The Canada Revenue Agency headquarters in Ottawa. The union has also accused its former accountant of negligence.Sean Kilpatrick/The Canadian Press
The union representing Canada Revenue Agency employees is suing its former treasurer for allegedly stealing $150,000 by issuing herself cheques and attempting to cover her tracks.
According to court documents, the Union of Taxation Employees (UTE) Local 70000 alleges former treasurer Fatima Cabral misappropriated union funds. It also accuses its former accountant, Katerine Boyer, and her company, Boyer & Boyer Chartered Professional Accountants of Gloucester, Ont., of negligence for failing to identify the financial inconsistencies.
"Ms. Cabral was involved in the misappropriation of money from the plaintiff's accounts in the amount of approximately $150,000 for the benefit of herself and possibly others," says the statement of claim, filed in an Ottawa court last December.
"The accountants also acted in a highhanded and reckless manner with total disregard for their professional responsibilities and duties without any consideration for the client's best interests."
The statement of claim says the union noticed financial inconsistencies in 2014 and hired a forensic accountant to investigate. The union alleges Ms. Cabral, who was treasurer from the summer of 2008 to March, 2012, "engaged in a scheme to improperly divert and misappropriate" union funds.
As treasurer, Ms. Cabral had signing authority for cheques and was one of a few people who had access to the union's financial records, according to the statement of claim. The union alleges Ms. Cabral wrote cheques to herself for fabricated expenses and overstated and duplicated expenses, issued cheques to her personal creditors and manipulated entries in the union's cheque registry to cover her actions.
The union calls Ms. Cabral's conduct "callous, reprehensible and high-handed." It is is seeking the return of the $150,000, and $50,000 in punitive damages. Ms. Cabral has not filed a defence and did not respond to a request for comment.
The union also alleges Ms. Boyer and her firm failed to identify and investigate "clear and serious inconsistencies" in the union's financial records, including Ms. Cabral's claims, did not reconcile the union's cheque book with its financial statements and failed to provide financial records when the union requested them. The union is suing Ms. Boyer and her firm for $150,000 for "breach of contract and/or negligence" and $50,000 in punitive damages. It also demands that Ms. Boyer and her firm refund the union for services provided during the "relative time period," which it does not specify.
"Had the accountants complied with their professional obligations and not been negligent, the plaintiff would have learned of the defalcation by Ms. Cabral at an earlier stage and prevented further loss," the statement of claim says.
In a statement of defence filed on April 22, Ms. Boyer rejects the union's allegations of negligence and asks that the lawsuit against her and her firm be dropped. Ms. Boyer deferred all questions to her lawyer, James Thomson, who said there was no way his client could have suspected misappropriation.
"An auditor … only reviews the corporation's financial records once a year for a limited period of time. And if you look at the standards applicable to the work that accountants are expected to do and the case law as well, they are not generally looking for fraud," Mr. Thomson said. "There's an old adage that an auditor is a watchdog, not a bloodhound."
Ms. Boyer and her firm have filed a cross claim against Ms. Cabral for costs associated with the union's lawsuit.
UTE national president Robert Campbell directed calls about the lawsuit to the union's lawyer, Karen Perron, who refused to discuss details.
"At this point in time, the particulars and evidence in support of the allegations will be produced during the context of the litigation in the usual course of the action and we're simply not at that stage yet," Ms. Perron said.
The UTE is the largest component of the Public Service Alliance of Canada (PSAC) and represents more than 25,000 CRA employees across the country. Local 70000 is one of its the union's six Ottawa branches and represents about 2,400 CRA workers.
PSAC president Robyn Benson, who is a member of another UTE local, said she has confidence in the local's handling of the matter.
"As the president of PSAC, there are 17 components and each of those components have a multitude of locals," Ms. Benson said. "The component is doing due diligence."