WASHINGTON - Citicorp's Diners Club unit has been barred from bidding for new business from the U.S. government pending an investigation of its government charge card program.
Described as a temporary suspension, the action will not affect the ability of 900,000 government workers to use the Diners Club cards they have been issued for travel and entertainment purposes.
Renewal Is Pending
But the action, dated Aug. 26, came two months before Citicorp Diners Club's government contract comes up for renewal. Diners Club and Citibank (South Dakota), the other Citicorp subsidiary under contract to the General Services Administration, were given time to "respond to the allegations."
An unspecified number of Citicorp employees were disciplined after an audit uncovered "excessive" dining charges, as well as a trip to Las Vegas, where Diners Club has a processing facility, said Citicorp spokeswoman Susan Weeks.
A federal employee, Ray Fontaine of the General Services Administration, has pleaded guilty to a misdemeanor charge compensation, according to Karen Shaffer, GSA's inspector general. He is awaiting sentencing.
A GSA spokesman declined to comment on whether the agency might decide against renewing the Diners Club contract. Ms. Weeks said the company expects to resolve the matter "long before the contract comes up."
Although the government does not pay for the cards issued to its employees, Citicorp collects a percentage of the charge volume from merchants who accept the cards. Total volume last year was $1.8 billion.
Ms. Weeks said Citicorp views the government action as the final step in resolving improprieties that Citi discovered and reported to the government on its own initiative.
"We disciplined our employees and the GSA employee pleaded guilty," Ms. Weeks said. "GSA is now saying, |this is the next step to resolve it, to put it behind us.'"
Ms. Weeks did not identify the Citicorp employees or the action taken against them by the bank, but said, "We made sure it wouldn't happen again."