USPS said to put billions at risk

U.S. Postal Service deposits totaling $65 billion a year are vulnerable to theft, robbery and mishandling because of inadequate security and failure to follow procedures, according to a report to Congress Tuesday.

About $6.3 million was at least temporarily lost in the 2001 fiscal year, although much of it was recovered, the General Accounting Office said in its report on an investigation of postal security requested by Rep. J.D. Hayworth, R-Ariz.

“It really is disturbing to realize that there had been this problem, not only here (in Arizona) but nationwide,” Hayworth said. “Until these problems are addressed, you’re going to continue to see this vulnerability.”

Before 1997, the Postal Service made daily deposits at 5,500 banks across the country. But to help cut costs, the Postal Service started using armed bank couriers to collect deposits at central facilities before depositing them in banks.

The Postal Service handles about $65 billion in remittances each year.

In June 2001, Louis Malcolm Holley, a 28-year Postal Service employee, stole $3.2 million from a Phoenix facility. Holley was convicted and sentenced to three years and five months in prison. About $1.7 million in cash was recovered, but prosecutors said he destroyed about $400,000 in checks and money orders.

The GAO report noted that security cameras at the Phoenix site were not used, and the key to a cage where valuables were held was left in the lock.

A separate GAO report detailed the Postal Service’s security gaps, but it was withheld for security reasons.

Postal Service Chief Operating Officer Patrick Donahoe said in a letter responding to the GAO that a plan stressing employee accountability and adherence to security provisions has been developed.

Those procedures are expected to be implemented this month, said Gerry Kreienkamp, spokesman for the Postal Service. Development of the policy was delayed while the Postal Service recovered from a series of anthrax-tainted letters sent to news outlets and Congress.

“Sometimes some things take higher priorities, depending on what’s going on,” Kreienkamp said. The amount of money stolen in the Phoenix case was an aberration, he said, and the service loses only a minute fraction of the money it handles annually.

Hayworth said he was encouraged to hear the Postal Service is working on fixes, but Congress must continue to apply pressure.

The GAO investigators visited three facilities in Arizona and one each in Texas, Maryland and Washington. They found a number of cases in which postal workers did not follow the service’s security policies, the report said.

It also noted that, in a three-month period late last year, postal inspectors found 252 security lapses nationwide in the handling of deposits, including instances in which doors to secure areas were propped open and left unattended.

In August 2001, the Chief Postal Inspector wrote a letter expressing misgivings about the security of deposits. He said deposits had been on the rise since 1999, and management was unable or unwilling to secure the money properly. In Phoenix, for example, a report outlined security problems that the inspector felt could have prevented the 2001 theft, had they been implemented.

The inspector also noted that discipline was lacking, the GAO report said. For example, one employee in the Mid-Atlantic Division left the deposits in a post office lobby and the money was stolen, but no disciplinary action was taken.