The Department of Social Development launched a major anti-corruption campaign recently, asking for public support in its fight against fraud, but a large proportion of the fraud is committed by civil servants. The corruption takes many forms, including syndicates operated by corrupt government officials, doctors, lawyers and priests.
More than 50 000 corrupt government officials are enjoying the spoils of corruption by drawing grants they are not entitled to. Social grants are intended to benefit persons earning less than R800 a month, but Daniel Maloka of the compliance and support unit in the department says there are government officials earning decent salaries who are also registered as grant beneficiaries.
The department is investigating about 10 000 cases where individuals are drawing an old age grant, even though they are too young to qualify for one. Grants are intended for South African citizens aged over 60 for women, and 65 for men. Applicants must comply with a means test and must not be receiving any other social grants.
Maloka says they are aware of instances where applicants who are not successful in applying for grants are approached by corrupt officials who refer them to doctors who provide falsified medical records, at a price, allowing them to access disability grants.
Last week the department announced that until March next year, people fraudulently receiving grants can come forward and apply for indemnity. But Minister of Social Development Zola Skweyiya has warned that syndicates responsible for fraud are likely to receive harsher punishment than those that have been duped into participating in scams.Â
‘Working together with other law enforcement agencies, we have already started prosecutions and civil actions against syndicates and public servants in provinces such as the Eastern Cape. We will intensify those efforts,” Skweyiya warned.
“Minister Skweyiya, to his credit, has come out and admitted the extent of the problem in his department,” says Hennie van Vuuren of the Institute for Security Studies.
Civil society organisations say the indemnity plan will be more cost-effective than legal action. “It is a good initiative to enable those people against whose name grants have been claimed to rectify the situation.
“People who are involved and not necessarily guilty can use this immunity period to clear their name so that we don’t clog up the court systems with thousands of cases of alleged fraud that don’t lead to convictions.”Â
The Black Sash says civil servants who have been involved in grant corruption should be severely punished since they undermine the support the government has earmarked for poor people.
“We would hope that civil servants who have been involved in such corruption be dismissed and required to pay back what they have stolen,” said Nceba Mafongosi, regional advocacy coordinator of Black Sash.
It is hoped that the centralisation of grant payments by the South African Social Security Agency will curb fraud, corruption and maladministration of social grants.
“Centralisation is probably a good model, because the provincial model has quite clearly led to widespread corruption,” said Van Vuuren.
Members of the public can make use of the national anti-corruption hotline, launched earlier this year, to report cases of fraud and corruption.
“The government needs to roll this out in a big way because there are people in public service departments who know about corruption that is occurring but need to know that they can report it,” said Van Vuuren.
Adrienne Carlisle, spokesperson for the Public Service Accountability Monitor, says: “The government’s response to date, particularly to social grant fraud being perpetrated by civil servants themselves, has been weak.
“Too few people are reportedly brought to book and, once a problem is identified, the department is slow to introduce checks and balances to prevent it from happening again.”
The schemers and the scams
Disability grants
The disability grant is the most widely abused by people using falsified medical certificates to claim benefits. A social development department report released in January found that disability grants had increased from 600 000 recipients in 2000 to 1,3-million this year. In August this year a KPMG audit of the Umzinto office in KwaZulu-Natal found that 90 of the existing 97 disability grants being paid out were fraudulent.
In January Dr Leod Zondo, a superintendent of Empilisweni hospital in the Eastern Cape, was arrested and charged with defrauding the social grant system of about R3,8-million. It is alleged he provided fraudulent medical certificates to as many as 96 patients a day at a cost of R250 each, amounting to a daily income of R23 000.
“Dr Zondo is one example of the collusion that is occurring between the public and private sectors. There are those who are abusing the system and gaining handsome profits from it by giving grants to people who shouldn’t receive grants,” said Hennie van Vuuren of the Institute for Security Studies.
State pensions
The National Prosecuting Authority has uncovered a number of cases where officials created fictitious persons on the benefit system’s database to claim grants. Officials are also alleged to keep the details of deceased people on the database so that they can claim their benefit.
In June last year Kholiswa Hlati, a department pension paymaster, turned herself over to the King William’s Town police. She was dismissed and found guilty of fraud amounting to R844 000, for which she was sentenced to 15 years’ imprisonment.
