DA welcomes action on UIF fraud and supports Auditor-General’s recommendations

Dear MyPE

The Democratic Alliance (DA) welcomes the announcement by the Minister of Employment and Labour, Thulas Nxesi, that senior Unemployment Insurance Fund (UIF) officials, including Commissioner Teboho Maruping, have been placed on precautionary suspension.

This follows an investigation by the Auditor-General (AG) into fraud and financial mismanagement associated with the UIF’s Covid-19 Ters benefit scheme.

The AG found, inter alia, that a new system implemented for Ters incorrectly calculated the benefits for the first lockdown period (27 March to 30 April) by not taking into account the actual period of labour inactivity and the portion of the salary paid by employers, resulting in significant overpayments.

Due to weak financial controls, a large number of Ters payments were also made to people who are below the legal age of employment, deceased, working in government, receiving social grants or students funded by the national student financial aid scheme. A total amount of R169 900 was paid to individuals who were indicated as being in prison according to the Department of Correctional Services database.

The AG has recommended that the UIF should collaborate with other state organs in the intelligence and police services and institute investigations into overpayments as well as payments to deceased persons, UIF employees and prison inmates. Management should further implement consequence management if any official is found guilty of misconduct.

It is critical that the AG’s recommendations should be implemented expeditiously. It should also be borne in mind that although the UIF set aside R40 billion for the Ters scheme for the period 27 March-15 August, the AG was only in a position to audit an amount of R28.18 billion paid out as at 9 July 2020, covering claims for April and May 2020.

As such, the AG is likely to have only scratched the surface of malfeasance at the UIF.

All along, Minister Nxesi has been very quick to point the finger of blame at employers for the many problems bedevilling the Ters scheme. However, it is inconceivable that the fraud and financial mismanagement uncovered by the AG could have occurred without the active participation of UIF officials who control processing and payment of the Ters benefits.

To this end, the suspension of senior UIF officials is a positive move. Going forward, the AG, working with specialist forensic auditors from the South African Revenue Service, must extend the scope of the probe into fraud at the UIF. The DA will keep a close eye on developments to ensure that guilty UIF officials are brought to book.

Regards

Dr Michael Cardo MP
DA Shadow Minister of Employment and Labour