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Bermuda: millions paid out in error

February 10, 2023

CMC — Bermuda’s bipartisan Public Accounts Committee (PAC) has blamed a series of administrative errors for more than three million US dollars being paid out in unemployment benefit payments during the coronavirus (COVID-19) pandemic to people who were working.

PAC said in a report there were “internal control weaknesses” and poor vetting procedures when the payments were made following the outbreak of COVID-19 in March 2020.

More than 10,000 people lost their jobs after the island went into lockdown when the first cases of the virus were recorded. As an emergency measure, the government paid out US$500 a week to those made redundant by the pandemic for a maximum of 12 weeks.

The emergency relief scheme ended up costing the taxpayer US$60 million, including US$3.5 million in overpayments.

PAC, chaired by Opposition Leader Cole Simons, based its findings on reports filed by the Auditor-General. The committee also interviewed a number of civil servants from the Ministries of Finance and Labour.

However, the committee was unable to obtain a report compiled by PricewaterhouseCoopers after the accountancy firm carried out its own review of procedures.

“Due to the urgent need to provide relief to persons suffering economic hardship, the Ministry of Finance accepted the risk and made the decision to commence processing, approval, and payment of the UEB (unemployment benefit) despite internal control weaknesses,” said the report.

“In fact, it was later revealed that a number of overpayments occurred, mainly because applicants had subsequently found employment and did not report their new employment status,” it added.

The committee noted that some claimant files were incomplete and there was no evidence to show that a contract to provide an unemployment database was put out to tender.

“The Ministry of Finance didn’t delegate authority or provide any legislated instrument which authorised the Minister of Finance to delegate authority to execute his powers or furnish finance officers the authorisation to execute making unemployment benefit payments,” the report said.

“The Ministry of Finance was unable to produce formal procedures on payment instructions and the PAC was unable to confirm the number of times the Ministry of Finance directed sums of money to be paid to individuals with or without consulting the Director of Workforce Development.

“It was determined that the application vetting process was not robust and led to numerous payment errors, duplicate payments and delays.

“The PAC has requested, but has not received, a report which summarises the number of UEB applications retroactively validated and the number of and value of the errors uncovered and rectified from March 2020 to June 2022.

“There was also evidence that there were inadequate protocols in place which would have prevented double dipping, in cases where some UEB recipients also received Financial Assistance benefits.”

The committee recommended that the Ministry of Finance should devise detailed procedures and structures for unemployment benefit payment, and “more robust” information technology servers were needed throughout government.

The Royal Gazette newspaper reported that by July 2021 the government had recovered around US$500,000 of the $3.5 million in overpayments, but it is not known if additional monies had been collected since then.

A total of 158 people have died from COVID-19 in Bermuda, but more than 18,600 have recovered from the virus.

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