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Auditors find 21 unreported wins by BC lottery retailers but no fraud

Nov 12, 2007, 10:17 am

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British Columbia Lottery

Auditors studying the integrity of B.C.'s public lottery system found 21 previously unreported lottery wins of $10,000 or more by retailers who sell tickets to the public, says an independent report released Thursday.

B.C. Solicitor General John Les, who ordered an independent probe of the lottery system last May, said the discovery did not point to fraud within the Crown-owned lottery corporation that raked in $2.4 billion in revenues in the 2007 fiscal year.

"'There's not evidence per se that anything untoward happened in those cases," he said.

A B.C. ombudsman's report last May found the public was in danger of being ripped off by retailers who sold lottery tickets and their employees.

That report found an identifiable lack of scrutiny when it comes to prize payouts for 99 per cent of winning tickets and 80 per cent of prize money paid out for wins under $10,000. It said the lottery corporation kept few checks on the retailers and made 27 recommendations.

Provinces across the country have been working to tighten policies and procedures to remove the chance that retailers enjoy an advantage over the public when it comes to winning.

A similar review in Ontario found corruption at some retail lottery outlets.

Ontario's ombudsman concluded last March the province's lottery corporation was "fixated on profit rather than public service." The Ontario ombudsman's report prompted the corporation's chief executive officer to resign.

In Halifax last spring, police announced they would examine millions of dollars worth of questionable winnings by lottery retailers after an independent investigation revealed gaping holes in how the Atlantic Lottery Corp. protects its customers from dishonest sellers.

The independent Deloitte and Touche report found the B.C. lottery corporation is working to tighten the system, but more needs to be done. It made more than 40 recommendations.

"'Our forensic and analytical tests identified several deficiencies and resulted in the identification of 21 additional retailer wins of $10,000 and greater that were not identified manually by the B.C. Lottery Corp. through the freedom of information request and not reported by the ombudsman," said the report.

"During our review of the prize payout files for these additional retailer winners, nothing came to our attention to indicate that the rightful owner of the ticket was not paid the prize."

The report recommended the lottery corporation continue with its plans to implement a system-wide fraud detection system designed to address the limitations of its current system and monitor suspicious activity.

"The recommendations around those kinds of things are all going to be implemented," said Les. "There's just no question about that. I mean we didn't commission these reviews to now ignore them. All of those systems will be upgraded."

The report said fraud can never be totally eliminated from public gambling organizations, but the lottery corporation can do more to cut the risk of fraud. The corporation's efforts to eliminate fraud are still a work in progress, the report added.

"We're determined that this system is going to work well and it's going to be the fairest in the country," said Les.

The report also recommended the government review potential areas of conflict of interest by ensuring the gaming investigation branch and lottery corporation no longer report to the same minister, who is Les.

Les said the report identifies pros and cons to the situation, and he would not guarantee making the change.

The Opposition New Democrats have consistently called for the separation of the gaming investigators from the bean counters.

"How could the same minister try to deal with all of that and make an objective decision," said NDP gaming critic Harry Lali. "The Liberals have put this one (recommendation) on the back burner.

The government needs to separate the minister from the two branches of the lottery corporation to protect the interests of British Columbians, he said.

The report also called for whistleblower provisions to foster a culture of honesty, integrity and openness.

Ontario has implemented background checks and a new code of conduct for lottery retailers.

The Western Canada Lottery Corp. in the Prairies requires winning lottery tickets to be signed before they can be validated and redeemed.

British Columbia no longer allows lottery retailers and their employees to buy tickets and validate them at their workplaces.

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