ACT government warned about 'financial fraud' in ChooseCBR

Documents released under freedom of information show the government knew about technical risks of the scheme's ICT system, including potential financial fraud, more than six months before the voucher program triggered a three-day spending spree.

The risk of financial fraud even increased when the decision was made to double the voucher amounts during last month's rollout.

The territory government's discount voucher scheme has been mired in controversy due to a series of technical issues and allegations of voucher misuse.

ACT Business Minister Tara Cheyne has already admitted there was a pattern of questionable transactions totalling more than $5000 across three businesses during a trial of the program last year.

Questions have also been raised about people signing up to the scheme multiple times and people using the vouchers to buy gift cards.

Some grocery stores, which were the biggest beneficiaries of the scheme, allowed customers to redeem vouchers for discounted gift cards.

However, an ACT government spokeswoman said this was allowed as it was in line with the program's goal of "stimulating spending at local businesses".

The scheme was rolled out in June, with the government providing $2 million of subsidised vouchers for people to spend at participating Canberra businesses.

The $2 million was spent in three days, with more than $1.6 million claimed in just one day.

It followed a three-week December trial of the scheme where $500,000 was allocated, but only $310,000 was claimed in the trial.

The government spokeswoman said a spot checking process was incorporated into the program to minimise the risk of fraud.

The spokeswoman did not say whether any questionable or fraudulent transactions had been uncovered during the June rollout, but she said the audit process into the scheme was ongoing.

So far, more than 25 businesses have been asked to provide evidence of transactions where vouchers were redeemed. The spokeswoman said "almost all" businesses had provided this and the government would follow up with those who didn't.

There were questionable transactions in the trial of the scheme with three businesses banned from taking part in the June rollout.

A government-commissioned review into risks done by consulting firm PwC Australia last year determined there was a medium risk factor that people could create fake accounts in order to get ChooseCBR vouchers.

It recommended if the scheme were to be rolled out longer term that an "identity validation" process, linked to other ACT government services be implemented.

PwC conducted the review before the December trial of the program. In the three-week trial, the maximum discount was 25 per cent, and the highest dollar voucher was $20.

Given the lower discount, PwC determined that people would unlikely create multiple accounts as it would be too much effort.

"Realistically, to gain a 25 per cent discount with a 75 per cent spend combined with the number of citizens that have multiple phone numbers, the risk has been assessed as a low rating, as the return is low for the outlay and/or effort," the review said.

However, in the June rollout the maximum discount increased to 50 per cent and the highest dollar voucher was $50.

This coupled with the fact that JobKeeper was removed as a requirement for participating businesses, increased the risk of fraud.

"For the full rollout there is the potential for greater financial gain which increases the overall risk of the occurrence of potential fraud or questionable transactions," an internal government document from May said.

"Without the checks with the ATO (linked to the JobKeeper criteria during the trial), there are limited mechanisms to fully monitor transactions and to provide a high level of assurances around the information provided by businesses.

"To overcome this, different checks will be required to support business registration."

The government spokeswoman said the additional checks included asking business owners to provide bank statements or proof their nominated bank account was linked to their business, evidence they operated in the ACT and their ABN.

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The ACT's opposition sought the freedom of information documents, with business spokeswoman Leanne Castley saying the warnings of potential financial fraud should have been a red flag.

"[This] proves the government wasted millions of dollars of Canberrans' money with a rushed scheme and inadequate testing that less than 20 per cent of eligible businesses participated in," Ms Castley said.

"The documents reveal the government was warned there was a greater risk of fraud but 'limited mechanisms' to properly monitor transactions which should have raised flags in the minister's office."

Documents also revealed the territory government had estimated that the program would run until September.

"Given the larger voucher amounts, and with more businesses able to participate, we hope to see the money spent steadily over the next few months," a document said.

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