Saskatoon city hall suffered $1M fraud due to procedural failure: report

Saskatoon lost more than $1 million to a fraudster due to failures in its own processes, according to a city administration report.

On Aug. 12, city officials realized a fraudster electronically impersonated the chief financial officer of Allan Construction. The impostor changed the company’s banking information and the city deposited $1.04 million in taxpayer money to the fraudulent bank account.

“The investigation determined that there was no malicious intent by any civic employee,” states the report written by city manager Jeff Jorgenson.

Allan Construction is the contractor for the rehabilitation of the Sid Buckwold Bridge.

“The fraud was due to systemic failure primarily related to a lack of appropriate procedures or guidelines for employees in this area of the Administration to follow,” Jorgenson wrote.

Since the discovery, the city has changed and added measures to its approach for electronic funds transfers. Areas include how vendors and employees change banking information.

In November, Jorgenson said an Ontario court judge ordered the return of the remaining $355,000 the city said was fraudulently obtained. The judge also awarded the city $25,000 in court costs, the city manager said.

The city’s net external legal costs are estimated at $75,000. An appeal hasn’t been filed, but Jorgenson said the cost could rise if there is an appeal.

The report goes before the city’s governance and priorities committee on Monday.

Saskatoon police continue to investigate, but no charges have been laid.

1:08 Saskatoon police continue investigation into city fraud case