City fields 85 reports on fraud-waste hotline

Councillor calls launch of three-year pilot project a ‘tremendous success’

The city fielded 85 reports of wrongdoing during the first year of Hamilton’s fraud and waste hotline pilot project.

That’s a spike the city’s auditor says he didn’t forecast.

“It’s been a year of quite high volume, actually more than I expected,” Charles Brown told councillors Thursday.

The previous year-long high for reports was 12.

The fraud and waste hotline allows city employers, contractors, vendors and members of the public to report alleged misdeeds confidentially or anonymously.

Without the hotline, it’s not likely many of those reports would have been made, Brown said. Of the 85 tips, 20 were made directly to his office.

Brown’s report to the audit, finance and administration committee included 99 cases overall over 18 months;14 were received before the hotline launched in July 2019.

As of Sept. 22, it’s estimated the city lost roughly $100,000 to fraud, $45,000 to waste and another $57,000 that didn’t fit neatly into one category.

The city says it has recovered

$21,000 of that amount with another $55,000 pending.

Nearly half of tipsters, or 46 per cent, said they were city employees.

The tip line is a pilot project that costs $12,500 a year through a three-year contract.

Coun. Chad Collins called the initiative a “tremendous success” so far and wondered when it should become a permanent program.

“It’s certainly hard to swallow in terms of seeing some of these things, but it happens in every organization.”

Not all of the reports led anywhere, with some cases found to be outside the auditor’s jurisdiction or lacking information.

But investigations resulted in five terminations, and disciplinary action in three cases. In two more instances, employees retired.

Two cases were referred to police.

In one example, a customercare representative was found to have “misappropriated” or “failed to account” for roughly $4,000 in cash and bus tickets or taxi scrips.

In another case, a manager received an estimated $10,000 to $15,000 in “leadership coaching” from a regular city vendor.

Another employee who processed cash receipts stole an estimated $21,000 in funds over four years. The staffer and police were notified.

In a payroll phishing scam, someone impersonated a new city worker and managed to divert more than $4,000 in pay via an email ruse. Police were also notified in this case.

A report of improperly discarded public works supplies pointed to an inventory discrepancy of $52,000 and about $5,000 worth of copper wire thrown in a dumpster.

Human resources told Brown’s office a former employee had been “erroneously” paid a full salary and long-term disability benefits for more than a year, amounting to a $55,000 overpayment.

Another report involved an employee who cancelled $565 in parking tickets for his or her own vehicle and partner’s vehicle.

Some allegations were “unsubstantiated,” the city auditor’s report noted, but they revealed “significant control weaknesses.”

For instance, several reports of City Housing employees renting market rate units alleged they’d jumped the wait list and benefitted from “preferential treatment.”

The wait list, in fact, applies to rent-geared-to-income units but not ones rented at market rates, the auditor found.

Nonetheless, the cases highlighted an “opportunity for a policy and/or process” for “adequate controls” over renting market rate units to avoid conflict of interest or unfairness.