The City of Edmonton is trying to recover in court $1.6 million from what the city auditor said was a fraudulent invoice scheme involving a pair of city employees, a private sign supplier and the city’s neighborhood renewal program.
Invoices were sent and cheques were cut over a four-year period between 2015 and 2019. Then, a tipster informed the city managers office and in March, police got involved.
“On September 18, 2019, the city manager’s office received an email alleging that a City employee had a side business in traffic sign rentals and had inappropriately directed work to this private company for personal gain,” the audit released Wednesday reads.
“On October 11, 2019, the allegation was forwarded to the office of the city auditor for investigation.”
LISTEN BELOW: Mary Persson with the City of Edmonton joins The Ryan Jespersen Show
The audit concludes that the money was lost, “through a false invoicing scheme that took advantage of control weakness in the City’s procurement and payment processes.”
The city was able to stop payment on another $200,000.
“The two employees that are identified in the audit investigation report are project management staff,” said Jason Meliefste, interim deputy city manager for infrastructure.
Both employees left the city: one in December 2019 and the other a month later in January of this year.
City council’s audit committee dealt with the report in-private on June 25. It was in a closed-door meeting of the committee, under the advise of city lawyers.
City auditor David Wiun told reporters when the report was made public that council dealt with this matter in-private because the city didn’t want to tip its hand, for fear the money would disappear.
“There is not evidence that work was received for the $1.6 million that is still outstanding and therefore we are trying to recover those funds,” chief financial officer Mary Persson said.
The city says it’s working with its insurance company to recover the money. The allegation the problem was spread over four years is a concern to Persson.
“This is also collusion, so it does involve numerous people which is more difficult to deal with over a long period of time. But we have improved controls around the analytics and we have improved controls around the project management and the approval of payments to address this in the future.”
Meliefste said a third set of eyes is needed when the bills are paid.
“Some one else needs to provide a review and oversight and also sign off on the process at the same time, so the idea of introducing another layer of review and approval is what we’re hoping will help reduce the risk,” Meliefste said.
A second secret audit was looked at by the committee in June and reviewed by city council at its final meeting before the break.
It, along with the administration’s response deals with the still-unfinished police campus in the northwest part of the city. It’s expected it’ll be made public in September.