The former employee suspected of defrauding the city of more than $1 million had access to cash from a number of city services and programs, says  the city's head of finance.

Hamilton police are investigating a finance and corporate services employee dismissed earlier this week who is suspected of stealing $1,058,235.20 since 2005.

The money likely didn't come from any particular service, Mike Zegarac, acting head of finance, told CBC Hamilton.

"I suspect it was whenever the opportunity arose, and that determined which vendors were affected," he said.

The total works out to just over $9,000 a month for the nine year-period involved.

Employees handle cash from various customers and vendors. The city was encouraging customers and vendors who pay in cash to move to paying by cheque, Zegarac said. The discrepancy was discovered during that process.

There are several areas of the city where staff take cash, Zegarac said. Those areas range from recreation fees to development charges, and parking fines to property taxes.

In addition  to police, the city has asked a  forensic accountant to look into the incident.

Cash not unusual

Zegarac does not anticipate that any other employees were involved.

"We think throughout the initial investigation that this is isolated," he said. "The individual has admitted to the theft and the individual has admitted he was solely responsible for the theft."

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Finance head Mike Zegarac, shown at a council meeting Wednesday, says the city has taken swift and immediate action. (Samantha Craggs/CBC)

It's not unusual for municipal employees to handle cash, said David Siegel, a municipal politics expert at Brock University. "That's the way business is done sometimes."

Cities do typically have checks and balances in place to guard against mishandling. For example, the person who takes cash usually isn't the same as the person who makes entries into the accounting system, he said.

"You divide up responsibilities that way so one person serves as an automatic check on the other," Siegel said.

"This is the sort of thing that managers fear. But large municipalities are multi-million dollar operations and unfortunately these things can happen."

'Immediate and swift action'

The city confirmed the loss on June 18 and took "immediate and swift action" to bring the matter to the Hamilton Police Service major fraud unit. Police would only say Thursday that an investigation is ongoing.

The city hopes insurance will cover a "significant portion of our loss," the city said in a statement Wednesday. It is also reviewing its policies and procedures and co-operating with police.

Earlier this year, the city used video surveillance and GPS records of city vehicles to investigate 31 public works employees for "neglect of duties, time theft and/or breach of trust." It resulted in 29 employees being dismissed.

It shows that the city makes uncovering these situations a priority, Coun. Chad Collins said.

"We've been fairly successful in uncovering two large ones in the last year," he said. "I don't think it's anything to brag about, but it's a fact."

Won't be the last time

This investigation "is not the first time it's happened and unfortunately it won't be the last," Collins said. "We'll never have a system that prevents the smaller amounts to the much larger amounts.

"But I think the public can be assured that we're constantly trying to uncover it if it does exist."

Coun. Sam Merulla has called on the city to establish an accountability office that would investigate these issues. The public works investigation prompted him to do so. Now he wants to expedite work on the office.

Even though it took nine years to catch it, Merulla sees this as good news. It means city staff are watching each other, and that its checks and balances work.

"We blew our own whistle," he said.

"For anyone to suggest this is a negative thing, I think they have their head up their butt. This shows that the city is actually pursuing fraudulent and corrupt behaviour."