Saturday, Mar. 18, 2000

Defence paid at least three bills twice By DEAN BEEBY -- The Canadian Press

The Defence Department's cheque is in the mail -- twice.

Federal auditors have discovered at least three cases in which the military paid the same bill two times, to the tune of more than $1.9 million.

And an investigation into the incidents has exposed flaws in the military's financial reporting system, which is supposed to guard against duplicate payments.

Documents detailing the errors were obtained under the Access to Information Act.

The most recent case involved duplicate cheques each issued for almost $590,000 to an unidentified vendor in April last year.

One cheque was sent from Ottawa, the other from Montreal. One of the cheques was cashed immediately but the vendor held on to the second one for four months before auditors finally retrieved and voided it.

No public money was lost, and the auditors found no evidence of fraud within the Defence Department.

But the investigation did determine that clerks could easily bypass a computer-generated warning that a duplicate payment was being made.

A second case from October 1998 involved doubled-up cheques for more than $1.3 million to another vendor whose name was deleted from the released documents.

Auditors found that the second, manually produced cheque was rushed out because the company "was experiencing cash-flow problems and had indicated a serious risk of being petitioned into bankruptcy."

The firm quickly returned the first cheque uncashed as agreed, and no public money was lost.

But the subsequent investigation again found that clerks could too readily override safeguards against duplicate payments.

In a report on Sept. 3 last year, investigators called on the military to beef up the duplicate-payment alerting system "with particular emphasis on limiting or removing the ability to simply bypass the warning once received."

A military spokesman said last week the system still allows doubled-up cheques to be sent out.

"If the duplicate payment is detected after the cheque has been issued, then we take immediate action to recover it," said Capt. Darren Steele.

A third case involves the purchase of an $18,000 Honda tractor for Canadian Forces Base Comox, B.C., on Vancouver Island.

The base accidentally sent a cheque made out to the wrong vendor in August 1998, and the company quickly cashed the cheque.

On discovering the error, the Defence Department paid the correct vendor and has since been unable to recover the money from the first company, identified only as a British Columbia firm.

"The similarity of company names appears to have resulted in the error causing the payment to the wrong vendor," says an internal investigation report.

"Unfortunately, the misdirected payment was sent to a company known to be operating on the fringes of legality."

The most recent letter demanding repayment, sent on Feb. 25 this year, has remained unanswered so the military last week turned the case over to the Justice Department. The government wants its money back, plus interest.

Investigators criticized officials at CFB Comox for being slow to take steps to recover the money and for attempting to simply write off the amount.

Spokesman Lieut. Yves Vanier said the military will not comment on the case now that it is in the hands of lawyers.

http://www.canoe.ca/TopStories/defence_mar18.html

-- Martin Thompson (mthom1927@aol.com), March 18, 2000