Desperate: People queue outside a labour department office to apply for Unemployment Insurance Fund payouts during the Covid-19 outbreak. Photo: Delwyn Verasamy
Employers and officials who defrauded the Unemployment Insurance Fund (UIF) of millions of rands by submitting falsified claims under the Temporary Employer-Employee Relief Scheme (Ters) during the Covid-19 pandemic face the full might of the law and being forced to pay back the money.
UIF commissioner Teboho Maruping and senior officials updated the media on Wednesday on the latest payment figures, fraud statistics and criminal cases opened by the fund during its “follow the money” campaign to uncover fraud, arrest perpetrators and reclaim stolen funds over the 2022/23 financial year.
He said the fund was processing claims for Ters and workers affected by the unrest in KwaZulu-Natal and Gauteng in July 2021. In some cases, employers had received benefits but not paid these to workers, while ghost claims had also been uncovered.
Maruping said UIF had paid out Ters benefits totalling R64 billion since 2020. This, he said, directly impacted the economy both by keeping workers employed through implementing the Ters salary intervention and by keeping them in the system as contributors to the fund.
Most of these payments went to businesses and workers in Gauteng (49%), followed by the Western Cape (18%) and KZN (14%).
“KZN did not take the lion’s share, but they did take the lion’s share of the fraud cases and for us that is concerning. Most cases of fraud seem to find their way to this province. We have 27 cases in court,” he said.
Maruping said the fund had paid out R9.3 billion in Ters benefits to 774 370 workers in KZN since 2020 and a further R17.7 million to 5 571 through the Workers Affected By Unrest (WABU) temporary financial relief scheme.
A further R2.4 billion was disbursed by the UIF to 272 889 workers and their beneficiaries as normal benefits, including unemployment, maternity, illness and death, in the 2022/23 financial year. The top 10 sectors that received most of the R9.3 billion payout are trade, personal, construction, iron, professional, textile, air, entertainment, food and education.
He said the fund was working closely with the Special Investigating Unit (SIU), the Asset Forfeiture Unit’s (AFU) Fusion Centre and the Hawks to investigate and clamp down on fraud.
A total of 132 cases related to Covid-19 Ters nationally had been referred for criminal investigation and prosecution as at 31 March 2023.
Maruping said R557 711.76 had been recovered in a R736 598.19 fraud case, and in the second case, the fund had recovered R113 170 880.58, which included interest over a few years on the sum of R111 951 492.41 that had been stolen. He said the first suspect had been found guilty while the second matter was pending before the court. Both cases occurred in Pretoria.
“The AFU has assisted the UIF to preserve funds linked to Covid-19 Ters. Two successful orders have been obtained in two matters where the funds have already been paid back to UIF,” he said.
Smiso Nkosi, a manager in the UIF commissioner’s office, said forensic auditors were continuing to audit companies to ensure the correct amounts of Covid-19 TERS funds were paid to workers at the right time.
A total of R2.6 billion has been recovered by the UIF through phases one and two of the fund’s ‘follow the money’ project which is auditing companies that benefited from Covid-19 Ters.
He said the audits have found instances of fraud related to employers who applied for ghost employees, had applications with inflated salaries, who made applications for terminated employees and who made applications while being allowed to operate as essential services during lockdowns.
Nkosi said measures are being implemented to deal with employers who refused to cooperate with its auditors. These include the referral of cases to the SIU and the Hawks for criminal investigation; refunding of all Covid-19 TERS funds; blocking of employers from the UIF’s service offerings; and blacklisting employers.
KZN’s UIF risk and fraud unit manager Monwabisi Mangcotywa said more than 20 suspects had been arrested through joint investigations for Covid-19 Ters-related fraud. These matters are all still before the courts.
Mangcotywa said the fund is taking disciplinary action against officials implicated in fraud cases and those who are alleged to have solicited bribes from clients to expedite claims at labour centres in the province. So far four officials have been dismissed and two others have been arrested.
“We have discovered that here in KZN fraud is a lifestyle,” Mangcotywa said.
Department of labour KZN chief inspector Edward Khambula said fraud was taking place on multiple levels.
“We have taken steps and arrested officials and some other officials are under investigation. Officials know how to go around the system. We have introduced technology, which we can’t disclose, where we are now able to monitor our system,” he said.
UIF director of beneficiary services in KZN, Bhele Mzinyathi, said there had been delays with claims payments and long queues at labour centres because there had been largescale job losses and claims backlogs in the province.
“There are interventions and we are engaging with employers where there are a huge number of layoffs, to contact us directly so that we can visit the workplace to make the life of our clients a little bit better,” he said.
He said the department had also focused on implementing its online self service channel to make it easier for people to file claims.