A bureaucrat stole $47.4M from Ontario. Why did it take so long for anyone to notice?
It's the $47.4-million question: how was an Ontario bureaucrat able to steal so much for so long?
Sanjay Madan, a former Ministry of Education computer specialist, pleaded guilty this week to a massive fraud dating back to January 2011. He was sentenced to 10 years in prison and must repay what he stole.
From a nondescript government office at 777 Bay St., Madan exploited lax oversight of information technology procurement for almost a decade, right under the noses of successive Liberal and Progressive Conservative governments and the provincial auditor general.
He was finally caught in 2020 after pilfering $10.8 million from the Support for Families pandemic relief fund.
By relaxing" computer security protocols, Madan funnelled 43,590 payments of $250 to 2,841 bank accounts he controlled at the Bank of Montreal, Royal Bank of Canada, TD, Tangerine and India's ICICI bank.
And, in what Superior Court Justice Suhail Akhtar called a genius-style" scam, the Toronto man stole an additional $36.6 million in a fee-for-service" computer consultant scheme.
It was lucrative, with the annual take ranging from $782,000 in 2019 to a staggering $6,652,000 in 2014.
That means Madan, an information technology specialist supposedly earning $176,608 a year, was taking home more taxpayer money than any other public servant in Ontario.
Government house leader Paul Calandra insisted Thursday that lessons have been learned from the debacle, including a reduction in the use of outside consultants" going forward.
Auditor general Bonnie Lysyk said while no new audit into procurement of such contracts is planned at this time," her team would be taking into account what happened in its future probes.
We've been in the loop from pretty much day one," said Lysyk, referring to the exposure of Madan's crimes in summer 2020.
According to the agreed statement of facts filed in court, he and his private-sector associate Vidhan Singh - who is still on trial, charged with money laundering, fraud and possession of stolen property - used real and sham" companies to get government information technology work.
Singh has denied any wrongdoing and his case is proceeding.
Entrusted with hiring Ministry of Education computer contractors, Madan knew there was little scrutiny of qualified vendors" providing government services worth less than $100,000.
Madan would tell Singh the amount the government could be billed per consultant at the VOR's (vendor of record's) maximum approved rate (e.g. $900 per day)," court documents said.
Singh would find a consultant who would work for a rate that was substantially less (e.g. $400 to $500 per day) ... and Madan would ensure the consultant was hired," the documents continued.
Both were mindful that many government vendors of record routinely subcontract work to other consultants who have not been approved as qualified contractors. Singh's companies were not vendors of record.
Singh would pay the consultant, pay the VOR a percentage fee (typically between $3 and $5 per hour per consultant) and keep for himself approximately $100 per day per consultant less the VOR's percentage fee - and Singh would pay the remainder to Madan."
NDP Leader Marit Stiles said Thursday the thefts were exacerbated by Progressive Conservative and Liberal governments over-relying on expensive private consulting firms" to do public-service work.
Stiles urged Premier Doug Ford to further cut down on his government's use of overpriced consultants to protect public money."
Madan's defence lawyer, Chris Sewrattan, also had questions about how taxpayers' money could be squandered.
What Mr. Madan did ... was criminal, but there was some legal skimming going on as well and I've never heard about an investigation going into that," said Sewrattan.
He didn't invent the scheme, it would seem," the lawyer added.
Indeed, Madan merely gamed the system with one of the oldest maxims in politics: knowledge is power.
The scheme depended on information asymmetry. Consultants were generally unaware of the rate at which the government was billed for their services - their contract was with Singh and not the MOE (Ministry of Education) directly," the court documents said.
Similarly, the MOE was unaware of what the consultants were ultimately paid, or, in most instances that it was Singh and not the VORs who paid the consultants," the documents said.
After COVID-19 hit in 2020, Madan became even more brazen and greedy - and not just by defrauding the Support for Families program for which he was the information technology leader.
Court records show he took advantage of the fact that nearly all government employees were working from home due to the COVID-19 pandemic to expand the ongoing fee-for-service' consultants fraud."
Atop the dozens of subcontractors already working, Madan arranged for 14 sham fee-for-service contracts to be awarded to dummy' consultants, the majority of whom existed only on paper."
No work was being done," the court documents said of a grift that cost the treasury $741,508.86, including tax.
On Aug. 11, 2020, Madan called Singh and said that he was going to be suspended, which would mean there would be nobody to approve the 14 consultants' time sheets, and the fraud would soon be discovered," the documents said.
The government paid five invoices before the 14 sham consultants fraud was discovered, but the remaining nine invoices were put on hold and have not been paid to date."
Madan's jig was up.
Robert Benzie is the Star's Queen's Park bureau chief and a reporter covering Ontario politics. Follow him on Twitter: @robertbenzie