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USDA has paid millions to dead farmers - audit

WASHINGTON (Reuters) - The U.S. Agriculture Department paid out $32 million in soil conservation payments and crop insurance aid to dead farmers from 2008 to 2012, congressional auditors said on Monday, calling for stricter rules to prevent improper payments.

In a report, the Government Accountability Office (GAO) said two USDA agencies did not routinely check master lists compiled by the government to assure payments go only to living recipients. Contracts with USDA often are voided by death, but payments can flow to heirs for work already performed.

USDA said the problem was not as broad-scale as auditors suggested in citing potentially improper payments to 4,537 recipients. Some payments were made properly, but errors in recordkeeping misidentified recipients, it said.

However, the Risk Management Agency (RMA), overseer of the taxpayer-subsidized crop insurance system, said it began in May to match payment record with the Social Security Administration's list of decedents, as suggested by GAO.

The Environmental Working Group, which favors more funding for soil and water programs, juxtaposed the potential crop insurance mispayments, "this irresponsible use of scarce taxpayer dollars," with proposals in Congress to slash funding of food stamps for the poor.

Improper payments to deceased farmers and landowners are a recurring issue for USDA, although the payments are a small part of agricultural spending of around $20 billion a year on farm subsidies, soil conservation and crop insurance.

Earlier this year, the USDA inspector general said agencies in charge of farm subsidies could be vulnerable to improper payments. A 2007 GAO report listed $1.1 billion in farm payments over six years to deceased persons.

GAO said the Natural Resources Conservation Service, in charge of soil and water conservation programs, and the RMA needed "a systematic process" to check for deaths, such as the Social Security Administration list, rather than rely on finding them as part of routine operations.

USDA objected to GAO's description that the agencies had no procedures to identify deceased subsidy recipients.

In the report, GAO said the Farm Service Agency, which runs the crop subsidy program, had strengthened its oversight of payments since 2008 and now recovers most payments that are made improperly. But GAO said there could be a 9 percent error rate in coding whether payments were proper or improper.

(Reporting By Charles Abbott; Editing by Leslie Gevirtz)

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