A sports facility employee taking money under the table, a staffer receiving hospitality from a contractor and a worker living in a vacant city-owned housing unit are just some stories told in Hamilton’s latest fraud and waste report.
Complaints coming in to a city hotline continue to rise, year over year, with some 159 reported between July 2022 and July of this year –a 49 per cent increase from the prior reporting period.
Deputy Auditor General Brigit Menard says 13 investigations into alleged employee wrongdoing were undertaken in the last year, with nine people terminated and confirmation of $132,000 in losses.
“I will note that there was a jump in employee benefits fraud cases this year, and there continues to be conflict of interest reports received,” Menard told a city committee.
Auditor General Charles Brown cited one conflict of interest example to councillors Thursday involving three employees and a contractor.
“Conflicts that were the result of having a significant social relationship, including receiving hospitality from a contractor and attending social gatherings together in a non-business setting,” Brown elaborated.
“We also concluded the contractor received favourable treatment from these employees.”
Other investigations highlighted in the review include an imposter vendor changing banking information on file for a real vendor and diverting $52,000 in monies owed to the real vendor to the imposter.
Brown also said an employee allegedly lived in a vacant city-owned housing unit without the knowledge of management and made modifications to the unit at the city’s expense for personal benefit.
“It was alleged that another employee, responsible for oversight of the unit, knew about it and didn’t report it,” Brown said.
Since the city launched its fraud and waste hotline, about $1.29 million of losses has been substantiated, with just $36,000 having been recovered over four years.
Menard says the paltry recoveries are consistent with numbers traced across a number of nations by the Association of Certified Fraud Examiners, which annually reports little in the way of monetary recaptures.
“Unfortunately, recoveries are typically a tiny percent of losses incurred by an organization,” Menard said.
“So while this number may seem small, it is quite typical.”
More than 430 reports via the fraud and waste hotline have been assessed and investigated since coming online through a pilot program in July 2019.