Automotive News reports that the special Inspector General for the federal TARP program has identified several types of fraud that the Obama administration’s $5 billion bailout fund for auto suppliers may be susceptible to.
The U.S. Treasury Department’s $5 billion fund for auto suppliers may be susceptible to fraud, a watchdog for the federal bailout said today.
The fund, which provides government-backed protection to suppliers against automakers’ failure to pay for goods received, may be exposed to “phantom receivables,” said a report by the special inspector general for the Troubled Asset Relief Program.
These receivables are auto parts that qualify for federal funding but are never delivered to the manufacturers.
The fund also may be susceptible to commercial bribery because of the unchecked power given to automakers to pick the suppliers that can participate in the program, according to the 248-page report to Congress.
This was one small part of a massive report on the entire TARP program by Neil Barofsky, whose job is to make sure the program’s funds are used correctly.