The federal government faces a long and costly path to recoup hundreds of millions of dollars in overpaid COVID-19 emergency benefits due to its failure to flag fraudulent claims, the auditor general said.
Efforts to recover the money will begin this spring for the Canada Emergency Wage Subsidy (CEWS) and this fall for the Canada Emergency Response Benefit (CERB), according to a report by the Canadian Press.
To date, CEWS has paid out nearly $71.5 billion in assistance to around 437,000 companies and is set to run until mid-June. The CERB, meanwhile, has given $74 billion in aid to Canadian employees financially impacted by the COVID-19 pandemic.
Auditor general Karen Hogan said that the government did well in rolling out the programs “in record time under extraordinarily challenging circumstances,” but this came at the expense of the usual safeguards used to assess applicants’ eligibility and prevent fraudulent claims.
She said her audits flagged several instances where federal officials could have made program adjustments that might have prevented the wage subsidy from going to insolvent businesses and fraudsters from claiming the employment benefit.
Hogan added that the Canadian Revenue Agency (CRA) did not have all the information required ahead of time to validate each company’s application before handing out the subsidy, nor did the agency ask for each employee’s social insurance number, which could have prevented “double-dipping” between the two programs. This oversight has resulted in the government giving out about $500 million in ineligible CERB payments.
Minister of Employment Carla Qualtrough said that while the audits are scheduled to start soon, these will be “very complex,” particularly those involving “sophisticated fraud.”
The CRA and Employment and Social Development Canada, which was involved in the development of the CERB, are expected to spend four years tracking down every wrongful payment. The work will start in September and will partially rely on 2020 tax returns that are due in a few weeks.
