cargill control UNICEF now? Sheesh they have no limits. When will they colonize pluto?

 

[the chief]

I BELIEVE the topic is about the USDA/GIPSA not INVESTIGATING. It is not about whether any illegal acts have been committed. We don't know if there have been any illegal acts because THEY HAVE NOT DONE THEIR JOBS, have they?

And why haven't they investigated? Because they were told NOT to.

 

[Anonymous]

I BELIEVE the topic is about the USDA/GIPSA not INVESTIGATING. It is not about whether any illegal acts have been committed. We don't know if there have been any illegal acts because THEY HAVE NOT DONE THEIR JOBS, have they?

And why haven't they investigated? Because they were told NOT to.

It should now be quite evident for everyone why OCM has taken this stance against putting anymore Packer cronies into the USDA....

OCM: Halt the Corporate Influence At USDA; Oppose Keys Nomination to USDA

The Organization for Competitive Markets (OCM) is calling for Congress to begin restoring public trust in government by halting the degree to which industry corporations influence public policy, particularly in agencies like the U.S. Department of Agriculture (USDA).

OCM President, Keith Mudd, says the organization will vigorously oppose the nomination of G. Chandler Keys to a high level post at USDA.

Recent media reports indicate that Keys will be nominated by the Bush Administration to replace Bill Hawks as USDA's Undersecretary for the Agricultural Marketing and Regulatory program.
In 2005 Keys left a 20-year career with the National Cattlemen's Beef Association (NCBA) where he worked as the organization's chief lobbyist.

After leaving NCBA, Keys handled government relations in Washington, DC for Swift & Co.
"The continued pattern of appointing people with strong industry ties to agri-business companies and special interest sectors to federal regulating agencies must stop," said Mudd. "Research shows there are approximately as many industry people among USDA appointees as there are career civil servants. The revolving employment door between industry and the regulating agency sets the stage for policy influence abuse. Mr. Keys has a long history of opposing grassroots livestock producers while advocating policy that favors corporate agriculture and the meat packing industry. The nomination of Mr. Keys should be rejected and USDA should be directed to search for an unbiased, knowledgeable candidate who will appropriately represent agriculture's broad base."

In 2004 OCM co-authored a paper titled USDA INC: How Agribusiness Has Hijacked Regulatory Policy at USDA (www.revolvingdoor.info). "Research documented in the paper shows that multi-national agricultural corporations and the meat packing industry are embedded at USDA," noted Mudd. "The current administration seems intent on bringing the business special interests into politics in an effort to take over the regulatory agencies of government so they can, in effect, regulate themselves. This is a disturbing trend that has been very harmful to grassroots agricultural producers. It's time for Congress to intervene. We urge Congress to reject Keys during the confirmation process and take the first step in restoring
credibility to the People's Agency."

 

[PORKER]

Latest NEWS; Phyllis Fong, the Agriculture Department's inspector general, issued a report on Wednesday criticizing the Grain Inspection, Packers and Stockyards Administration (GIPSA) for sloppy management policies and oversight of its investigations. In particular, the report accused GIPSA of:

an inability to track investigations because it classified all activities related to the Packers and Stockyards programs as investigations;

weak management control, with 50 investigations up to three years old stalled because a senior management review panel had not set standards for conducting investigations;

no decision-making on policy, in that requests for guidance and policy decisions from P&SP staff went unanswered, making timely investigations impossible. Even a new policy group set up in summer 2005 had no real mandate;

failure to implement prior recommendations, in that earlier advice to better manage resources to monitor the market for anti-competitive behavior was not followed. Specifically, P&SP did not, as it agreed to, integrate economists into investigations, empower legal specialists to consult with OGC, hire experienced managers to oversee P&SP investigations, and develop a teamwork approach among the mentioned economists and legal experts.
The net effect, OIG said, was that GIPSA in effect blocked its own investigations of stockyards and meat companies, sometimes by forcing employees to create a false impression of strong enforcement activity by referring to routine paperwork as investigations.

Secretary of Agriculture Mike Johanns said that while he was mystified by some of agency's actions, he would "recognize the report and then fix the problems."

GIPSA employees had complained that they felt management was tying their hands and that they couldn't perform their jobs. JoAnn Waterfield, deputy administrator of GIPSA, resigned suddenly at the end of 2005.The FBI and department of Justice want her located. Johanns said he didn't ask for her resignation.

One industry source suggested that the upgrading of routine letters to investigations may have another interpretation: Frustrated GIPSA investigators, unable to extract information from packers and stockyards, upgraded the status of the paperwork as an investigative tool.

 

[Econ101]

GIPSA still believes that contracts supercede the PSA. That is the interpretation that the legal staff is giving to the agency management.

They have a lot of work to do to fix this problem. It starts at the top, but JoAnn is not the only one that needs to be removed.

 

[PORKER]

http://151.121.3.117/advcommittee/ac-may2005.pdf GIPSA Members