Another criminal investigation into benefits fraud from Bulgaria

The Tax Investigation Service FIOD is conducting a criminal investigation into new signals of organized benefit fraud from Bulgaria. State Minister Okje de Vries (Benefits, VVD) wrote this in a letter to the House of Representatives.

De Vries wrote to the House that the Benefits Department, part of the Ministry of Finance, had recently received “several signals about the potential abuse of benefits in a regulated context.” People may incorrectly register in the personal records database as residents of the Netherlands and then incorrectly apply for benefits online using DigiD. This may also include address and identity fraud.

One of the signals relates to potentially unjustified requests with nearly 2,000 unique citizen service numbers, according to the letter addressed to Parliament. According to the government service Logius, the manager of the DigiD application, the permissions were implemented “using multiple DigiDs from certain IP addresses.”

In addition, the ministry has received indications that “middlemen” are being used to submit illicit applications for benefits, De Vries writes. On behalf of someone else, these people register in the Netherlands and apply for benefits, with the proceeds going to the client. According to the Secretary of State, another signal concerns “the sharing of step-by-step plans on social media on ways to incorrectly apply for benefits while not living in the Netherlands.” Two municipalities reported incorrect registrations in the basic registry and suspected fake rental contracts to the Ministry.

According to State Secretary spokesman De Vries, the suspected fraud occurred specifically when applying for childcare and housing allowance. The first fraud reference dates back to October 2022, and the most recent one dates back to January of this year. The applicants in question have now had their benefits discontinued, but have received advances.

The spokesman does not want to say how much the Benefits Administration made unexplained advances and how many suspects, because of the ongoing criminal investigation. FIOD will also not provide any further comments for this reason.

Censorship intensified

The new fraud case was uncovered as the Benefits Administration gingerly increases its oversight of benefits payments. The so-called “intensive supervision” was discontinued in 2020 after the benefits scandal, in which benefits were wrongly withheld and taken back from citizens due to suspicions of fraud. This has caused tens of thousands of families to experience major financial problems. The recovery process will cost the treasury more than 8 billion euros.

The Ministry believes that the resumption of intensive surveillance must be carried out with the greatest possible guarantees. Subsequent recovery of allowances should be avoided as much as possible. The benefits department began recording fraud signals again at the end of last year and conducting so-called “legal investigations.”

De Vries wrote last January that the service did not want to start structurally passing signals of potential fraud to FIOD or prosecutors until the end of 2024 at the earliest. Meanwhile, the benefits service can pass “clear signals of fraud” to investigative services. This was the case during the current FIOD investigation, its spokesperson confirms.

A previous fraud case involving people who incorrectly applied for benefits from Bulgaria led to major political unrest in 2013. The long-standing call for a tough approach to tackling benefit fraud has been further heightened by this case. The then State Secretary Frans Wickers (Finance, VVD) resigned in early 2014 after proving, according to the House of Representatives, his inability to properly address this fraud.

Even now, more than a decade after the Bulgarian scams came to light, it seems difficult to prevent benefits fraud. This is due to the system whereby allowances are paid as an advance immediately after submitting the application, without checking whether they are legal. Once this check is done, the fraudsters will have already gotten away with the stolen items. In addition, because of the benefits scandal, civil servants are extremely reluctant to address fraud, because they fear making mistakes and being held accountable for it.

According to the Benefits Administration, “preventative enforcement” is now only possible “to a limited extent.” “This is inherent in the pre-payment system of the current benefits system, where benefits are paid a month in advance and are only later tested to ensure their legality,” De Vries wrote in the letter to Parliament.

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Hard report on fraud and benefits policy: 'It could happen again tomorrow'

Earlier this year, researchers participating in the parliamentary inquiry into fraud policy concluded that politicians and the media at the time paid too much attention to the issue related to Bulgarians, and not enough attention to the problem of the “prepayment system for benefits.” The case involved 1,500 incorrectly paid benefits, with a total value of 5.6 million euros. The main suspect was sentenced to four years in prison in 2015.

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