Summary: Pursuant to a congressional request, GAO reviewed the Department of State's involvement with the defunct American Club in Greece.
GAO found that: (1) the U.S. Embassy in Athens, Greece, established the club as an employee association in 1948; (2) the club closed in 1985, leaving unpaid debts, including employee severance payments, social security payments, bank loans, and utility bills; (3) embassy staff did not comply with regulations regarding monitoring the club's activities; (4) a former embassy employee improperly personally cosigned a club loan; (5) the Embassy implied to Greek authorities that the cosigner had diplomatic immunity, although State regulations did not allow such immunity for employees' personal debts; and (6) Greek courts held the U.S. government responsible for the club's debts. GAO also found that: (1) State and the Department of Justice believe that the U.S. government will ultimately pay the club's debts, but the agencies disagree over the source of funding to settle the claims; and (2) State instituted procedures to reduce the government's potential liability for similar debts, including issuing a statement regarding support for private clubs and requesting annual statements from the clubs.
