Whistleblowers are compromising tax fraud investigations, minister says
The Fifth Estate and Radio-Canada report that CRA has lost hundreds of millions of dollars in bogus refunds
Minister of National Revenue Marie-Claude Bibeau has come out swinging against the whistleblowers behind recent reports that the Canada Revenue Agency (CRA) is plagued by major gaps in fraud detection and has paid out hundreds of millions of dollars in bogus refunds.
"One should not disclose instructions to defraud the government. It compromises the integrity of the system. It also compromises the investigations that are underway," Bibeau told a Senate committee hearing on Tuesday.
In her testimony, Bibeau said unnamed sources in stories from CBC's The Fifth Estate and Radio-Canada have undermined the CRA's efforts to fight tax fraud.
"It's the first thing the minister is briefed on when they arrive at the agency ... If you reveal [confidential information], you are going to jail," she said.
Bibeau was responding to senators who suggested the reports were in the public interest and asked questions about improving fraud detection mechanisms at the CRA.
The Fifth Estate and Radio-Canada reported this week that an internal briefing note written earlier this year stated senior CRA officials were concerned that the public might learn that it had major "gaps" in its ability to detect fraud, and that it had paid out hundreds of millions of dollars in bogus refunds.
The scope of the fraud and the number of taxpayers affected by hacked CRA accounts has largely been kept out of the public domain.
On Tuesday, Sen. Pierre Dalphond criticized efforts to track down whistleblowers, saying it gives the impression the CRA is seeking to "silence" any internal criticism.
The former judge asked the minister if she was "ready to give instructions to the [CRA] not to engage in a witch hunt," adding it would be a way to respect the spirit of a bill that aims to better protect federal whistleblowers from retaliation.
Sen. Claude Carignan added there is no indication the whistleblowers provided "confidential information about taxpayers" to the media.
"They were disclosing issues," he said.
The Fifth Estate and Radio-Canada reported last week that sources now believe CRA is trying to find the whistleblowers who spoke to the media.
"It's not a witch hunt that's taking place right now, but it's a call to order," said Bibeau.
Carignan said the recent media reports have raised issues of public interest and are helping to put pressure on the CRA to improve its security.
"It seems like credit card companies and banks are ahead of the curve when it comes to fighting fraud, and I think the reason is that the money comes out of their pockets. At the CRA, they are not accountable," he said.
Scammers posing as accountants
The CRA has known for months about "major risks" in its fraud detection systems, according to an internal memo obtained by The Fifth Estate and Radio-Canada.
Sources said fraudsters were able to pose as accountants or tax preparers and hack into taxpayer accounts.
"This impacts the agency's ability to detect suspicious activity both proactively and in a timely manner, resulting in undetected fraud, extended unauthorized account access and/or changes to accounts," said one internal memo written earlier this year.
"This gap leads to financial losses, impacts the privacy of Canadians and could lead to media reports outlining a lack of action by the CRA."
Bibeau told senators that fraudsters mostly rely on confidential information obtained from data leaks from private companies, such as financial institutions and businesses.
"It is not the agency's system that is compromised. The personal information was obtained outside of the agency and used to gain entry into the agency," she said.
Bibeau said bad actors are constantly developing new strategies to defraud the CRA, which she described as a high-value target.
"We learn from our mistakes. Each time a new situation arises, whatever it may be, we review our systems to protect ourselves," she said.
After the Senate committee hearing, Bibeau said the CRA recently added new layers of protection to its systems. She said she would not provide more details because she doesn't want to help criminals adjust their methods.
If you have any tips on this story, please send a confidential email to Harvey.Cashore@cbc.ca or Daniel.Leblanc@cbc.ca, or phone 416-526-4704.
ABOUT THE AUTHOR
