High-Risk Stock Stolen or Missing from MTO Offices

I am personally very pleased with this auditor’s report.

In the fall of 2000 I was hit and run in London Ontario by a stolen vehicle with plates that were apparently returned to the MTO office in Mississauga. I believed that the plates had been stolen from the MTO office there (amongst other concerns).

None of the police officers at the municipality level or the O.P.P detachment I spoke to took me seriously. As a matter of fact, some were aggressive and the LPS never did follow up with me.

This audit was a complete surprise to me but vindicates a letter I had sent in April 2004 to the Ministry of Transportation, whose Head of the Licensing Administration Office, Barbara Breen, took me seriously and forwarded it to their Internal Audit Services Branch.

I wrote to her to tell her it was my intention to send my complaint to the Chief of the London Police Services and the Solicitor General. But since I didn’t have faith or trust in them, I didn’t bother. Now, I’m more than happy to.
Here’s a low down on the MTO’s audit:

The auditor of Ontario has found in its recent audit of the Ministry of Transportation’s Private Issuing Network that 56,000 high risk stock items such as license plates, stickers, temporary driver’s licenses and permits have been reported missing or stolen.

Section 3.05 of the Driver and Vehicle Private Issuing Network audit the Auditor reports that there have been incidents of misuse of customer credit card information as well as fraudulent driver’s licenses being created by altering existing driver’s license photos, dates of birth, names and addresses.

It also found that the Ministry was to audit these PIN offices but the rate dropped to almost no audits from 159 full audits in 2001 down to 1 full audit in 2003.

(Incidentally, the Minister of Transportation at the time was Progressive Conservative Brad Clark from StoneyCreek. It would figure a Hamilton politician was in charge when all this criminal activity was taking place)

60 offices representing approximately 20% of the PIN and collecting approximately $150 million in revenue annually have not been subject to any type of audit for 3 years or more.

7 of the PIN offices were never audited.

Problems within the Ministry’s PIN monitoring offices are having difficulty coordinating their efforts to conduct these audits. In particular, that the Microfilm and Records Unit provides up to 75% of the documents needed to perform an audit.

The Auditor found that it took over 11 months to get the documents the Ministry’s Performance Management Office needed to conduct their audits.

Another factor for the audits not taking place was because of a March 2002 Ontario Public Service Employees labour disruption that lasted for almost 3 months. Once the labour dispute was over it took over a year and a half to enter in manually processed licensing transactions.

Those transactions were not entered in sequence resulting in 240,000 errors, which took more time to resolve, which took away audit resources to finish the task.

The A also found that PIN staffs were sharing system passwords – prohibited by ministry policy – and that staffs were manipulating the system to produce false records.

In July 2004 a PIN employee fraudulently charged $2000 on customer credit cards and could not be identified because of the use of shared passwords.

In January of 2004, another PIN employee was caught changing the photos, dates of birth, names and addresses on current driver’s licenses. Bogus transactions were entered into the Licensing and Control System, and outside parties were mailed fraudulent licenses incorporating the altered data.

In February of 2004 two more cases of fraudulent licenses created at the same office came to the attention of ministry staff and charges have been laid.

The Ministry concluded after analysis that it was easy for staff to manipulate the current system to produce such false documents.

(Boy, wouldn’t our American cousins love to know that organized crime groups are providing themselves with false identification!)

47,000 high-risk stock items were reported missing and over 7,000 have been reported stolen.

70% of the missing stock was from 6 offices and 75% of the stolen stock was from another 3 offices.

The A notes that the missing stock could be used for fraudulent or illegal purposes.

The PIN offices are required to deposit funds to the province’s account when they have accumulated $15,000 in cash.

The Ministry matches bank deposits to business transactions recorded in the Licensing and Control System through an automated process. The Ministry resolves unmatched items by making bank inquiries, review of the LaCS or review of supporting documents or audits.

The A found 750 unmatched deposit items in the last 4 years totaling the amount of $2.7 million from offices that are no longer open. A also noted that “special handling” transactions that have a particular commission given to the PIN offices.

In 2003/04 the PIN offices collected $59.7 million in revenue and charged the Ministry $965,000 in commissions.

A tested 33% of the PIN offices. The A found the PIN had not charged the correct commission and in most of the cases, charged a higher commission than was earned.

The A also found that the Ontario Motor Vehicle Industry Council certificates and dealer authorization letters were not current.

If the PIN had current certificates it would prevent fraudulent transfers by individuals who misrepresent themselves as motor vehicle dealers and avoid the retail sales tax payments.

Section 3.06 of the Driver Licensing Audit, (besides having some great comparison charts and statistics with other provinces and countries) that the driver examination service provider was not complying with ministry security requirements when hiring staff that has access to confidential driver records.

The Ministry had no policies and procedures in place to deal with prospective and existing employees with criminal records.

The A noted instances where staff had criminal records yet no action was taken and 25% of the new-hire files the A reviewed, the required criminal check had not been done.