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‘Broken’ claims system will fix Compensation Fund corruption

Amid complaints about its new claims system, Employment and Labour Minister Thulas Nxesi has assured members of Parliament that the change is part of the department’s efforts to clean up the beleaguered Compensation Fund.

Addressing Parliament’s portfolio committee on employment and labour on Wednesday, Nxesi said Compensation Fund commissioner Vuyo Mafata​ has his “full support”.

“He is leading a major clean-up campaign at the fund, which has long been the target of fraud and corruption.”

The fund compensates workers who are injured on duty, or sick from diseases contracted at work. It also compensates the families of workers who die as a result of these injuries or diseases.

Last year the fund’s board received audit disclaimers because of its inability to collect contributions effectively and validate claims.

Nxesi’s presentation to the portfolio committee comes amid concerns raised by a new formation called the Injured Workers Action Group (Iwag), which released a statement on Monday accusing the department of implementing a new claims system that has left workers “out in the cold” .

In its statement the group warned that workers who have been injured on duty “are facing ‘a crisis of epic proportions’ as a result of the technological collapse of the R60-billion Compensation Fund that is legally mandated to cover their medical bills and disability pensions”.

The group, which according to its statement comprises “concerned industry leaders”, was formed in the wake of reports that healthcare service providers working with the fund have halted operations because they are not able to log claims.

In October 2019, the fund launched its new claims system, called CompEasy. It replaced the uMehluko electronic system, which was decommissioned because of its weak controls.

But according to Iwag, the CompEasy system was “dead on arrival”. 

The group’s spokesperson, Tim Hughes, said: “The website never worked. The system was never parallel tested with the old one, as you would expect when the stakes are this high.  As a result, about 150 000 working-class South Africans who have been injured or disabled on duty since mid-2019 have been left out in the cold.”

On Wednesday, Nxesi said the new system was introduced to “strengthen controls”.

“During the transition there will be glitches … And we should not be defensive about the glitches … But the new system is up and running and it is working. It is not operating at 100%, but we are certainly on an upwards trajectory.”

Greater accountability

Nxesi added that the CompEasy system — and its part in protecting the fund from abuse — forms part of the department’s efforts to heed President Cyril Ramaphosa’s call for more effective governance, “greater accountability and strengthening the controls to remove opportunities of fraud and corruption”.

“The days the fund pays out unsupported claims willy-nilly — those are over,” he said.

Nxesi also assured the portfolio committee that the new system would work for workers rather than in the favour of service providers.

“Equally it is important that the fund improves the service to its clients. By that I mean the injured workers, not the middlemen …. We are not going back to the previous ‘free for all’ system.”

He explained that under the new system, the entity that submits the claim is now responsible for gathering the supporting documents. These entities will not be able to submit a claim without all the required documentation. “This is a critical change. And, ultimately, it is in everyone’s interest to get that right.”

Nxesi said: “In the previous lax regime, the injured workers were often left holding the burden of trying to get all the documentation long after the service provider or the middleman had received their money … And we start asking: ‘This system, it was meant for whom? Was it meant for the middlemen or for the workers?’”

In response to the minister’s presentation, Inkatha Freedom Party MP Xolani Ngwezi said he is “very happy to hear” that the days of middlemen exploiting the fund are over. “Because almost everywhere in the country, people are complaining about this thing.”

Ngwezi later supported a forensic investigation into false claims. “We need to get the truth,” he said.

Left in the lurch

Democratic Alliance MP Michael Bagraim thanked the minister for his presentation. But he said service providers have been “left in the lurch” by the department, which has not communicated to them why they have not received claims for months.

“The reality is that if there is in fact a problem with any of the intermediaries and any of the intermediary companies, then one would expect that the department would get back to them … And tell them what’s the problem with the claim.”

Bagraim said that if there are fraudulent and corrupt claims, “there should be prosecution”.

DA MP Michael Cardo said the issues of fraud and corruption raised by the minister are a “smoke screen”.

“The issue here is that the Compensation Fund has a new IT system … which is almost completely dysfunctional. It simply doesn’t work. So we can’t make it an issue of fraud and corruption,” he said.

“That is an attempt to distract us from the core business of what we should be entertaining in this committee today.”

The Compensation Fund’s Mafata responded to the concerns raised by the MPs, saying that the system is up and running. “Is the system operating optimally? No … For the system to operate optimally, we need all stakeholders to play their role.”

Nxesi concluded by saying the department has “no fight” with Bagraim on the matter. “But we must emphasise: all of us must play our roles. All of us have responsibilities and obligations if we want payment,” he said.

“And I can tell you, and I have reports, some of the staff members, because corruption was being followed up, Honourable Ngwezi, they ran away. Some have joined the service providers. What does that mean?”


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Sarah Smit
Sarah Smit
Sarah Smit is a general news reporter at the Mail & Guardian. She covers topics relating to labour, corruption and the law.

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