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Anatomy of a blunder: How Veterans Affairs quietly buried a $165M accounting error

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It was an incredibly simple (and incredibly daft) mistake — and it led to a $165 million federal fiscal faux-pas.

In 2001, the Liberal government of Prime Minister Jean Chrétien made what appeared to be an innocuous change to federal tax forms.

It separated federal and provincial tax exemptions, shuffling the basic personal tax credit from one part of the document to another.

Staff at Veterans Affairs, who administer disability awards and pensions, did not pick up on the modification to the tax law for several years and ended up short-changing former soldiers — most of them elderly — who received disability pensions and awards benefits.

It was a mistake that cascaded, over time, into a whopping, multi-million dollar fiscal mess that Justin Trudeau’s Liberal government began to mop up last fall.

CBC News has obtained hundreds pages of documents under access to information legislation, and has conducted a series of background interviews with current and former federal officials, to understand the extraordinary blunder that shortchanged up to 272,000 disabled veterans of roughly $165 million.

The documents show how officials traced the confusion back to the change in the forms and in the Income Tax Act.

More troubling is the fact that the error was discovered and quietly fixed by Veterans Affairs in 2010 — but no effort was made to notify or reimburse those affected by it.

For critics, the records obtained by CBC News raise important questions about fiscal accountability at Veterans Affairs. What actions did bureaucrats take when the error was first discovered? Why it was kept hidden until the former veterans ombudsman blew the whistle internally in 2017?

A significant number of the affected veterans — 170,000 — have since passed away. While the Liberal government has pledged to repay their estates, the documents reveal that Veterans Affairs does not keep track of next-of-kin and has no means of finding them.

No one was held accountable for covering up the mistake and the Liberal government has shown no interest in conducting a follow-up investigation to get to the bottom of the matter.

Jean-Pierre Blackburn shakes hands with veteran Bruce Bullock, 87, in Ottawa on Saturday, May 8, 2010. Blackburn was Veterans Affairs minister when the department corrected an accounting error that cost veterans roughly $165 million – without attempting to compensate those affected. (Pawel Dwulit/The Canadian Press)

A spokesman for Veterans Affairs Minister Seamus O’Regan ducked questions about who made the decision to cover up the error, and why.

“While I cannot speak about the decision-making processes of the previous government, it would be hard to believe a decision regarding the financial benefits of Canada’s Veterans would have been made without the Minister’s awareness,” said Alex Wellstead, a spokesman O’Regan.

“What I do know is that when this was brought to our government’s attention, we fixed it.”

The minister at the time was Conservative Jean-Pierre Blackburn.

He was unavailable when contacted CBC News.

A ‘fundamental breakdown’

Another former Conservative veterans minister, Erin O’Toole, said he believes there should be an investigation and described the decision to bury the mistake as an ethical lapse.

“This appears to be a fundamental breakdown of proper practices in a major department of the government,” he said.

“I believe we would support the government on some sort of investigation into this to see if there’s a cultural issue here. If someone elevated it to the political level on our watch and we didn’t fix it, that is a mistake.”

The briefings, slide deck presentations, letters, evaluations and actuarial projections offer a sketch of how the embarrassment unfolded and proceeded unchecked at the department level for the better part of eight years.

Starting in 2002, Veterans Affairs did not take into account the impact of the basic provincial tax credit on veterans.

The flawed method used to calculate disability pensions and awards “was never really questioned until about 2011,” says an undated federal government analysis.

The department insisted recently in a statement to CBC News that it “consistently applied the formulas correctly” and blamed the tax changes themselves for the error.

According to the documents obtained by CBC News, Veterans officials at the time appeared to be operating on the assumption that they had the law on their side because the legislation was “silent” on the precise method of conducting the calculations.

The “Pension Act does not specify the calculation for the annual adjustment,” said a December 2019 slide deck presentation.

Downplaying the error

The law may not be precise, but the documents show — under the heading of “new information” — that the regulations supporting the legislation do spell out the proper method for calculating the adjustment.

