Anonymous tip line leads city to discover $202K lost to fraud and waste

Investigations prompted by anonymous reports to a new city hotline reveal that Hamilton lost $202,000 in fraud and waste.  

The fraud and waste hotline is a three-year pilot that allows city employees, contractors, vendors, and members of the public to report suspicion or proof of wrongdoing confidentially and anonymously to the office of the city auditor (OCA). 

After investigating, the OCA found losses of $100,000 in fraud and $45,000 in waste, according to a media release. The office said it was unable to determine what category would be most appropriate for the other $57,000.

As of September 22, 2020, the city said it has recovered $21,000 of its losses.

Ward 5 councillor (Centennial) Chad Collins said that while the numbers were difficult to process, it shows the hotline has been a "tremendous success." 

"It's certainly hard to swallow, but it happens in every organization, and I'm glad to be able to demonstrate that we're getting to the bottom of these issues," he said in a city council audit, finance and administration meeting on Thursday. 

The hotline costs $12,500 per year, said Charles Brown, the city's auditor. 

Thirty-one investigations launched

The OCA, which is an independent and objective office that is accountable to council, received 99 reports between January 1, 2019 and June 30, 2020.

Eighty-five of those were received and assessed during the first year the hotline was launched, which was July 2019 to June 2020. 

Around 46 per cent of the reporters self-identified as an employee. Eight reports were sent by management, finance, human resources, and procurement. 

Lloyd Ferguson, councillor for Ward 12 (Ancaster), noted that while the office dealt with 51 issues, there were 26 that were found to be unsubstantiated.

He said he was concerned that complainants might be trying to get even with their bosses. 

Brown said he's "guarded for that very possibility," but added that they look at the merits of every case.

"Before we decide to investigate, we look at the merits. Is there any evidence being offered at the outset that we can actually look into? What's the reason for bringing this forward?" he said. 

There were 31 investigations launched. Here's how they broke down: 

• Eight investigations related to fraud. 
• Fifteen investigations related to waste/management. 
• Eight investigations combined fraud and waste/management. 

As a result of the investigations, there were: 

• Five terminations.
• Three disciplinary actions.
• Two "other" (includes employee retirements.)
• Two referrals to the police.

A media release from the city says that the hotline helps deter fraud, waste, and wrongdoing; strengthen internal control and mitigate risks; and improve policies and standard operating procedures. 

They added it helps make operations more efficient, and can be used to identify trends and make recommendations to management. 

"We will continue to use report findings to assess and investigate any reports of wrongdoing as appropriate to protect city assets," said Brown in the release.