Monday, April 30, 2012

But who's watching the taxperson when the taxperson misbehaveth?

Documents reveal hundreds of 'high risk misconduct' cases at CRA
By Daniel Leblanc
Sunday, April 29, 2012
The Canada Revenue Agency has offices across the country, including this one in Winnipeg. (The Canadian Press Images)

Allegations of corruption that have rocked the Montreal offices of the Canada Revenue Agency are just a fraction of the total instances of “high-risk misconduct” reported at the federal tax agency every year, records show.

The CRA has dismissed seven officials from its Montreal offices in connection with an RCMP investigation into allegations of fraud and corruption involving senior team leaders and auditors at the tax-collection agency.

Documents show that over the past eight years the CRA has identified a total of 456 founded cases of high-risk misconduct across the country, an average of 57 a year. The CRA defines these cases as involving breach of trust, conflict of interest, falsification or destruction of documents, fraud, off-duty conduct, abuse of authority, and unauthorized access or disclosure of confidential information.

The NDP used a parliamentary procedure known as the “order paper” to obtain information on the number of ethical breaches at the CRA, and shared the figures with The Globe and Mail and Radio-Canada.

In an interview, New Democrat MP Hoang Mai said he is concerned that upcoming cutbacks at the CRA will prevent the agency from keeping up internal controls over the conduct of its employees and ensuring that all Canadians pay their taxes.

According to the 2012 federal budget, the CRA will have to cut its budget by $253-million over the next three years.

“There are major cuts at the CRA in the budget, and we already know that officials at the agency are overworked,” said Mr. Mai, the NDP’s critic for national revenue.

Mr. Mai will be seeking more information from the CRA, saying he is deeply concerned about the RCMP investigation into allegations that surfaced in 2008 that tax officials in Montreal offered preferential treatment to companies and individuals in exchange for kickbacks.

“It’s been four years, and we still don’t have charges,” he said. “We’ve been asking lots of questions, and the only answer that we are getting is that the CRA can’t comment because of the ongoing investigation.”

The CRA is insisting it will not compromise the integrity of its processes, both in terms of reminding employees of their obligations and in developing systems to catch and stop wrongdoing.

Since 2004, the agency has nearly doubled the number of internal investigators, to 25 from 13. In addition, the budget for internal investigations has gone up 146 per cent, reaching $2-million.

In a statement, the agency pointed out that it has 40,000 employees, which means that high-risk misconduct files affect only 0.125 per cent of its work force.

“The limited cases in which an infraction is committed must not lead to a negative perception regarding the honesty and integrity of thousands of CRA employees who do their work in an exemplary fashion,” CRA spokesman Noël Carisse said.

The government said it will ensure that the budget cutbacks do not impact any measures designed to prevent wrongdoing among CRA staff.

"The integrity of our tax system is important to all Canadians and our Government will take any steps necessary to ensure it is protected," said Nancy Bishay, a spokeswoman for Revenue Minister Gail Shea.

The CRA can fire employees in the event of severe wrongdoing, and it refers cases to the RCMP that could involve criminal activity.

The allegations in Montreal that Mounties are investigating have rocked the entire agency.

RCMP search warrants allege that CRA officials helped firms in Quebec's construction industry evade taxes.

In addition, some of the CRA officials targeted by the Mounties are accused of collecting kickbacks from businessmen, such as restaurant owners, in exchange for lax audits or for turning a blind eye to unreported income.

The RCMP has also alleged in search warrants that CRA officials received gifts or compensation from a construction firm, including free home renovations, trips to Las Vegas and the Bahamas, and an upscale evening at a Montreal Canadiens home game.

Two CRA auditors were fired in 2009 after investigators alleged that they shared a bank account containing $1.7-million in the Bahamas with Francesco Bruno, owner of construction firm B.T. Céramique. At least seven other officials in the CRA’s offices in Montreal have since been disciplined in relation to various files, including allegedly fraudulent research-and-development tax credits.

No charges have been laid as part of the RCMP investigation and none of the allegations in the search warrants have been proven in court.


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