Benefit fraud made easy by lack of checks on claimants

The National Audit Office has flagged the lack of inspections being carried out by the department of social security, to assess whether beneficiaries of social assistance were genuine claimants of benefits.

One of the more serious omissions found by the NAO was that requesting taxpayer profiles (TP) was not the current practice during 2014, to assess whether claimants for some €80 million in social assistance fulfilled criteria. 

“NAO testing revealed that TP was being consulted only in cases where there was a substantial change in circumstances, or in situations warranting further investigation. In such cases, benefits were already being paid to individuals before such assessment was conducted.”

The NAO tested a sample of 44 individuals who were paid a total of €391,878 during 2014.

The NAO found that one particular beneficiary of social assistance had only declared that she received financial assistance for her nine children every four weeks and was paying rent every month.

During 2014, the claimant received total non-contributory social assistance payments of €8,845.

But upon investigation of this claimant, the NAO noted that the claimant failed to disclose three transfers of property to third parties, totalling €58,234.

The investigation showed that the beneficiary was involved in two transactions as a buyer, for a total value of €43,093.

Following a number of anonymous reports, the benefit fraud and investigations department conducted an investigation of the claimant’s situation and belongings in February 2015. In addition to the details that emerged from the claimant’s profile, it was also revealed that the residence she was living in was not being rented.

The claimant was registered as a farmer from 2006 to 2013 and during this period, she owned a considerable number of livestock.

“Upon enquiry with DSS, NAO was informed that the case was currently being assessed by the Department. However, payments to the beneficiary had not been stopped as at the date of writing of this report,” the NAO said.

A number of transactions were traced in another separate claimant’s taxpayer profile in relation to purchase of property and donations. It transpired that the beneficiary failed to disclose three acquisitions from third parties, amounting to €31,664.

The claimant also received another property as a donation for the value of €93,175.

Furthermore, it transpired that the claimant’s wife had also sold a property for €10,482.

None of this information was declared by the claimant as per application dated 2012 and no changes in circumstances were declared thereafter. Meanwhile, during 2014, the claimant received payments from MFSS amounting to €8,201. Following NAO’s testing, DSS stopped the claimant’s benefit payments whilst investigating further.

The NAO recommended that the department formalises the procedure surrounding the filing of applications, as well as their assessment, to ensure a uniform approach in relation to all applications received.

“It is important that officers within DSS obtain corroborative evidence to sustain the declarations made by the applicant. This may include, but should not be limited to, the applicant’s TP together with other legal and financial documentation.”

The department said it is holding regular meetings with the Management Efficiency Unit within the Office of the Prime Minister, to further tap cases of fraud by conducting thorough assessments at an early application stage.

Preparations are underway with the Malta Information Technology Agency (MITA) so as to set up an online application framework, which will lead to uniformity during the application process.

Assessments

Whenever an individual requests financial assistance from the department, an application form is to be filled and submitted for assessment. The applicant is bound to declare all the relevant details at application stage, including details of members within the same household, bank account details, property and vehicle ownership, and inform the department of any changes thereafter.

At the evaluation stage, the assessor will determine whether the applicant is eligible for assistance, based on the given declaration.

However, when the information required is not fully available, the assessor may request further details from the applicant.

The NAO noted that the declaration by the applicant is taken as given, and at this stage, no further assessment is made by the department to ascertain that the information is complete and reflects the actual claimant’s position or status.

In fact, during the year under review, no formal procedure was in place requiring third party confirmation to be obtained at the evaluation stage in order to corroborate the declaration given by the applicant.

Although the facility to retrieve bank and employment details directly from Social Assistance and Benefits System exists, in most of the cases tested, no evidence was traced in the respective files showing that such information was extracted for verification of claims submitted by claimants.