The Auditor-General has called for amendments to the Social Security Act to include penalties for benefit fraud, as a means to pre-empt such crime.
"Subsequently, penalties should be enforced in respect of fraud cases which result in overpayments to instil a culture that fraud involving public funds is considered and may be treated as a crime," the auditor says in his annual report, issued today.
He pointed out that benefit, pension, allowance or assistance repayment terms are outlined in Article 102 (1i) of the law which only states that “where such overpayment occurs as a result of the non-disclosure or misrepresentation of a material fact (whether the non-disclosure or misrepresentation was or was not fraudulent) the rate of recovery by means of deductions from any benefit, pension, allowance or assistance to which he thereafter becomes entitled shall be determined by the Director but shall in no case be less than the equivalent of 10% of the rate of benefit, pension, allowance or assistance to which he thereafter becomes entitled…..”
He said that the Overpayment Notification does not request the beneficiary to refund overpaid amounts. Beneficiaries are notified of any overpayments by means of notifications sent by post. Through this document, the beneficiary is informed that such overpayment will be deducted from current and future social security payments, but is not specifically requested to refund the amount overpaid.
The auditor used the following cases as examples:
A Care Allowance was paid to a beneficiary resulted in an €840 overpayment which was created in 2010. When asked whether this overpayment was recouped, the Department of Social Security replied that “The overpayment has as yet not been recouped as claimant does not have any live benefits”.
In another case, a beneficiary had two social assistance overpayments, outstanding
balances collectively amounting to €3,971. These were being repaid at a rate of 10% through deductions from her Children's Allowance benefits.
At this rate, it would take the department nearly 21 years to collect such overpayment. However, the beneficiary would be receiving the allowance for two children until 2012 and an allowance for one child until the year 2015, due to the
children reaching 16 years of age.
On 2 May 2011, the audit office queried whether evidence was available showing that the beneficiary was requested to refund the overpayment. The reply
received was inconclusive, as it was stated that “………claimant was informed of the overpayment in August 2010. In April 2011 claimant had called at District Office and requested a copy of said document. File is to be sent to Sliema District
Office so that the requested document is handed over to claimant”.
Subsequently, the department provided a copy of a document sent to the claimant requesting her to visit the respective Area Office for the necessary arrangements to be made to settle the overpayment. Such communication was dated 3 May 2011, a day after this issue was raised by the audit office.