Governor Lou Leon Guerrero made the revelation yesterday in a letter to Guam Solid Waste Authority Board Chairman Andrew Gayle that GSWA has lost $267,000 due to cyber fraud.
But the letter provided little details so PNC met with GSWA General Manager Larry Gast to find out how it occurred.
“We actually made the discovery when the bank declined the second transfer that was going to them. And when they declined it, that’s where we found out that somebody had inserted themselves between us and the vendor. Everything the vendor was sending to us they were intercepting. Everything that we were sending to the vendor was being intercepted by the third party,” Gast said.
He added it was difficult to discover the scam as the third party was intercepting all communications through email between GSWA and the intended vendor.
The first transaction was a little over $267,000 dollars but the second transaction could not be disclosed as a result of an ongoing federal investigation. While Gast confirms that the $267,000 is lost, he says that the money from the second transaction may be recovered.
The actual vendor the money was supposed to be paid to is Green Group Limited LLC, a company based out of Georgia which has a local office on island. Green Group Limited LLC is contracted for services related to the Layon Landfill. Gast says that because of the 14-hour time difference between Guam and Georgia, contact was always made through email, a contributing factor that set up GSWA for falling victim to cyber fraud.
“When GSWA took over, we maintained all the policies and procedures that the receiver had in place. We were trying not to make wholesale changes at this beginning stage. We’re making small minor changes that help in efficiency and things like that but we still have the same email addresses that we had when the receiver was in charge,” Gast said.
Gast said the email account used was a Gmail account established by the federal receiver. As a result of the incident, GSWA email accounts are being transitioned to a GovGuam account which will be behind the government’s firewall which will provide a little additional protection.
The money owed to the vendor has been paid with the exception of the one month. Gast says that the vendor is aware as they are also involved in the investigation, adding that the money has been set aside and is sitting in limbo until GSWA learns if any monies are recovered.
Gast, meanwhile, assures GSWA customers that the loss of the money will not have an effect on them indicating that the money will come from the savings made from operational changes that reduced GSWA costs.
This news comes just months after the Leon Guerrero administration purported to the federal court that Guam could manage GSWA.
“I can’t make judgments for the court. That would be me speculating on something that they would have to make a decision about. I am sure it will be a concern of the judge,” Gast said.
GSWA will make the incident known in its next report to the court. But Gast said remedies are already being put in place by GSWA to ensure this does not happen again.
“As soon as I found out that there was an issue, we immediately put in place that I will go through the representatives of off-island vendors to make sure that any changes are true and legitimate requests from them,” Gast said.
The incident has resulted in Governor Lou Leon Guerrero issuing GSWA several directives which include holding the personnel accountable for failing to follow procedure. Gast says ultimately he is the one responsible and any action taken will be decided upon by the GSWA board.
The Guam Police Department, the Office of Public Accountability, the OAG and Guam Homeland Security as well as the FBI were notified about the cyber fraud.