But, the Grahamstown-based Public Service Accountability Monitor (PSAM) says Hlati was implicated in fraud as far back as 1997. The organisation claims that in November 1997 Hlati, pension paymaster Mzwandile Ntshoko and two pensioners, Thabisa Madikane and Philiswa Mabangule, were arrested in Alice on charges of theft and fraud. It is alleged the four were involved in a fraud syndicate responsible for the theft of more than R112 000 worth of pension cheques between September 1996 and November 1997. The pensioners allegedly colluded with the paymasters by travelling to various pay points in the area collecting pension cheques of deceased pensioners.
PSAM wants to know why Hlati remained in the employ of the department after her first arrest, and whether action has been taken against Ntshoko.
Child support grants
Fraudsters obtain false birth certificates from the Department of Home Affairs and use these to claim child support grants. Deputy Director General Fezile Makiwane says this is done in collusion with home affairs or health department officials. A report released on Monday saidthat 14 400 child support grants are being claimed, for children who have been recorded as deceased by the Department of Home Affairs .
In September two officials in the Eastern Cape education department were arrested for their involvement in a R2,3-million social grant scam. It is alleged they were part of a syndicate using fake documents to access child support grants. The joint anti-corruption task team believes that syndicates enlist government officials to assist them in defrauding the state.
Other scams used to defraud taxpayers include officials stealing cheques from existing grant beneficiaries and cashing their payment vouchers using other people’s thumb and even toe-prints.
Syndicates often launder the stolen cheques through a business. An Eastern Cape family, the Govenders, were arrested, had their assets seized and appeared in court in January this year. It is alleged they received more than 5 661 stolen cheques from corrupt Eastern Cape officials in the departments of health and social development. The state alleged the cheques were laundered through the Govenders’ businesses. It is alleged the family instructed employees to falsely endorse the cheques with their fingerprints, a method used by illiterate pensioners to cash their cheques.
Officials are also accused of recruiting and assisting people to make grant applications based on false information. Last December the Scorpions and the joint anti-corruption task team arrested a national Department of Social Development data capturer Lulamile Kwaza, for grant fraud amounting to R500 000.
It is alleged Kwaza approached members of the public, encouraged them to apply for grants, approved their applications and backdated payments that often amounted to as much as R15 000. Kwaza would then allegedly demand a share of the payments. PSAM says there are no reports of Kwaza facing an internal disciplinary hearing and the outcome of the court case is not yet known.
Youthful pensions and the living dead
The Eastern Cape has set the benchmark for social grant fraud, with an impressively high number of cases of grant corruption.
An audit of the province by the Department of Social Development shows that in March 2002, 8 104 beneficiaries received a government pension and social grant simultaneously. In the same month, 3 770 people who claimed old age grants, totalling R2,2-million, were found to be too young to recieve them.
At the same time, the number of old age grant recipients — 68 088 — identified as being older than 80 was seen as an “abnormal”. The cost was R38,8-million.
Again in March 2002, 28 188 recipients were paid a total of R17,3-million, despite not having barcoded identity documents, while 2 537 recipients who seemed to be in possession of invalid identity documents were paid a total of R1,5-million.
During August and September 2001 and March and September 2002, R3,8-million was paid to people the department of home affairs recorded as deceased.
The National Prosecuting Authority (NPA) said it has been involved in the crackdown on social grant corruption in the province as part of a joint anti-corruption task team.
NPA spokesperson Sipho Ngwema said the team, comprising the Scorpions, the NPA, the Special Investigative Unit, the South African Police Service, the office of the Auditor General and the National Intelligence Agency, has investigated 363 cases of corruption. Of those, 108 are still under investigation, 71 have been finalised in court, 92 are on trial and another 92 have not been prosecuted.
Ngwema said most of the finalised cases (62%) were of fraud and theft and involved paymasters working for the department of social development. “This is followed by frauds committed by ordinary citizens and government employees not working for social development and welfare. Most cases committed against the department involve social grants of all kinds, [such as] theft and encashment of grant vouchers.”
Spokesperson for the Public Service Accountability Monitor Adrienne Carlisle said that fraud and corruption, especially within the ranks of the public service, have been rife in the Eastern Cape. “It is an indictment against the department that this identified form of corruption has been allowed for so long, particularly … where the department has predicted it would overspend … [by] more than R1-billion this year alone.”
She added that the department revealed last week that almost 2 000 government officials were receiving grants to which they were not entitled. This fraud had cost R23-million. “This is not a new problem,” she said. In August 2003, Minister of Social Development Zola Skweyiya ordered a forensic audit after data interrogation revealed that hundreds of government officials were receiving grants totalling about R17-million.