Toronto’s auditor general got nearly 700 fraud complaints in 2014

Office says it doesn’t have enough resources to investigate a rise in allegations - including employee misuse of cellphones, sick leave and falsified benefit claims.

Thestar.com
Feb. 18, 2015
By Olivia Carville

A lack of resources in the Toronto auditor general’s office has led to the city investigating its own employees and dismissing “substantiated” fraud complaints, according to the office’s 2014 report on fraud and wrongdoing at city hall.

Nearly 700 complaints related to misuse of city money were logged with the office of the auditor general last year, according to the report. Complaints include staff abusing sick leave, submitting falsified health care claims and misusing corporate cellphones to the tune of $25,000.

The report does not disclose how many investigations were conducted, nor does it identify which departments or employees were involved.

Rising fraud allegations have outstripped resources in the auditor general’s office to investigate them, which has led to complaints being handed down to managers to probe - sometimes with unsatisfactory results, the report said.

“There were instances where management has led an investigation and concluded that the complaint was unsubstantiated. Upon further independent review by the Auditor General’s Forensic Unit, it was determined that the allegations were in fact substantiated,” the report says.

Operating independently helps the auditor general hold city officials, management, staff and boards accountable for their public funds. When managers are asked to investigate their own employees, lack of independent oversight “presents a risk to the City of Toronto,” the report says.

The MFP computer-leasing scandal - which involved a $43 million contract that ballooned to $85 million in the early 2000s without council approval - highlighted the importance of independent watchdogs.

“The need for sufficient oversight is critical,” the auditor general’s report says.

Toronto lost an estimated $839,000 to fraud last year, a figure likely to rise as outstanding complaints are dealt with.

The report, released last week, will be up for discussion and debate before Toronto’s audit committee on Feb. 27. Auditor General Beverly Romeo-Beehler declined to talk to the Star about its findings until the committee meeting.

Romeo-Beehler will be conducting an internal review of the office this year, and according to the report, she will seek extra resources for the forensic unit, which handles the fraud investigations, in the 2016 budget.

The forensic unit was established 10 years ago to oversee the Fraud and Waste Hotline Program, which allows anonymous reporting of wrongdoing involving city resources.

Since the birth of the hotline, allegations of fraud have steadily increased, with a high of 822 complaints in 2011.

Last year, 687 complaints were received, but many included two or more allegations, driving the actual number up to about 1,300.

One-quarter of the complaints investigated were substantiated in whole or in part - with 26 cases resulting in discipline.

Five 2014 cases of misuse of city funds

A city employee and spouse submitted fraudulent health-care and dental claims over several years, totaling about $60,000. The employee was fired and the spouse was convicted of fraud and ordered to repay $59,645.

An employee who pretended to be ill while on an overseas vacation and claimed 72 hours of sick time, totaling $3,000, was fired but reinstated after arbitration.

A member of the public had an illegal water connection installed to bypass the city’s water meter. The city recovered $9,500, the cost of the estimated water bill.

An employee misused a corporate cellphone, spending about $25,000 on international calls and data roaming. The employee was fired.

A hired agency violated its contract by submitting false records in billing the city, with a loss of about $628,000. The city negotiated a settlement.