Lawsuit over massive Veterans Affairs accounting error to cost Ottawa almost $1 billion

An embarrassing multi-million-dollar accounting error that was covered up for years at Veterans Affairs Canada (VAC) will end up costing taxpayers almost $1 billion, now that a Federal Court judge has signed off on a combined class-action settlement.

More than 272,000 former soldiers, sailors and aircrew — most of them elderly — were short-changed on pension and disability payments for almost eight years, starting in 2002.

VAC staff made the mistake by not factoring provincial tax credits for individuals into their calculations. The department discovered the error in 2010.

The oversight was fixed but officials decided at the time not to notify the affected veterans and not to offer reimbursement for the missed payments.

The affected veterans — who include some former members of the RCMP — sued and have now been awarded an additional $817 million on top of $165 million in compensation earmarked by the federal government.

The Liberal government chose to settle the case rather than fight it out in court. A settlement agreement struck last fall was approved by Federal Court Justice Catherine Kane on Jan. 17, 2024.

The settlement comes into effect in mid-March.

Former veterans ombudsman Guy Parent originally uncovered the accounting error in 2018.

A CBC News investigation the following year showed how VAC covered up and downplayed the error to the former Conservative government, which was at the time engaged in a massive deficit-cutting exercise. According to internal records, no one was held accountable for the decision to keep silent and shortchange veterans.

The Liberal government's compensation program began making payments in 2019 and early 2020, but to date only 48 per cent of the funds have been dispersed, according to VAC.

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