Internal documents obtained by CBC News provide further details on the seriousness and extent of the suspected fraud committed by civil servants, which was first revealed in the Auditor General’s annual report in January. “There have been potential fraudulent incidents involving government officials, such as misrepresentation of credentials, personal use of corporate credit cards or inappropriate use of public funds,” wrote Auditor General Denise Hanrahan. “In some cases, the employees were fired as a result of the investigations carried out. In general, these incidents were not reported to the police but were dealt with internally through disciplinary proceedings.” Hanrahan’s report did not specify the amount of money, but said the money had been largely reimbursed and the province had not suffered any damage. However, an information note prepared for the executive board and obtained by CBC News through access to information reveals this information in dollars. This internal document raises questions about how the suspected fraud could have taken place – and what is being done to stop it from happening again. A white collar crime expert says the ability of workers to use so much public money speaks to the weakness of their system. Meanwhile, government officials say swift action has been taken to prevent workers from committing fraud in the future.
Over $ 130,000 in cash advances to an employee
In October 2020, the executive board pointed to the Personal Services and Internal Audit Department, which conducts fraud investigations, that an employee had received $ 131,631 in personal cash advances for an indefinite period of time.
The employee, the note said, was fired and the money has been returned.
The following year, an employee of the same department reported that he had charged nearly $ 5,000 on a corporate card for personal use. In this case, the person kept his job, but was disciplined.
Police were not notified in any of these cases, the note said.
Dozens of provincial government officials have been reported to have used their corporate credit card for personal purchases and cash advances. (Keith Srakocic / The Associated Press)
Seven employees of the Ministry of Fisheries, Forestry and Agriculture reportedly raised more than $ 170,000 among themselves, using corporate credit cards for cash advances and charges between January 2015 and October 2020.
The employee with the highest debt had a balance of over $ 54,000 on his corporate card. The other employees had balances between $ 7,878 and $ 44,962 on their respective cards.
A survey of nine Ministry of Transport and Infrastructure employees between 2015 and 2020 revealed that they collectively put over $ 200,000 in their credit cards.
An employee put more than $ 37,000 into his travel card for personal expenses or cash advances.
The rest were paid at the beginning of the investigation, the document said.
Four employees at the Ministry of Industry, Energy and Technology had outstanding balances on their cards. The highest amount owed was $ 21,236. Collectively, they owed almost $ 40,000.
None of these cases were reported to the police either.
Most government departments reported problems
Most provincial government departments have reported cases of employees using inappropriate corporate credit cards for personal means, usually in the hundreds or thousands of dollars.
In most cases, the money was returned. Some had garnished their salaries to settle their debts.
The government briefing mentioned only one case where an employee was fired.
Dave Oswald is a director at Financial Restitution, a forensic accounting and fraud investigation firm based in Oakville, Ont. (Zoom)
In all, more than $ 600,000 was spent by civil servants.
An information note prepared for Finance Minister Siobhan Coady in February stated that there were 68 fraud allegations, 22 suspensions and one shutdown.
“There is not enough control”
The director of the Ontario-based Forensic Restitution, an accounting and fraud firm that specializes in white-collar crime, says cost fraud is not uncommon in government departments and large corporations.
However, Dave Oswald said appropriate security measures should be taken to stop it before it reaches the amounts received within the Newfoundland and Labrador governments.
“It’s coming to this point because there is not enough control,” said Oswald, who reviewed documents obtained by CBC News.
“There will always be some form of fraud. But if you use data analysis, if you control all your expenses, if you have a cost control system, then you will drastically reduce the amount of fraud.”
Finance Minister Siobhan Coady speaks in last week’s announcement of the 2022 Provincial Budget. (Patrick Butler / Radio Canada)
A 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 activity up to denunciation and legal action.”
The majority of disciplinary sanctions from 2015 ranged from “adverse reporting” to a three-day suspension.
Only one employee who was caught improperly using his corporate credit card lost his job.
Oswald said that this is the wrong approach and that any case of fraud should be reported to the police – whether it is returned or not.
“It sends a completely wrong message to the company or the government department, because what you are saying is anyone caught doing this kind of thing. [thing] “He will not face disciplinary action if you pay for it,” 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 answering questions from CBC News, the finance minister said enhanced control measures had been added to improve surveillance of card usage. Additional documentation requirements have been issued and the government has improved reporting requirements for detecting and preventing future fraud. Following these incidents, Coady said, “additional guidelines and revised business practices have been implemented to complement existing card usage policies to ensure that proper controls and balances are maintained and to reduce the risk of recurrence.” . All provincial government officials are required to take part in fraud awareness and management training, he said. Coady said each case of fraud is investigated and evaluated on an individual basis. “We take all cases of fraudulent activity very seriously and will continue to do so,” Coady said. “As far as public servants are concerned, we will not go into details about individual cases.” He said any allegation requires a thorough investigation. Read more from CBC Newfoundland and Labrador
