RCMP called after suspected employee fraud in federal government

Feds also announce several measures to strengthen, streamline oversight of management practices

RCMP called after suspected employee fraud in federal government

Public Services and Procurement Canada (PSPC) – the procurement arm of the federal government – has referred to the Royal Canadian Mounted Police (RCMP) three cases of suspected invoicing fraud by IT subcontractors.

The department has asked the police to look into suspected employee fraud that could cost the federal government at least $5 million, reported The Canadian Press.

The department discovered fraudulent billing schemes that were being used between 2018 and 2022 through a recent data review. A call to a tipline triggered the review, said Jean-Yves Duclos, procurement minister.

Paper invoices lead to alleged fraud

The subcontractors took advantage of the fact that most of the invoicing was done on paper, making comparisons of data difficult, said Duclos, according to reports from The Canadian Press and CBC.

The subcontractors submitted timesheets and billed departments under separate contracts. The scheme involved 36 federal departments, agencies and Crown corporations.

"Until now, there has not been any sign that this was due to mismanagement within the federal government," Duclos said, adding that no one has lost their job and an internal investigation is ongoing.

The government did not provide the names of the individuals involved in the suspected employee fraud to protect the integrity of the RCMP investigation.

The development follows reports about Canada’s Office of the Auditor General’s (OAG) firing of two workers for having undisclosed contracts with the federal government itself.

More fraud cases in federal government

The first three cases referred to RCMP are part of a "first wave" of cases, said the department. It noted that officials said another five to 10 cases are being examined, though they could not provide an estimate of how much money is involved.

"The good news, if there is good news here, is that it shows that the investments in what we call electronic procurement, in data-gathering and data analytics, over the last few years are starting to work really well," Duclos said at a press conference, according to The Canadian Press report posted on CTV News.

The new cases are not related to the ArriveCan application, which has been the subject of numerous investigations, independent reports and studies by parliamentary committees in recent months, according to CBC.

PSPC, TBS strengthening, streamlining procurement

Just today, the federal government announced a number of measures it is implementing to strengthen and streamline oversight of federal government management practices, particularly in the area of procurement.

PSPC is launching the new Office of Supplier Integrity and Compliance (OSIC) program, which will enhance the procurement body's capacity to identify and respond to instances of supplier misconduct, according to a release posted on Yahoo!

The OSIC will use data analytics to identify potential instances of fraud and wrongdoing within federal procurement. This includes ensuring that the federal government has the tools to address other concerning conduct,

TBS also released an update to the Manager's Guide: Key Considerations When Procuring Professional Services. It noted that it is looking to embed certain elements of the guide within TBS mandatory procedures to strengthen the accountability of managers.

In the coming months, TBS will also introduce a new Risk and Compliance Process, which will assess government-wide trends, risks and individual departmental performance in key management areas and take immediate corrective actions where necessary.

TBS will also review the Directive on Conflict of Interest to ensure that the requirements are clear and effective, particularly as they relate to employees who engage in outside employment, including contracts with the Government of Canada.

TBS will also review guidance provided to deputy heads and explore additional oversight that will include strengthening the consequences of non-compliance with the directive.

"Canadians deserve to know how their hard-earned tax dollars are being spent, and that they are being spent wisely and responsibly,” said Anita Anand, president of the Treasury Board.

“To foster public trust, public service leaders must ensure sound procurement and management practices across government. That is why we are stepping up our oversight of management practices, including strengthening compliance and accountability with mandatory policies across government.” 

In 2023, Toronto’s Fraud and Waste Hotline received 1,054 employee fraud complaints made up of roughly 1,450 allegations.

Here’s how to respond when you confirm employee fraud, according to experts.

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