City blames ‘lack of appropriate procedures’ in $1-million online fraud

The City of Saskatoon is blaming its own internal systems for how a fraudster managed to get their hands on more than $1 million this summer.

The findings of an internal investigation into the online fraud scheme were released Wednesday. The report found no one employee was at fault for the loss of $1.04 million that went missing from city coffers in August.

“There was no malicious intent by any civic employee. However, the team did determine that the fraud was due to systemic failure primarily related to a lack of appropriate procedures or guidelines for employees,” city manager Jeff Jorgenson wrote in his report.

The city said the fraud occurred when someone electronically impersonated the chief financial officer of a construction company and asked for a change in banking information. The requested change was made and money subsequently was sent to the fraudster’s bank account.

Since the incident, the city has taken steps to prevent similar events from occurring again.

“The city has made numerous changes and additions to the procedures, processes and controls surrounding electronic fund transfer payments, including how a vendor or employee changes their banking information,” said the report.

All of the city money was recovered in November, plus an additional $25,000 was awarded by a judge in Ontario to partially cover the city’s legal costs.

The city estimates the bill associated with recovering the money will come in around $75,000, providing it is successful in collecting the awarded court costs.

The parties have until Dec. 23 to appeal the decision of the court.