Province calls for investigation by auditor general into actions of 'various' Manitoba municipalities

An unknown number of municipalities in Manitoba are on the hot seat after the provincial government called for an investigation from the auditor general.

The order in council — or cabinet decree — reveals "various" municipalities could face scrutiny but it only names one: Westlake-Gladstone, which recently urged residents to refrain from making slanderous accusations about its chief administrative officer after nearly $450,000 was stolen in "cyber fraud."

The government document, published online Thursday, states the municipal relations department heard concerns from citizens in those municipalities with "respect to council governance, financial management, oversight and public accountability."

The department determined a special audit of the municipalities is appropriate.

Manitoba's auditor general, Tyson Shtykalo, is not required to follow the request if the independent office believes it would interfere with its primary responsibilities. The office has not immediately responded to a request for comment.

The province's request to audit multiple municipalities at once appears to be uncommon. Between 2008 and 2018, five municipalities were investigated, but multiple audits were not commenced at the same time.

The president of the Association of Manitoba Municipalities said it wouldn't be appropriate to prejudge the investigation.

"lt's really hard for me to comment when I don't know the scope and exactly what the concerns are that are being brought forward," said Kam Blight, who is also the reeve of the Rural Municipality of Portage la Prairie.

He said there could be "an investigation that takes place by the auditor general and once we get the results of that investigation, we'll review the report and then we'll try and implement best practices."

The province cancelled a scheduled CBC interview with the municipal relations minister Thursday in adherence to government protocols for a mourning period following the death of a monarch. 

If the audits go ahead, the scope may include whether all financial and administrative provisions were followed and whether the form and content of financial information documents are adequate and suitable, the order in council says.

The Municipality of Westlake-Gladstone is the only municipality singled out in the audit request. Leadership did not respond to CBC News questions over the course of two days.

Questions over theft of $450,000

Earlier this summer, the municipality tried to allay resident concerns over the conduct of its chief administrative officer following a "cyber security breach" between late 2019 and early 2020 took nearly $450,000 from its coffers.

Lawyers representing Westlake-Gladstone in its pair of lawsuits over the loss of funds urged residents in a July news release to avoid making "slanderous or libel allegations" about or toward the CAO.

"We can advise the residents and ratepayers of Westlake-Gladstone that there is no evidence the chief administrative officer took or misappropriated the funds or was involved in any manner whatsoever with respect to the taking of the funds," states the release attributed to DD West LLP, the legal firm with a Winnipeg office.

"Cyber crime is rampant and unfortunately, the municipality and Stride Credit Union have been victims of it."

The order in council does not specify if CAO complaints have any bearing on the province's audit request.

The municipality began legal action after it failed to get its money back. It is pursuing litigation against Stride relating to its computer system and the loss of funds, as well as Western Financial Group and Travelers Indemnity Company relating to their insurance policies and denial of claims under those policies regarding cyber insurance, the lawyers' news release says.