Internally, it seems, officials were trying to gloss over the mistake by downplaying its significance and making it appear — in one of the more recent briefings — as a proactive, positive measure:

“In 2011, [Veterans Affairs Canada] implemented a prospective change to the calculation of Disability Pensions and Disability Awards which was to the benefit of the veteran.”

A number of troubling questions need to be put to current and former Veterans Affairs officials now, said O’Toole.

“Did the age — and in some cases, the relatively small amounts — lead someone to make the wrong decision from an ethical standpoint? That is what we should investigate,” he said.

“That is perhaps one of the most troubling connections we might draw from this. I sincerely hope that was not the determination made by someone.”

In the documents, Veterans Affairs defended its financial practices and said it “employs a rigorous process whereby all escalation calculations are completed by the Statistics Directorate and validated by the Attestation Unit. [The] review and sign off is completed by various directors up to and including the director general of finance.”

It’s not clear whether anyone in those positions was held accountable when the error was discovered.

A history of program gaffes

Retired lieutenant-general Walter Semianiw, a former senior official at Veterans Affairs, said he’s not surprised that the blunder happened in the first place. He also questioned the meticulous fiscal image the department has tried to present in the documents.

During his three years there, Semianiw said, department officials were called on the carpet regularly by the federal Treasury Board for being unable to accurately cost programs.

“Every time we developed a new policy based upon direction from government, gave it to corporate services to figure out the dollars, had it ready in a Treasury Board submission … to be fair, not all of them, but enough of them came back from Treasury Board, saying, ‘You’re numbers are wrong,'” he said.

“When I was there, this seemed to be a challenge for the department’s corporate services area to be able to determine the correct financial make-up for any type of new program.”

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Canadian Tech Calling: Moon and Mars and Mobile Phones

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Canadian technological know-how is helping develop reliable mobile communications for next-generation space missions, including manned missions to the Moon, Mars and beyond.

With many eyes here on Earth now focused on Mars, following the successful journey of ‘Percy’, the roving space exploration vehicle more formally known as Perseverance that is now cruising the Martian landscape, the continued role of Canadian researchers and technologists in space exploration has also drawn more attention.

A team of researchers at Simon Fraser University is working to make LTE/4G and Wi-Fi communications systems on the Moon a reality, along with others in the U.S. and Canada, under the umbrella of the Artemis Program at NASA.

That project will see the return of human beings to the Moon by 2024, and then to the surface of Mars after that.

As part of those efforts, NASA selected Nokia Bell Labs to build a test network and communications infrastructure to build interoperability standards among future cellular and Wi-Fi networks, so that all types of devices can be connected and support Artemis.

The network must provide critical communication capabilities for many different data transmission applications, including command and control functions; real-time navigation and remote control of surface rovers; as well as the streaming of high definition video, applications that are all vital to long-term human presence on a lunar or planetary surface.

“It sounds like far-out stuff, building networks on the Moon, Mars and even further out in our solar system,” says Stephen Braham, the director of the PolyLAB for Advanced Collaborative Networking at SFU. “But we’re actually testing Nokia’s technology right now.”

SFU’s PolyLAB for Advanced Collaborative Networking is doing some of that work at its Exploration Wireless Communications testbed at Vancouver’s Harbour Centre, in collaboration with the Canadian Space Agency (CSA).

“(This is) what will allow us to build the ladder of technology standards needed to get cellular networks off Earth and into the solar system,” Braham said in a statement.

NASA and the CSA handed that critical testing to Braham and the scientists at PolyLAB, the Canadian component of what’s called the Exploration Wireless Communications (ExWC).

“Before space agencies can adopt these technologies, we need to prove we can operate between multiple vendors and different agencies, which is why NASA and CSA supports the ExWC testbed,” he continued.

The ExWC testbed launched back in 2018, testing high-speed wireless communications systems for space use, including 5G-forward LTE solutions and advanced Wi-Fi.

The SFU radio transmission systems, in the lab and on masts in the mountains in B.C. and the Yukon, are tested with various vendors and leading telecom providers, such including Vancouver-based Star Solutions and Sierra Wireless, another local company, as well as international telecommunications firms like Nokia.

