One question begs for attention: What can be deducted from the ICAC press release of 9 January 2017 titled “Duo charged with $1.64 allowances fraud and perversion?
To the casual reader informed about international fraud it might not seem like a whole lot of money, but the casual reader might not appreciate that defrauding the International Social Service (ISS) requires at a very minimum a whole lot of documents submitted, evaluated and approved for payment.
With no direct knowledge of the criminal investigation, we may attempt to analyze the press release (link) according to our understanding of the standard procedures required by the Social Welfare Department prior to the disbursement of public funds as housing allowance for refugees.
These standard procedure, tweaked repeatedly between 2006 and 2016 when refugee slums were banned, may be summarized in the following steps presumably devised to decentralize decision making, introduce checks and balances and, most crucially, reduce systemic risks of fraud:
- A suitable “home” is identified by or for the refugee;
- the landlord completes a Tenancy Agreement in Chinese;
- the landlord fills in ISS forms and provides documents including “proof of ownership”;
- the refugee submits the set of documents to an ISS caseworker;
- the caseworker reviews and evaluates the documents (1st document check);
- the caseworker forwards the documents to the ISS housing unit;
- the housing unit staff review and evaluate the documents again (2nd document check);
- the housing unit staff phone the landlord to verify the information (phone check);
- the caseworker and housing unit staff conduct a “home visit” (physical check);
- the housing unit approves the monthly rental payment to the landlord;
- the caseworker prepares monthly “Agreement of Provision of Assistance” (monthly check);
- the caseworker reviews and approves utility bills on a monthly basis (utilities check);
- the caseworker conducts “home visits” on a yearly basis (annual check).
The documents required to satisfy the “proof of ownership” are various and may include purchase agreements, title deeds, land searches, rate demands or legal letters that officially identify the person who will receive rental payments as the legitimate property owner. Vision First is in possession of copies of documents prepared by the defendants which appear ambiguous at best.
Surely there might be reasonable doubts about the authenticity of the “proof of ownership” for 48 “homes” allegedly owned by the duo, a humble clerk and transport worker, who would have been notably wealthy had they genuinely possessed such properties. Besides, the owners of comparable estates typically operate through private leasing companies, not in person.
The press release states that the defendants “were the respective landlords of service users to ISS in relation to addresses as stated on the Landlord Information Forms”. It avoids reporting that the defendants settled refugees in ramshackle, dangerous and unhygienic unauthorized structures in Ping Che, Fanling. Vision First took photos of these illegal structures which were manifestly unfit for human habitation. One compound had no bathroom. The refugee tenants were required to use a public toilet 300 meters from the compound (link). ISS stopped approving huts and shacks for refugees’ accommodation.
Vision First has been puzzled for years by the standards of “home visits” conducted by ISS caseworkers and housing unit staff who permitted (or overlooked?) that refugees resided in degrading slums, despite the Social Welfare Department requiring adequate accommodation that included cooking, washing and bathing facilities, presumably in compliance with all relevant building standards and codes.
Attention must be given to the fact that the $1.64m fraud consisted of over 1500 transactions as the monthly rental allowance was $1000 until 2010 and $1200 thereafter. The number rises to 3000 when including the utility fees claimed monthly by the defendants. Further, ISS caseworkers prepared and submitted to refugees over 1500 monthly Agreements on Provision of Assistance – despite the doubtful legality of “proof of ownership” and “homes” presumably inspected?
The 48 refugees signed the 1500 agreements not for financial gain, but to avoid being homeless and thus have no place to sleep, wash and cook. It is noteworthy that the 48 refugees were provided “homes” through the submission, verification and acceptance of more than 4500 micro-transactions. One has to wonder what smoke and mirrors were deployed by the two defendants, a humble clerk and transport worker, to persuade and defraud hundreds of competent ISS professionals.
It is peculiar, if not suspicious, that scores of caseworkers, housing unit staff and relevant managers reviewed “proof of ownership” and inspected “homes” for the disbursement of $1.64m, broken down into thousands of micro-transactions over five and a half years – without raising doubts with law enforcement.
ONCE UPON A TIME in a Kingdom far far away, there arrived Three Little Pigs who escaped the butcher’s knife in their homeland. Unable to speak, read or write the Kingdom’s language, they could not work and soon became poor and hungry. They were homeless and slept on park benches even when it rained.
After several months of suffering, the Three Little Pigs heard that the King was rich and benevolent. They asked a friendly citizen who spoke their language to accompany them to the Royal Court to request food to eat and a place to sleep. You see, the King’s laws did not allow people to sleep on the streets and the Royal Court had the duty to assist anyone in need.
The Kingdom was very large and a multitude of officers worked at the Royal Court to make sure that every citizen was, or at least appeared, to be happy, lived safely and obeyed the King’s law. Now, the Three Little Pigs were foreigners who did not know the Kingdom’s laws, so the King commanded the Chancellor to assist and protect them.
One of the Kingdom’s law was set a long time ago. It ordered that “All people must live in homes of bricks, not straw or sticks.” The law was designed to protect the subjects of the King from the Big Bad Wolf who would come at night to huff and puff and blow the homes down … to eat the people!
The Chancellor was busy running the Kingdom every day, so he ordered the Court Officers to take care of the Three Little Pigs as special guests of the King. The Chancellor gave them a bag of the King’s gold to pay for expenses like food and home. The Court Officers had studied the King’s laws. They knew clearly that nobody could live in homes of sticks and straws, least the Big Bad Wolf eat them.
When the Three Little Pigs looked for homes, they had the misfortune of encountering Bandits who pretended to help, but really wanted to steal the King’s gold. The Bandits arranged for the Three Little Pigs to live in huts of straw and sticks, but wrote contracts for the Royal Court indicating that they lived in homes of bricks. The Court Officers, who for many years paid the Bandits with the King’s gold, curiously failed to verify that the Three Little Pigs lived in brick homes.
One cold dark night, the Big Bad Wolf prowled across the Kingdom looking for something to eat. He was ravenously hungry because all the King’s subjects lived in homes of bricks. Suddenly his mouth started to water when he discovered the straw and stick huts where the Three Little Pigs were sleeping. Then he huffed and he puffed and he blew the huts down … devouring three scared piglets in juicy morsels!
The King was furious when he heard about the tragedy. He yelled at the Chancellor whom he had ordered to assist the Three Little Pigs. In turn, the Chancellor was angry with the Court Officers who had failed to house the Three Little Pigs in homes of bricks and had handed the King’s gold to the Bandits.
Alas, the Big Bad Wolf had already made a swift meal of their foolish mistake!
The King dispatched the Sheriff to catch the Bandits who were arrested and thrown into a deep dark prison from where they can still be heard crying. The Chancellor then punished the lazy Court Officers for losing the King’s gold and sent them to build brick homes for the rest of their lives. To this day the Court Officers regret not following the King’s laws and turning a blind eye to the Bandits’ crimes.