Ignore CERB cheaters, federal workers told

Federal employees vetting the millions of applications for emergency and employment-insurance benefits during the pandemic have been told to ignore most potential cases of cheating, despite reports of widespread fraud.

If employees detect possible abuse they should still process the payment and should not refer the file to the department’s integrity branch, says a memo issued last month by Employment and Social Development Canada.

It’s unclear whether anyone would be available to investigate the questionable cases anyway. The memo says the department has suspended “compliance and enforcement” of the EI program, which is helping manage Canada Emergency Response Benefit (CERB) payments.

Meanwhile, a source familiar with the situation said 200,000 applications have already been “red-flagged” as possibly fraudulent because of dubious claims of past employment income and other factors.

Employment Minister Carla Qualtrough has said the government knew there was a heightened risk of fraud with the pandemic-aid programs but wanted to get the money to Canadians in need as quickly as possible, and would work later to claw back any unwarranted payments.

But the memo seems to take that approach a step further, encouraging civil servants to turn a blind eye to abuse.

It’s one thing to push the payments out rapidly with few questions asked, another to brush aside actual evidence of abuse, said Aaron Wudrick, federal director of the Taxpayers Federation of Canada.

“Governments should be assuming that everyone is honest, but that doesn’t mean they should suspend any and all attempts to follow up potential cases of fraud,” said Wudrick. “Even a small percentage (of fraud) can mean hundreds of millions of dollars wasted.”

But Marielle Hossack, a spokeswoman for Qualtrough, said the system was designed to disperse the funds quickly with “backend safeguards” to ensure that any payments made to ineligible recipients are eventually repaid.

“We intend to continue to regularly conduct file reviews and investigations to identify and address cases of error, fraud, and abuse,” she said in a statement. “We are using computer tracking, data analytics and linked data systems to detect mispayments and fraudulent activity.”

As for applications that arrive from abroad, if the person is a resident of Canada and outside the country “for a temporary period of time,” they can still access CERB, said Hossack.

Another prominent public-spending watchdog takes a different view, suggesting Ottawa has to take some risk as it addresses historic levels of unemployment that were in effect created by government fiat.

“In normal times, it is essential that the EI integrity branch do their job to limit abuse and error,” said Keven Page, former parliamentary budget officer.

“(But) in these unusual times, it is the government who is shutting down the economy to contain spread of the virus,” said Page, now CEO of the University of Ottawa’s Institute of Fiscal Studies and Democracy. “The government is using its spending power to buffer the impact of unemployment and loss of business.”

Auditors, he added, “will have a number of years to address program error — and they will.”

The CERB pays $500 a week during an initial fourmonth stretch for people rendered jobless by the pandemic and lockdown, so long as they made at least $5,000 in 2019 or the previous 12 months. Those eligible for EI because of their work history are receiving the same amount for that time period

The memo was distributed in late April on the ESDC/SC IntraWeb.

“Effective immediately, while processing a claim, if an agent uncovers information that suggests potential abuse of the EI system by a client, an employer or a third party, they do not impose a stop pay and do not refer the file to integrity unless it is considered an urgent investigation,” the note says.

“This is a result of the integrity service branch suspending all non-official investigations. In addition to suspension of Claimant Information Sessions (CIS), in-person interviews and on-site visits, they have suspended all Integrity Operations activities for compliance and enforcement of the EI program.”

The memo does outline exceptions, “urgent” matters that should be referred for investigation: applications on behalf of dead people, “dormant” social insurance numbers — those that were never used until the benefit claim was processed — and false records of employment.

But the source said even evidence of fraudulent employment records is being overlooked and CERB or EI paid out regardless.

The person, who is not authorized to talk about such internal matters and asked not to be identified, said the evidence of abuse includes numerous instances where applicants claimed suspiciously to have made $5,000 in the last month of 2019 – the minimum to be eligible for CERB.

International students whose visas allow them to work only 20 hours a week during classes are claiming to have put in 40 hours weekly as they apply for EI. And applicants across Canada are applying for CERB or EI while at the same time being paid by employers under the table, said the source.

The person said they doubted the 200,000 red-flagged cases will ever be investigated, as each one would take days, an enormous drain on resources. It’s more likely fraudulent claims will simply be written off, the source said.

Hossack did not confirm or deny the 200,00 figure in her statement.

The CBC quoted a Canada Revenue Agency employee as saying abuse is common, citing an elderly woman and her two disabled children who all applied for CERB, though none was eligible.

Even inmates at a prison in Trois-Rivières, Que., have received CERB cheques, according to a Radio-Canada.