Employers who made fraudulent claims under the Covid-19 wage protection scheme have refunded slightly more than R2bn to the Unemployment Insurance Fund (UIF), employment & labour minister Thulas Nxesi told parliament on Thursday.
The minister was answering questions from MPs in the National Council of Provinces. He said employers were entering into acknowledgment of debt arrangements with the UIF for the false claims made under the Temporary Employer/Employee Relief Scheme (TERs). The Ters benefit is part of the government's R500bn Covid-19 support package.
Between March 27 2020 and the previous expiry date of October 15 2020 Ters payments cost the UIF R58.3bn with 13.7m payments being made to workers and 1.2m employers having applied for the relief.
Nxesi said about 1,000 cases of allegedly fraudulent claims had been referred to the police for possible criminal investigation and about 80 employers had already appeared in court on charges of fraud and corruption.
The minister said the “follow the money” project was continuing to find out how much money had been stolen. A lot of fraud, he said, took place in the initial phase when the UIF paid money to employers rather than directly to the workers themselves. In some cases employers failed to pass on the money to workers.
Forms the fraud took were that employers inflated the amount or the number of workers who were claiming the benefit.
Nxesi said nine audit firms had been employed to “follow the money” and some of those who were corrupt were being identified during the process.
The Special Investigating Unit has also been investigating the fraud and would hand over its report once the investigation was concluded.
The SIU investigation followed findings by former auditor-general Kimi Makwetu that, among other things, R1.3bn was paid to companies without them submitting invoices. Payments were also made to incarcerated, underaged and dead people. State officials whose salaries were not affected by the lockdown also benefited.
The auditor-general’s findings forced labour and employment minister Thulas Nxesi to suspend five senior staff at the UIF including its commissioner, CFO and COO.
Nxesi said the UIF had gone a long way in dealing with the system weaknesses which were identified by Makwetu in his probe of the Ters scheme. Better controls had been introduced and moves were afoot to upgrade the UIF’s IT systems. The minister said the Treasury and outside experts had evaluated the system and made recommendations.
Nxesi confirmed the statement made by acting UIF commissioner Marsha Bronkhorst in parliament that government was not looking at extending the Ters benefit beyond March 15 as there was no money. The focus at present were the mass retrenchments which were taking place for which the UIF would have to pay its normal unemployment benefits.
Bronkhorst estimated the cost of the extension of the Ters benefit from October 16 until March 15 for those sectors of the economy still affected by the lockdown at R15,8bn. Sectors covered would include the tourism, liquor, hospitality conferencing events and activities in related value chains. Workers with comorbidities and those older than 60 years who cannot be reasonably accommodated at work will also be covered.
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