Benefit fraud and investigation directorate, Malta
In response to the growing abuse of social security benefits, the Maltese government established the Benefit Fraud and Investigation Directorate in 2005. The central aim of the directorate is to investigate fraudulent practices, including abuse of unemployment benefits. A significant factor in the success of this initiative has been the joined-up approach among the various stakeholders capable of providing essential information regarding possible abuses, including abuse by those who are receiving unemployment benefits while doing undeclared work.
In 2005, Malta’s Ministry for the Family and Social Solidarity set up a Benefit Fraud and Investigation Directorate with the aim of investigating reports of alleged abuse in social benefits. The directorate was established through an amendment of the Social Security Act which vested the director of this unit with the power to appoint public officers and inspectors to investigate cases of benefits abuse. These inspectors can demand evidence of documents and information to assist them in carrying out their duties.
The directorate coordinates its operations in conjunction with a number of government departments. These include the police, Value-added Tax (VAT) department, Tax Compliance Unit, Department of Social Security, as well as private sector organisations, in order to obtain information that is considered critical for the conclusion of its investigations. The unit’s director also chairs two committees that facilitate coordination with a number of government departments or entities. The unit is run by a director who is supported by a legal officer, inspectors, desk officers, secretarial staff and an assistant director.
The mission statement adopted by the Benefit Fraud and Investigation Directorate is as follows: ‘Fraud in social benefits is antisocial; the Directorate is committed to combating such abuse.’ In accordance with its objectives, the directorate investigates cases of alleged abuse, including reports of persons receiving unemployment benefits while working in the informal economy. Cases of abuse must be concluded within a reasonable time and can lead to the elimination or restriction of benefits.
The Benefit Fraud and Investigation Directorate regularly and closely monitors all financial data that is uploaded to the computer system operated by the Department of Social Security. This data is obtained from local financial institutions and used to suspend the claims of beneficiaries receiving non-contributory means tested benefits soon after their financial means exceed the applicable threshold. Further investigations are conducted in cases where the claimants register a sudden substantial increase in their financial assets. Fraudulent practices are reported to the directorate through various means, including by free-phone, email, letter or through other documentation. Requests may also be generated by the Department of Social Security.
Evaluation and outcome
Achievement of objectives
In 2007, the Benefit Fraud and Investigation Directorate conducted 1,782 on-site inspections, of which some 1,444 cases were successfully concluded. These included various cases of abuse concerning benefits, of which 138 cases were related to unemployment benefits. Overall, the directorate made an estimated annual saving of €3,483,345 in benefits that were in breach of the provisions of the Social Security Act.
Obstacles and problems
In 2007, the Benefit Fraud and Investigation Directorate experienced a high turnover of staff; more specifically, a new assistant director and four new inspectors were engaged to replace the previous team of four who had resigned. Another difficulty concerned the ‘Controlled Vehicle Access system’, which was introduced in the area of the Directorate and which impinged on the number of on-the-spot investigations that were carried out at short notice. This also increased the risks for members of staff with regard to possible attacks while the workers walk to cars that are parked at a distance from their office.
Collaboration between the directorate and private and public entities, including the Employment and Training Corporation (ETC), has enabled more effective and targeted checks of abuse relating to unemployment benefits.
The number of cases of fraud relating to unemployment benefits decreased from 183 in 2006 to 138 in 2007. However, this may also be due to the fact that a number of cases were still pending and could eventually increase the number of cases initiated in 2007. It should also be noted that the number of overall cases is normally driven by the number of reports originating from the public and that, in 2007, the number of reports on unemployment benefit fraud was lower than that of the previous year.
A joined-up approach between the various stakeholders that can provide essential information regarding possible abuses is fundamental to curbing many types of social security fraud –including fraud by those who are claiming unemployment benefits while working. However, it is important to ensure that those who are caught will not have the opportunity to switch from one benefit to another: persons found receiving unemployment benefits while working in the informal economy often switch to social assistance and receive the same amount of benefits with fewer obligations. Moreover, they would start receiving their benefits in advance without having to go and register weekly at times stipulated by the Employment and Training Corporation.
While the setting up of the Benefit Fraud and Investigation Directorate is a move in the right direction for curbing social security abuses, the country’s legislation also needs to be tightened to restrict abusers from receiving alternative benefits to which they are eligible. Furthermore, in order to increase the number of inspections and investigations, it is important to have a trained pool of workers in place who are sufficiently protected against acts of crime while carrying out their duties.
Ray Muscat, Director of Benefit Fraud and Investigation Directorate
Employment and Training Corporation Law Compliance Unit, Annual Report, October 2006–September 2007 (forthcoming).
Anna Borg, Employment and Training Corporation (ETC)