The Auditor General has conducted a performance audit addressing Government efforts at curbing social benefit fraud. The National Audit Office (NAO) focused on the operations of the Benefit Fraud and Investigation Department (BFID), which is tasked with gathering evidence key in determining whether benefit fraud is being committed. BFID’s reports are then submitted to the Department of Social Security (DSS), whose role is that of adjudicating submitted cases.
The Report said that “the relationship between BFID and DSS is strained by their divergent views with respect to the administration of social policy. DSS prefers to err on the side of caution and only revoke benefits when absolute certainty of irregularity is attained. On the other hand, BFID relies on evidence that is logical and factual, yet not necessarily irrefutable.”
“This divergence in socio-political alignment is manifested in the disagreement that arises on a number of cases. NAO reviewed all such cases, and expressed concern in this respect. A case that drew NAO’s attention was that of a trader caught effecting transactions that ran into millions of Euro while simultaneously in receipt of a disability pension and sickness assistance, among other benefits.
“Aside from other interesting cases, such as that of the boxer in receipt of a pension for the visually impaired, are multiple cases featuring beneficiaries whose children are registered as having an unknown father while BFID investigations proved otherwise” the Report said.
NAO’s audit report also identified various management issues deemed to be of concern. “The level of feedback provided by DSS to BFID in the adjudication of cases was inadequate and undermined the process’ expected level of accountability and transparency.”
The Report said that “a similar source of contention were instances when DSS exercised administrative discretion beyond the parameters established by the Social Security Act. In addition, NAO noted that no system of flagging risk with respect to individuals who had previously committed benefit fraud and reapplied for benefits shortly thereafter existed.”
“In addition to investigations carried out following BFID’s receipt of reports on alleged fraud, the Department also conducts desk-based exercises, which entail the review and analysis of data in order to establish potential cases of fraud.,” the Report said.
“NAO believes that the future of benefit fraud investigations lies in improvements directed at such exercises, as such analysis would more fairly and comprehensively target beneficiaries presenting most risk rather than focusing on those who have ‘unfortunately’ had a report lodged against them.”
It said that “clearly emerging from findings presented in this NAO Report is DSS’s weak enforcement function in relation to the collection of undue benefits paid. This is largely attributable to the premise that one repays outstanding overpayments only if in receipt of social benefit payments. Further compounding this situation was the fact that repayment rates were at times wrongly applied, with inappropriate documentation supporting these deviations from the legally stipulated parameters.”
NAO stated that “in its opinion deterrents against benefit fraud are weak and insignificant, and certainly do not aid enforcement efforts.”
“Moreover,” NAO concluded, “it established that the magnitude of the overpayment bears no effect on the amount of repayment enforced, and increasing the overpayment due in absolute terms (through successive instances of benefit fraud) simply extends the period of time required to settle such dues.”
This audit report may be accessed through the NAO website: www.nao.gov.mt [1].