Covid-19 relief: UIF changing how it pays out cash after multimillion-rand fraud

The UIF has had to change how it approves payments to companies after a Pretoria man allegedly defrauded it to the tune of R5.7m.

Tshepang Phohole, who works for CSG Resources, allegedly created a profile on behalf of the company on the UIF system and used his personal bank account.

He is alleged to have then pocketed the R5.7m meant for his co-workers — and later went on a spending spree.

Addressing parliament's labour and employment portfolio committee on Friday, UIF COO Victoria Maluleke said they had now decided to use bank variation instead of just validating the account number provided.

Maluleke said in the case of CSG Resources, the employees' banking details were valid and that was the reason they paid the amount.

She said part of the investigation into the matter would be whether there was foul play by UIF officials.

“In the profile [company profile with the UIF], one of the key things that is there is the banking details. When the accountant [hired by the company] has access to the profile, he could see all the information that is there.

“So all the information that the employee had already captured, the information that he provided, even the banking details that were existing in the system at the time, the account could see ... and because the accountant was on the profile, the accountant could have changed those banking details if he needed to,” said Maluleke.

She said as the accountant, he would have known that the banking details were not correct, but he did not.

“One of the key things that we have also put in place, which we picked up that it was also a gap in the control, was on the issue of the confirmation of the banking details.

“Our process as UIF, all along, we have been paying to employees, so the existing controls that we have on bank verification, bank validation previously for us before Covid-19, was more when we pay to employees,” said Maluleke.

She said that due to Covid-19 they were now forced to pay to companies and bargaining councils, which was a new process for the fund.

Maluleke said the controls they had put in place were bank validations.

“Even in this instance, it [the account number] was sent to the bank for validation, so the bank validated this because it was a correct bank account, yes it was active, yes the branch code was correct.

“What we then picked up after these two fraud cases that we have now changed, we now added bank verification. What bank verification does, more than bank validation ... it also tries to validate the owner of the account,” she said.

She said they had realised that the majority of the fraud cases were around the banking details.