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Ontario to blame if $11M in COVID relief aid embezzled, fired bureaucrat alleges

March 14, 2021 – A former senior civil servant alleged to have embezzled at least $11 million in COVID-19 relief money is now arguing the Ontario government is to blame for any losses it suffered.

In a statement of defence filed in Superior Court this week, Sanjay Madan blames the province for allegedly lax security measures that allowed “widespread misappropriation” of money intended to defray the cost of children learning at home.

“The plaintiff knew, or ought to have known, that unscrupulous individuals, including potentially its own employees, might try to exploit weaknesses in its security measures to take money,” Madan alleges.

“Having anticipated such threats, (the government) ought to have taken steps to prevent them, or reduce any losses arising from them.”

The province, in an unproven civil action, is suing Madan, his wife and two sons for $11 million related to the COVID support program. It also alleges he made millions more in a kickback scheme related to contractor hiring that began years ago.

According to the lawsuit, Madan, who also goes by Sadanand Madan, and his family allegedly opened thousands of bank accounts between April and May last year. They then allegedly deposited thousands of cheques made out to fictitious applicants under the support program.

In his untested filing, Madan argues the province failed to take steps to mitigate any losses.

Among other things, he alleges the government hired “incompetent or marginal employees” to run the Support for Families program and failed to put safeguards in place to prevent unauthorized transactions or detect unusual transactions.

The omissions, he argues, include ensuring names on a bank account matched the person requesting the payments, and limiting the number of payments to one account.

“Such misappropriation occurred not because of anything the defendant Sanjay Madan did or didn’t do, but because of the plaintiff’s own negligence,” he argues.

Madan, who had a senior IT role and helped develop a computer application related to the COVID benefit, was fired in November. His wife and sons all worked for the province also in information technology.

Madan’s relatives have said in sworn affidavits they knew nothing of his purported wrongdoing.

In his new filing, Madan contends his family had no part in any alleged scheme to steal any relief money.

“The defendants Ujjawal Madan, Shalini Madan and Chinmaya Madan did not participate with the defendant Sanjay Madan in any of his activities in issue,” he says. “They are entirely innocent.”

He also maintains any money he did take has been repaid. While the courts have frozen Madan’s extensive assets, the money has not in fact been repaid, a government lawyer has said.

The province also alleges Madan received $10 million in secret commissions for steering government consulting contracts to certain companies he or an associate controlled.

Madan, owner of several named defendant companies, denies those allegations, arguing he followed normal procurement rules and his work actually saved the province money.

“The plaintiff not only suffered no loss arising from the alleged ‘kickback scheme’ but in fact saved money by selecting the highest score bidder in an open bidding contest,” he says.

In any event, the alleged kickback scheme cannot now give rise to a claim because it operated more than two years ago, he says.

Shalini Madan is suing the province for wrongful dismissal, while her sons, who resigned from their jobs, are also suing the government over being named as defendants in the suit against their father.

No criminal charges have been laid in the case.

This report by The Canadian Press was first published March 12, 2021.