Braham and associate professor Peter Anderson, who directs the SFU Telematics Research Laboratory that includes PolyLAB, both have extensive track records working on communication systems for NASA and the Canadian Space Agency (CSA).

It includes extensive research on very early cellular and Wi-Fi networks in the Canadian High Arctic, where advanced field communications systems were set up to support the SETI Institute and Mars Institute-lead NASA Haughton-Mars Project (HMP) up on Devon Island. 

That’s where Braham and his team tested the technology (developed in Canada) that became a big part of modern Wi-Fi, LTE, and now 5G technology, in order to meet up-front needs on human lunar missions if not all manned space flights.

From those early beginnings, the SFU team has now worked with other collaborators for the ongoing design and development of Canada’s prototype lunar/Mars surface communication networking systems, specifically the ExoMars rover, including Canadian space technology company MDA and the Canadian Communications Research Centre.

Braham is also an Associate Member on the Consultative Committee for Space Data Systems (CCSDS), supporting CSA during discussions and development of international standards for computing, networking, and communications in space. He also worked for many years as a member of the CSA’s nine-member Space Exploration Advisory Committee (SEAC), providing community leadership and representation in aspects of human space exploration in Canada.

But, when space agency officials announced recently that a Canadian will be aboard when NASA returns to the Moon in 2023, well, Braham was not named as that astronaut.

Nevertheless, with his and his team’s help, that astronaut will make Canada the second country in history to have someone travel into deep space and fly around the Moon.

And maybe use a mobile phone to call us and tell us all about it.

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Canadian Consumer Coalition Calls for Affordable Internet on National Day of Action

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Tomorrow, Tuesday, March 16, a national day of action will be staged by Canadian consumer advocates, social justice groups, telecom policy experts, digital activists, and independent ISPs, or Internet Service Providers.

In a series of scheduled virtual events, there will be calls for the federal government and telecom regulators to take action and ensure affordable Internet and wireless services are available to all Canadians.

The free online event is open to the public, and planners and scheduled participants in the Day of Action for Affordable Internet hope consumers themselves will them in urging a range of actions be taken by the federal government, the CRTC and the country’s Competition Bureau.

Advocating for a more affordable Internet will be: ACORN Canada; Brookfield Institute for Innovation + Entrepreneurship; activist and author Cory Doctorow; Canada Research Chair in Internet and E-Commerce Law Michael Geist; The Internet Society Canada Chapter; OpenMedia; Public Interest Advocacy Centre; Ryerson Leadership Lab; Samuelson-Glushko Canadian Internet Policy and Public Interest Clinic; and TekSavvy Solutions.

And while a lack of competition has long been cited as a reason for high prices in Canada, the fact that a majority of subscribers stick with the ‘Big Three’ is also a stumbling block to leveling the playing field, at  least price-wise.

Canada’s Competitive Network Operators, a trade organization made up of Internet and telecommunications service providers that own/operate telecommunications networks across the country, is also fighting for a fair Internet pricing and accessibility structure.

Pandemic Pressures

Affordable Internet activists point out that, throughout the current COVID-19 crisis, reliable and affordable connectivity became even more essential. So did many things, in fact: many we had never deemed as so important, relevant or even as noteworthy as high speed Internet.

“The affordability and accessibility of the [I]nternet has never been more critical,” says Franca Palazzo, one of the event participants and the executive director of the Internet Society, Canada Chapter. “More than ever, we are being asked to work, learn and connect online.”

While it is true that many of our fellow Canadians are struggling to make ends meet during this pandemic, and they struggle, the coalition says, to pay some of the highest telecom bills in the world (while others can’t even get high-quality reliable connections), it is also true that many of us are using our high-speed connections more than ever with no increase in cost or decrease in service as a result of our pandemic-related stay-at-home, work-at-home or school-at-home activities.

The big three providers in Canada – Bell, Rogers and Telus – are among those companies that lifted data caps on cable and fibre-based residential Internet services; it’s a corporate goodwill gesture made as a result of pandemic and public pressures. The caps have been lifted until the end of June, where and when possible. (The Liberal government has directed the country’s largest telecom providers to cut specific cellphone prices in general.)

