Manitoba municipality loses half a million dollars in alleged e-transfer fraud

A municipality in western Manitoba has lost more than half a million dollars from its bank account in an alleged case of fraud involving multiple electronic transfers of funds.

Gilbert Plains municipality mailed a letter to its residents last week letting them know that RCMP are investigating the cumulative loss of $514,571.86 transferred from the municipality's bank account without council's authorization.

The Nov. 15 letter says an employee "has had their contract terminated for just cause."

"Truthfully we were shocked that it did happen and to that extent," Gilbert Plains reeve Jim Manchur told CBC News.

"That's kind of how it transpired in the last few months — that we just didn't believe it would happen. And it did."

Manchur said the unauthorized e-transfers from an account with Fusion Credit Union were discovered about a year ago and the municipality hired the accounting firm MNP to investigate. 

That investigation took months and concluded in November, he said.

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Manchur said he didn't want to speculate on exactly how the funds were withdrawn — and by whom — other than to say it involved non-authorized e-transfers.

He said the money was withdrawn through a number of transactions but didn't specify how many.

RCMP spokesperson Sgt. Paul Manaigre confirms the RCMP's financial crimes unit is investigating. He says the case involves over 30 suspicious transactions that occurred between April 2020 and June 2022, and that totalled more than $500,000.

Manaigre said Gilbert Plains municipality reported the loss to RCMP on Nov. 9 based on a single suspect who had access to the accounting software.

"Right now, there's no indication that their systems were breached by an external person or that a cyberattack was involved," Manaigre said. 

Municipality shares details

The municipality has filed an insurance claim for the money and is waiting for an answer on whether the loss will be covered.

The letter to residents signed by Manchur on behalf of Gilbert Plains council says, "While the financial loss due to alleged wire fraud is a substantial amount of money, the municipality is fortunate in having strong financial reserves. Council is cooperating with our insurance company to seek financial compensation."

Manchur said residents "were appreciative of the transparency of the letter," since there were likely rumours circulating in town.

"You have my 100 per cent assurance that myself and council are committed to safeguarding our municipality's finances," he wrote in the letter.

"It is of utmost importance to every one of us on council to uphold the integrity of our municipal funds and ensure that we continue to thrive as the community we all love and call home."

To put the loss of half a million dollars in perspective, the municipality's financial plan showed annual spending for last year forecast at about $4.4 million.

The letter to residents lists a number of changes that were made to financial controls:

• Eliminating the ability to issue e-transfers from municipal accounts without dual authorization.
• Approval by council on all financial reports.
• Increased controls to ensure bank statements are reconciled on a regular basis.
• Regular and up-to-date audits .

Gilbert Plains is not the only Manitoba municipality to suffer a major loss of funds from a bank account in recent years.

Westlake-Gladstone municipality had over $472,000 withdrawn from its bank account in a series of unauthorized withdrawals in December 2019 and January 2020.

RCMP did not lay charges in connection with the Westlake-Gladstone case, and the municipality is suing its credit union, insurance company and insurance broker over the loss.