Boreal

Shooting the Messenger

The Impossible Report and the Missing Millions

The five years I was with the Department of Foreign Affairs witnessed the rapid computerization of the administrative and financial functions, not only at Foreign Affairs headquarters in Ottawa, but at Canada’s diplomatic missions abroad i.e. embassies, high commissions and consulates. As part of this computerization effort, I programmed a DEC-20 mainframe computer from the defunct Digital Equipment Corporation of Maynard Massachusetts to perform the millions of calculations and process the hundreds of thousands of transactions to determine the gains and losses on foreign currency transactions worldwide.

Until I did this, Canada’s hundred or so diplomatic missions did these time-consuming calculations on site and reported any gains or losses to Ottawa. Gains on foreign currency transactions were used to compensate missions that reported a loss.

The idea for what became known as the Currency Fluctuation Reporting System (CFRS) was mine and was not part of the official plans therefore senior management and missions abroad were not aware of the implications of having the computer in Ottawa calculate gains and losses on foreign currency transactions.

Missions continued to manually calculate and report their gains and losses to Ottawa during the year or so it took me to complete the design, implementation and programming of the CFRS. Upon completion I had a years worth of transactions; hundreds of thousand of transactions; each transaction representing the purchase of a good or service by a Canadian mission for which it paid in a currency other than the Canadian dollar.

Following is a one page summary of currency gains and losses on expenditures experienced by Canadian missions around the world in the fiscal year ending March 31, 1983. In the column labelled Year-To-Date Gain/Loss the report shows that the Department of Foreign Affairs has made more than 14 million dollars on foreign currency transactions. For the same period, missions abroad reported gains of approximately half that amount, and that is how the multi-million dollar fraud was discovered; a fraud that had been going on for a number of years.