Last update - 00:00 23/07/2007
Nazareth welfare-to-work Wisconsin program probed for alleged fraud
By Meron Rapoport, Haaretz Correspondent
The company that operates the Wisconsin (welfare-to-work) program in Nazareth claimed payment from the government for placing dozens of people in jobs who, in fact, are not working at all.
The suspected fraud was first discovered by an internal company audit, and is now being investigated by the Industry Ministry and the National Insurance Institute.
The private firms that operate all the Wisconsin offices are paid in part according to how many people they place in jobs. As a result, the Agam Mehalev company, which runs the Nazareth office, decided to pay its workers bonuses based on how many people they successfully placed, according to Agam CEO Tirza Bar-Haim. This apparently created a temptation for workers to issue fraudulent reports: The manager responsible for the suspect placements received both awards and bonuses from the company.
And because employers who hire Wisconsin participants receive various payments from the state, such as travel allowances for the workers, they, too, can benefit financially from fictitious placements.
The suspected fraud involves 120 people who were placed with a particular manpower agency in the Nazareth area. That, noted Bar-Haim, is a small fraction of the over 2,000 people that Agam reported placing in jobs over the last two years. But in recent months, placements with that agency have accounted for about 80 percent of Agam's total placements.
The company said it first discovered the suspected fraud during a routine check to ensure the workers it placed were being paid minimum wage, as required. That check revealed that some of the workers had never worked for the agency at all; others worked there only part-time, while the company had reported them as working full-time.
Since then, Agam said, it has contacted about 70 of the 120 people involved, and 26 reported that they had never worked for this agency. But sources involved in the investigation predicted that the number of fictitious placements would ultimately prove to total at least 75.
Agam also said it immediately contacted the Industry Ministry about the suspected fraud, and that the employee responsible for placements at the suspect agency has been put on leave. But a source close to the investigation pointed out that the company's behavior nevertheless appears flawed: "The entire affair shows that Agam Mehalev's monitoring of placements was problematic," he said.
The Industry Ministry confirmed that an investigation is underway, but said that the sums involved were comparatively low.
Non-profit organizations have charged in the past that Wisconsin operators were inflating their job placement statistics, though no such charge had previously been proven. One organization, Saut al Amal, even filed a complaint about the Nazareth program with the State Comptroller's Office. However, the comptroller's office said, these accusations were not included in the comptroller's final report on the Wisconsin Program because Agam provided "sufficient proof" to justify excluding them.
The timing of the revelation is sensitive for Agam because it and the three other Wisconsin operators will soon have to sign new contracts with the state.