Government officials in the Newfoundland and Labrador governments have spent hundreds of thousands of dollars on personal purchases and withdrawals with taxpayer-funded credit cards since 2015.
Internal documents received from CBC News set out further details on the gravity and scope of the alleged fraud committed by government officials, which was first revealed in the auditor general’s annual report in January.
“There have been potentially fraudulent incidents involving government officials, such as fraudulent representation of credentials, personal use of corporate credit cards or improper use of government resources,” wrote Auditor General Deniz Hanrahan.
“In some cases, employees were fired as a result of investigations. In general, these incidents were not reported to the police, but were treated internally through disciplinary proceedings.”
Hanrahan’s report did not specify the amount of money, but she said the money had been paid in large quantities and that the province had not suffered any losses.
However, an information note prepared for the executive board and received by CBC News through access to information reveals these figures in dollars.
This internal document raises questions about how the alleged fraud could have taken place – and what is being done to prevent it from happening again.
A white-collar crime expert says employees’ ability to use so much public money speaks to a weakness in their system. Government officials, meanwhile, stress that swift action has been taken to stop employees from committing fraud in the future.
Over $ 130,000 in cash advances per employee
In October 2020, the Executive Board informed the Department of Personal Services and Internal Audit, which conducts fraud investigations, that an employee had withdrawn $ 131,631 in personal cash advances for an indefinite period of time.
The employee, the note said, was fired and the money returned.
The following year, it was reported that an employee of the same department had charged nearly $ 5,000 on a corporate card for personal use. In this case, the person kept his job, but was disciplined.
Police have not been notified of any of these cases, the note said.
Dozens of provincial government employees have been branded using their corporate credit cards for personal purchases and cash advances. (Keith Srakocic / Associated Press)
Seven employees of the Ministry of Fisheries, Forestry and Agriculture allegedly raised more than $ 170,000 from each other using corporate credit cards for cash advances and fees between January 2015 and October 2020.
The employee with the largest debt had a balance of more than $ 54,000 on his corporate card. The other employees had balances between $ 7,878 and $ 44,962 on their respective cards.
An investigation by nine employees of the Ministry of Transport and Infrastructure between 2015 and 2020 revealed that they collectively put more than $ 200,000 in their credit cards.
One employee put over $ 37,000 in his travel card for personal expenses or cash advances.
The remains were paid at the beginning of the investigation, the document said.
Four employees in the Ministry of Industry, Energy and Technology had unpaid card balances. The highest amount due is $ 21,236. In total, they owed nearly $ 40,000.
None of these cases was reported to the police.
Most government departments reported problems
Most provincial government departments have reported cases of employees misusing corporate ID cards, usually ranging in the hundreds or thousands of dollars.
In most cases, the money was paid. Some people had their salaries confiscated to settle their debts.
There was only one case cited in a government briefing when an employee was fired.
Dave Oswald is a director at Financial Restitution, a forensic accounting and fraud investigation company based in Oakville, Ont. (Zoom)
In total, more than $ 600,000 has been spent by government officials.
A media briefing for Finance Minister Shiohan Cody in February said there were 68 allegations of fraud, 22 suspensions and one suspension.
“No adequate control”
The director of the Ontario-based Forensic Restitution, a fraud accounting and fraud investigation company that says white-collar fraud is not uncommon in government services and large corporations.
However, Dave Oswald said that there must be appropriate security measures to stop him before he reaches the amounts taken by the governments of Newfoundland and Labrador.
“This is because there is no adequate control,” said Oswald, who reviewed documents received from CBC News.
“You will always get some form of fraud. But if you use data analysis, if you review all your expenses, if you have a cost review system, then you will drastically reduce the amount of fraud. “
Finance Minister Shivon Cody speaks at the publication last week of the provincial budget for 2022 (Patrick Butler / Radio Canada)
The fraud management policy introduced by the provincial government in 2019 states that “there will be zero tolerance for fraud in any form, with consequences for fraudulent activities up to and including termination and prosecution”.
Most of the disciplinary sanctions from 2015 ranged from an “unfavorable report” to a three-day suspension.
Only one employee who was caught using his corporate credit card incorrectly lost his job.
Oswald said this was the wrong approach and that every case of fraud should be reported to the police – whether paid or not.
“This sends a completely wrong message to the company or the government department, because what you’re saying is anyone caught doing this type [thing] he will not be subject to disciplinary action as long as you return him, “Oswald said.
“When you talk about thousands of dollars, I would look at the termination or severe reprimand of the person.”
Now what?
In an email to CBC News, the finance minister said tighter controls had been added to improve oversight of card use. Additional documentation requirements were issued and the government improved its reporting requirements to detect and prevent future fraud.
Following these incidents, Cody said, “additional guidelines and revised business practices have been implemented to complement existing card use policies to ensure that proper checks and balances are maintained and to reduce the risk of recurrence of such events. “.
All provincial government officials are required to participate in fraud awareness and fraud management training, she said.
Cody said every fraud situation is reviewed and evaluated based on individual circumstances.
“We take all cases of fraud very seriously and will continue to do so,” Cody said.
“With regard to public service employees, we will not go into detail about the individual cases.”
She said any allegations required a thorough investigation.
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