Evidence of meeting #44 for Government Operations and Estimates in the 40th Parliament, 3rd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was hollander.
A recording is available from Parliament.
10:05 a.m.
Deputy Procurement Ombudsman, Office of the Procurement Ombudsman
I believe that the Public Works and Government Services Canada action plan is on their website.
10:10 a.m.
Bloc
Diane Bourgeois Bloc Terrebonne—Blainville, QC
It is on its site; we will verify that.
Because it is very important — to follow up on the suggestion made by my colleague — that you be able to see how things are done, study the contracting activity of PWGSC, in comparison with the contracts entered into for the renovation of government buildings. We will try to check, based on PWGSC's action plan, to see if everything fits with the action plan that they put forward and that you have apparently seen, examined and certified.
Thank you, Mr. Chairman.
10:10 a.m.
Liberal
The Chair Liberal John McKay
Madam Bourgeois, thank you for your question.
Mr. Hyer, you're new to the committee, but it looks like you're going to get the last five minutes.
10:10 a.m.
NDP
Bruce Hyer NDP Thunder Bay—Superior North, ON
Thank you, Mr. McKay.
Good morning, Mr. Hollander. It seems to me that perhaps the most useful thing I can do, given that you've gotten up early to share your time and expertise with us, is to give you a platform to tell us what you think would be the most useful. The only prelude to that that I'd make is a suggestion, but don't feel bound by it.
Do you have any feelings you'd like to add to what you've already said about what mechanisms are good or bad or need amending to deter potential wrongdoing and to get us good value for good projects in an honest and open process?
How about I give you the remaining four and a half minutes to tell us whatever you choose to tell us.
10:10 a.m.
Program Coordinator, Economic Crime Studies, Centre for Forensic and Security Technology Studies, British Columbia Institute of Technology
Thank you very much for the latitude your question allows, sir.
As I've mentioned, one of the most effective deterrents is a reporting mechanism, a whistleblower hotline.
Now, one of the things we have to realize is that when a fraudster considers whether he's going to commit a wrongful act, he considers very carefully the possibility that he or she may get caught, and the greater the possibility that the person will get caught, the less the chance that they're going to do what they had intended to do. I've already referred you to the fact that most of the cases where fraud was investigated and found were brought to the attention of the agency by means of tips. This is on slide 27. We know that having a whistleblower hotline can be a very effective way of reducing losses.
I would direct your attention at this point to slide 29 in your bundle. We see that where there are hotlines available, the percentage of cases of fraud that are initially detected by tips is 47%, nearly half, whereas if there's no employee reporting mechanism or external reporting mechanism, only abut 34% of the fraud cases get reported by tips at first instance. So having the hotline in place raises the pavement considerably.
If we take a look at slide 30, we see that hotlines also have an effect on median fraud losses. In organizations that have a hotline, the median fraud loss is just a little over $90,000 for a typical fraud case. In institutions where there is no hotline, the median fraud loss per case was $197,000 and change. So having a hotline in place reduces your loss, and it also shortens the duration of an ongoing fraud.
If you take a look at the following slide, you'll see that in organizations that had a hotline, their experience was that a fraud would go undetected for about 18 months. In the case of organizations that had no hotline, a fraud would go undetected typically for two years.
So having a mechanism in place is important, and the mechanism should probably be a phone line so that you have the human interaction, because this is important in this type of situation. It should be supported by a trained investigative staff, by a good research and intelligence function, and by an appropriate case-management process.
In addition, the existence of the mechanism should be supported by, first of all, employee awareness, so employees know what conduct is acceptable, what conduct isn't acceptable, and how to report it. And finally, there has to be a mechanism in place to ensure that any reprisal taken against an employee for blowing the whistle in good faith is going to meet with strong and fast punishment to make sure that employees will feel reasonably comfortable in blowing the whistle and doing the right thing for the people of Canada.
10:15 a.m.
Liberal
The Chair Liberal John McKay
Thank you, Mr. Hollander.
Unfortunately, that's the end of our time.
On behalf of the committee I want to thank Mr. Morse, Madame Trombetti, Mr. Hollander.
For those of you who celebrate Christmas, Joyeux Noel. For those of you who don't, Bonne Fête.
This has been actually very helpful to the committee's deliberations. Again, thank you for your time.
I'm going to suspend for a couple of minutes while we go in camera.
[Proceedings continue in camera]