Benefits fraud, sick leave abuse, mailroom theft among instances of misconduct highlighted in annual report
Toronto’s fraud and waste hotline handled a heavy caseload in 2025, flagging both day‑to‑day staff misconduct and large‑scale schemes that together exposed more than $10 million in actual and potential losses.
According to the Auditor General’s 2025 Annual Report on the Fraud and Waste Hotline, the City received 697 complaints last year, covering about 1,150 allegations. Since the hotline’s launch in 2002, it has dealt with almost 15,350 Hotline complaints, and in the past five years has averaged roughly 1,210 allegations per year.
For 2025 alone, the Auditor General reports actual losses of about $4.5 million from substantiated complaints, plus $38,000 in avoided losses where fraud was stopped in time.
Looking at the five‑year period from 2021 to 2025, the Auditor General’s Office says hotline‑related complaints have resulted in $6.3 million (actual losses) plus $4 million (potential losses), had the fraud not been detected. The City recovered $703,000 of those actual losses over the same period.
Fraud hotline for Toronto
The hotline itself, operated by the Auditor General’s Forensic Unit, is described as “a confidential and anonymous program that allows staff, members of the public, and anyone doing business with the City to report incidents of suspected fraud, waste or wrongdoing involving City resources 24 hours a day, seven days a week.”
Under the Toronto Public Service By‑law, wrongdoing includes:
- fraud
- theft of City assets
- waste - mismanagement of City resources or assets in a wilful, intentional or negligent manner that contravenes a City policy or direction by Council
- violations of the City's Conflict of Interest provisions
- breach of public trust
In 2025, 87 complaints progressed to formal investigation; 25 per cent were substantiated in whole or in part. The most common substantiated issues involved subsidy fraud, irregular benefit claims, fraud and time theft. The Office also closed 63 historical investigations from prior years in 2025, 41 per cent of which were substantiated, showing similar patterns of misconduct.
Auditor General Tara Anderson stresses that the impact is not limited to dollars: “Wrongdoing perpetrated in the workplace can damage employee morale and can negatively impact the organization’s reputation.”
Employee misconduct
Several employee fraud cases stand out:
|
Case type |
Description |
Financial impact |
Outcome for employee |
Organisational response / notes |
|
Mailroom theft of electronics |
Over a two‑year period, more than 20 packages containing electronic items went missing from City mailrooms. |
Total missing: ~$21,100; theft proven for ~$2,300 (3 packages) |
Identified employee no longer employed; not eligible for rehire |
Installed access barriers, purchased safes, updated procedures in consultation with Corporate Security |
|
Unresolved portion of mailroom loss |
Balance of missing electronics not conclusively tied to the identified employee. |
Unattributed loss: ~$18,800 |
N/A |
Loss remains unattributed; covered by same control improvements as above |
|
Sick‑leave abuse / second job |
Employee was “absent for approximately three weeks and had performed work for another employer while collecting sick pay.” |
~$3,200 (sick pay) |
Employee resigned; ineligible for rehire |
City recovered full amount of loss |
|
Conflict of interest / own company |
Employee “conducted personal business for their own company during work hours” with similar duties for other government clients. |
Not quantified |
Employee terminated; cannot be rehired |
Report notes risk they “could have benefitted from the confidential information” obtained at the City |
|
Benefits fraud – false claims |
Employee submitted 85 claims where “no service was provided” plus 4 unsupported claims under the City benefits plan. |
~$14,900 (benefit claims) |
Employee repaid full amount, resigned; ineligible for rehire |
Flagged by Claim Watch programme; cited as “one of the costlier examples of employee wrongdoing” by CBC |
Recently, a former Millbrook First Nation employee was sentenced to 4½ years in prison for defrauding the community of more than $4 million over a four‑year period. Meanwhile, a case of time theft led to the dismissal of one worker.
Larger schemes
Beyond individual staff cases, the Toronto Auditor General’s Office highlights larger schemes involving vendors and City‑funded organisations.
One major file involved electricity contracts in 2019: 14 City accounts were switched from Toronto Hydro to third‑party retailers using the credentials of a retired employee who lacked authority to sign contracts of that size. The contracts had an estimated total value of $4.2 million and would have cost about $2.5 million more than staying with Toronto Hydro. The City deemed the contracts “null and void,” reverted the accounts and recovered payments.
Another investigation into sewer work led to a five‑year ban on bidding for Capital Sewer Services, after a forensic audit found intentional overbilling of at least $1.1 million on a City contract.
In a statement to CBC, City officials said they are “taking the report’s findings seriously and are working with the Auditor General to prevent these issues from happening again.” They added that the City has “improved mailroom tracking, oversight measures and system access controls,” and concluded: “We remain fully committed to protecting public resources and addressing the issues identified in the report.”
How can employee fraud be prevented?
According to the CIPD, factors that can put an organization at greater risk of employee fraud include:
- a lack of internal controls
- a blame culture
- a lack of reporting structure
However, the threat from staff fraud can be combated effectively in two ways, according to the organization:
- by cooperating and adopting a common approach that encompasses zero tolerance of all types of staff fraud
- by focusing on prevention and introducing a rigorous anti‑fraud internal culture that promotes honesty, openness, integrity and vigilance throughout the workforce
“The challenge lies not only in ensuring that the correct policies and culture are in place to facilitate such an approach, but also ensuring that such policies are consistently followed,” says CIPD. “However, it’s important to ensure that staff do not misuse business property or systems or carry out any illegal activity, balanced with fostering a culture of mutual trust and respect.”