Not everyone is eligible for the pandemic discounts, however: some folks still using cellular (where, for example, high speed networking is not available) for their Internet connections are unable to get discounts because, the telecoms say, bandwidth and capacity would be threatened if caps were removed from cellular service.

“The digital divide in Canada is sometimes portrayed as exclusively a rural-urban divide,” says Sam Andrey, the director of policy and research at Ryerson Leadership Lab, where research and analysis into Internet usage is conducted. “But even in Canada’s largest cities, there are persistent gaps in access to digital services, devices and affordable [I]nternet at sufficient speeds that map onto other socioeconomic inequities, including income, age, race and ability,” he adds.

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Brim Financial Raises $25M Series B to transform the way people bank and shop

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TORONTO, March 16, 2021 /PRNewswire/ – Brim Financial (Brim), a Canadian next-generation Fintech company and certified credit card issuer, today announced the close of a $25M Series B, co-led by Desjardins Group and US-based EPIC Ventures with strong participation from Canadian and US based investors including goeasy Ltd., White Owl and Impression Ventures.

Brim’s state-of-the-art technology stack and credit cards infrastructure leverages the company’s ability to directly access the payment rails as an issuer, enabling Brim to deliver a fundamentally transformative ecosystem of financial products for consumers and businesses.

The Series B financing will bolster Brim’s Platform as a Service (PaaS). Brim’s B2B2C strategy enables any bank, credit union, fintech or large commercial partner to seamlessly roll out Brim’s financial products platform, credit cards and integrated buy-now pay-later solutions, mobile and digital banking, and behavior-driven customer engagement, all embedded with a best-in-class globally open loyalty and rewards ecosystem available in real-time at all merchants worldwide. With Brim’s Platform as a Service, partners have the ability to customize every element of the platform and leverage Brim’s end-to-end services, on a modular and turnkey basis.

Our technology stack powers banking, loyalty and integrated e-commerce on a single platform, with the customer experience at the center of it all” said Rasha Katabi, CEO and Founder of Brim Financial. “Today’s digital environment has brought a new sense of urgency for institutions to assess how they will interact with their customers. We are well positioned to be at the forefront of this transformation that’s shaping the way we live, connect and engage for decades to come, and we’re excited to be working with investors who share the same vision.”

Brim has expanded beyond the direct-to-consumer space enabling large partners to leverage their digital first platform, suite of credit cards and financial products, and a globally open rewards and e-commerce ecosystem. Brim seamlessly integrates buy-now pay-later capabilities in all of its revolving consumer and business credit card products, providing ultimate flexibility for customers with a uniquely and strongly differentiated ecosystem.

“We’re thrilled to be part of Brim’s next chapter. There is tremendous potential in the industry, both in Canada and in the US, and Brim is uniquely positioned to deliver a significant and much needed transformation.” said Ryan Hemingway, Managing Director at EPIC Ventures. “Brim is combining banking and commerce like we haven’t seen in North America.”

Merged with its scalable technology platform, Brim has the largest open loyalty and rewards ecosystem as Brim’s technology stack directly leverages the global payment network. Brim’s Loyalty and Rewards are live at all points of sale globally, both in physical stores and online.  Any merchant can be live and part of the ecosystem in less than 3 minutes.

“Brim’s platform delivers industry-leading payments technology to their customers at an astonishing pace,” Martin Brunelle, Vice-President, Growth, Acquisitions and Development at Desjardins Group.  “Desjardins has earmarked $100 M to invest in technology companies and investment funds who can support our different business units in their digital transformation needs.  We’re very excited to be partnering with Brim.”

With its platform built entirely from the ground up and directly on the global payment network, Brim is positioned to transform the future of the credit card industry and digital banking products with the world’s largest open loyalty and rewards ecosystem. Brim has notably on-boarded hundreds of merchants to its rewards ecosystem since its launch, and rapid expansion will continue to be a key focus for the company going forward.

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