Employee fraud, vendor fraud, taxpayer fraud -- the city’s auditor general’s office saw it all

Thestar.com
February 6, 2020
Francine Kopun

One city employee conducted work for private clients while on the job. Another accepted lunch and tickets to sporting events from contractors and hired them for personal projects. A city resident used their parent’s address to fraudulently qualify for financial subsidies.

These were among the frauds, waste and wrongdoing uncovered by the city’s auditor general in 2019, after receiving 587 complaints with a total of 950 allegations through the Fraud and Waste Hotline program.

Thirteen per cent of the allegations were substantiated in whole or in part, according to the report by city auditor general Beverly Romeo-Beehler, released Wednesday.

The resulting actual loss for 2019 was $101,000, she said.

Five employees were disciplined, and actions were taken against 13 other people including city vendors, employees and residents.

The employee who was working for private clients was fired, but is challenging the dismissal; the one who accepted kickbacks from contractors was fired and the city resident who engaged in fraud is being pursued for recovery of the money. The 2019 figures are on par with previous years, according to the report.

“We consistently receive fraud allegations related to subsidies the city offers, vendor frauds, conflict-of-interest, health-benefit fraud, misuse of city resources and time theft,” Romeo-Beehler said. “Like other organizations, we are seeing cybersecurity-related fraud allegations in recent years.”

The offences included:

• An employee committed time theft by spending an inappropriate amount of working time on the internet. The employee was suspended for one day without pay.
• A city department was the victim of a successful whaling attack -- a cybercrime in which the criminal uses the email of a senior official at an organization in order to redirect funds -- even after having been warned in advance that such attacks were taking place. A dollar figure was not attached to the attack.
• An employee failed to report a change in their relationship status, allowing a former common-law partner to improperly continue receiving extended health-care benefits. The amount of ineligible claims is being calculated for repayment from the employee.
• Another employee is repaying fraudulent benefit claims totalling $8,400, which were falsified by their spouse.
• The city is trying to recover $25,000 in unidentified subsidies paid to a member of the public who incorrectly reported their marital status in order to qualify; $57,000 from another who misreported their income in order to qualify; and $5,400 from someone who qualified for a subsidy by claiming to live at their parent’s address. (The auditor general does not name the programs.)
• An employee who improperly hired a vendor who charged three times more than those approved by the city; some of the work was unnecessary and not properly done and the vendor engaged a subcontractor to complete some work. The employee potentially received incentives from the vendor, according to the report, but retired before being interviewed and before disciplinary action could be determined.
• The city also terminated its service agreement with a not-for-profit agency that improperly used funds and misrepresented expenses.

The hotline was established in 2002 so that employees, councillors and members of the public could report allegations without fear of retribution. Although complainants may send emails, letters or fill out online forms to complain, calling the hotline remained the most popular option in 2019.