These syndicates work hand in hand with mortuary workers to compile fraudulent documentation that makes it possible for them to lodge substantial claims, according to the chief executive of the Association of Certified Fraud Examiners, Jaco de Jager.
Identity theft has become a national problem for the industry, but is most prevalent in the Eastern Cape, KwaZulu-Natal, Mpumalanga and North West, said De Jager, a forensic auditor who conducts investigations for insurance companies.
The death and funeral category contributes to the highest number of fraudulent claims within the life insurance industry, according to the Association for Savings and Investment South Africa.
In 2010, life insurance companies foiled 4636 attempted fraud cases with a value of R321.7-million. In 2009, they prevented 3579 cases of fraud worth R74.2-million.
In 412 of the cases in 2010, worth R23.3-million, fraudulent documentation had been submitted in an attempt to gain access to death or funeral policy benefits.
"When the deceased lies unidentified in a [medico-legal] mortuary for a specified number of days , the onus lies on the government to bury him or her," De Jager explained. "The unidentified person is then called a pauper.
"Mortuary workers will then contact various syndicates – who take out insurance policies using stolen identity documents or even fake identity documents – and inform them that they have a pauper lying and waiting."
If the pauper's physical characteristics match any of the identity documents, the syndicates pick up the body, arranging for a cheap burial or cremation, and buy the documentation necessary to register a death with the home affairs department from the mortuary workers.
"The mortuary workers sell the required papers to a number of syndicates," said De Jager. "They provide them with the DHA [department of home affairs] 1663, which is a notification of death form. They provide them with a filled-out form, including the fingerprints of the deceased, and leave the identity number and name fields blank.
Steps to prevent fraud
"The syndicates complete the ID details and get death certificates from the department of home affairs, after which they lodge claims with the relevant insurance companies."
De Jager said the notification of death forms sold for up to R1 000.
He stressed that not all mortuaries were involved in fraudulent activities. "Some of them are taking the necessary steps to prevent fraud, and to ensure they are running professional services."
Poonitha Naidoo, co-ordinator of the Medical Rights Advocacy Network, said the organisation received regular complaints about identity theft from the general public and health professionals.
"The complaints [we have] received suggest that this may be still ongoing and unchecked. Mortuary managers know of the problem but do not speak because they feel vulnerable. The department of health is quick to deny this and the perpetrators may continue to work in the system," she said.
Naidoo said she was aware of one incident in which a doctor's stamp was cloned on a death notification form, as well as another case in which a postmortem report with a fraudulent signature was sent to an insurance company for a claim.
In an email sent to the Mail & Guardian, the department of health said its forensic pathology services directorate had not been informed of death notification forms being sold to syndicates for the purpose of false insurance claims.
"The national department of health needs to be informed in order to be able to launch an investigation into the matter," it said.
De Jager said it was important for the insurance industry to communicate to the public that fraud in the insurance industry affected them. "If you go to a retail store and open an account, providing all your details, there is a possibility that the person who collects the form is working with a syndicate, which will then forge an identity document using your details. The public needs to be aware of this."
De Jager also said it was necessary for the government to appoint skilled staff to work in mortuaries. "One problem we face is that people who are dealing with paperwork in there, and who assist pathologists in dissecting bodies, don't have any skills – they can't take fingerprints, for instance. Syndicates can then misuse that, knowing that the fingerprint can't be analysed. Staff also need to be vetted – we need to establish if they have criminal records, or hobbies which pose a risk like gambling."
The insurance industry had adopted a zero-tolerance policy towards fraud and has been working closely with the police to combat it, De Jager said. "Our success ratio in detecting them, arresting them and prosecuting them is much higher than in the 1990s."
In its email the health department said that the national code of guidelines for forensic pathology practice in South Africa stated that if the identity of a body had not been established within seven days, fingerprints of the unidentified person were submitted to the police's criminal record centre and to the home affairs department in order to establish the identity of the deceased.
"If the body has not been identified after seven days in the facility, appropriate samples for comparative DNA analysis are retained, and the body moved to a freezer," said the statement. "Additional scientific methods may be utilised at the discretion of the authorised person to facilitate identification. After  days in the designated facility without being identified, the body is declared 'unidentified or unclaimed', and the process is started for burial or cremation of the deceased as a pauper."
Home affairs director general Mkuseli Apleni said that when a person died the DHA 1663 form was filled out and brought to the department so that a death certificate could be issued. "The form includes a fingerprint of the deceased, which home affairs officials have to match to the fingerprints we have on our database for that individual. So I don't understand how a syndicate would achieve that."
But De Jager pointed out that insurance fraud was organised crime. "The syndicates place people in strategic positions to gather information for them in order for them to be able to commit fraud. It can involve funeral parlours, police officers, doctors, community leaders all working together to stage deaths and claim benefits."
'Dead' man in long wait for police progress report on his 'death'
Simangaliso Ndimande, a retired police officer, first came to learn about his "death" more than a year ago when someone contacted his wife to express their condolences and raise the subject of his pension.
"I was contacted by Mr Ndimande about a year ago," said Mary de Haas, a member of the Medical Rights Advocacy Network. "Since he was very much alive he followed the matter up, opened a case at Eshowe, and managed to obtain documentation relating to the reporting of his death – a doctor's certificate, abridged death certificate, abridged birth certificate [his own] and a copy of the ID document of a woman who had reported him dead."
De Haas said Ndimande had obtained the documents from the home affairs department and that, to his knowledge, he had not lost an identity document.
"This suggests the involvement of a person or persons at home affairs," said De Haas. "The name of the undertaker is given on the doctor's certificate. So there was a number of leads – the identity document of the person who reported the death, the name of the undertaker and the name of the doctor who supposedly signed the death certificate."
She said that it was not known whose body was used for the attempted fraud or where it had come from.
When Ndimande heard nothing from the police he asked her for help. "Obviously we expected that the police would also follow up about potential insurance fraud by interviewing Ndimande, but nothing happened. I wrote to Isipingo [where the case had been transferred from Eshowe] police soon after Ndimande contacted me but got no response, and nor did he hear anything."
De Haas said it was only when she did a further follow-up that she received a response – early last month – in which the station commander stated that a request for fingerprints of the suspect had been forwarded to the home affairs department's head office in Pretoria, and that a progress report would be forwarded to her.
To date, De Haas and Ndimande have not received the report.
Ndimande confirmed that an insurance company had contacted his wife about his supposed death. "It was because she advised he was alive that he had to make an affidavit," De Haas said. "Then nothing further was heard. He wanted to give information to the police but they never got back to him. This case speaks volumes about the failure of police to follow up on leads." – Fatima Asmal-Motala