A local council has revealed it was the victim of an alleged $1.9 million fraud, linked to international criminal gangs under investigation by the Australian Federal Police and Interpol.
Noosa Council CEO Larry Sengstock said on Monday night that the organisation was targeted during the 2024 Christmas period.
“I want to emphasise that this fraud was not related to cyber security,” he said.
“Council systems were not breached or affected, no data was stolen and there was no impact to the public or our services. This has been confirmed by external forensic IT experts engaged by council to ensure ratepayers were protected.
“Once being alerted to this fraud, we established our incident crisis response team and immediately reviewed our operating procedures to ensure that processes were improved and any risk of future fraud was minimised.”
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Mr Sengstock said the council was unable to bring the incident to public attention until now.
“When police initially alerted us to the fraud, they directed us not to publicly disclose any information so as not to compromise their ongoing investigation,” he said.
“While we couldn’t go public, council did report the incident to Queensland Audit Office and relevant ministers.”
He said the some funds were recovered but the total value of the loss was $1.9 million.
“This fraud was perpetrated by international criminals who were, unbeknown to council, already under investigation. We have been advised that these investigations are ongoing,” Mr Sengstock said.
“The criminals used social engineering AI techniques and we will not go into specifics to avoid revealing the tactics of the criminals and because of our legal obligation to protect council staff.
“However, we can reveal that the fraudulent activity was sophisticated, strategic and targeted. We can also confirm that no Council staff were at fault or involved in the criminal activities.
“Despite having process and procedures to mitigate this type of event, unfortunately in this instance they were not effective enough, as this crime was committed by highly-organised, professional criminals who found a way through our processes.”
Mr Sengstock said the Queensland Audit Office had since recommended several measures to further improve the council’s processes, and the recommendations have been implemented.
“We are also in the process of installing additional third-party software to add another level of control,” he said.
Mr Sengstock urged other local government bodies to be on guard.
“Council takes its financial responsibility very seriously and on behalf of management I am sorry that this has happened,” he said.
“This incident also serves as a warning to other councils and local businesses to be on their guard and to continually review processes around all financial procedures.
“Unfortunately, as we are seeing every day in the media, scams and frauds are on the rise, and many companies and organisations are being targeted.
“While we are very disappointed this has happened and are doing all in our power to ensure we minimise the risk as much as possible, so this doesn’t happen again, we are thankful that in this instance no one in our community was directly affected and there was no impact on Council’s operational functions or projects.”
The Queensland Police Service, which is the lead agency investigating the matter, has been contacted for comment.
