6,140 state officials fraudulently scored R41m from Covid-19 relief scheme: SIU

'Processes were clearly deliberately overlooked or circumvented for purposes of paying out these monies fraudulently' - SIU head Andy Mothibi

28 October 2020 - 15:42
MPs heard that the SIU was applying for an extension of the current Covid-19 proclamation so as to investigate all Ters matters, with an estimated value of R985m.
MPs heard that the SIU was applying for an extension of the current Covid-19 proclamation so as to investigate all Ters matters, with an estimated value of R985m.
Image: Leon Swart/123rf.com

More than 6,000 government officials fraudulently benefited to the tune of R41m from the Unemployment Insurance Fund's Covid-19 Temporary Employee Relief Scheme (Ters) benefit, parliament heard on Wednesday.

The Special Investigating Unit (SIU) told parliament's standing committee on public accounts (Scopa) that a total of just more than R41m was claimed by 6,140 government officials from the relief fund benefit, using 3,959 bank accounts.

Of those bank accounts, 581 were associated with multiple beneficiaries (3,079 of them) and there were 55 beneficiaries who were identified who had no bank accounts. These benefited to the tune of R301,124.

In addition, dead and incarcerated people also benefited from the scheme. MPs heard that seven inmates from the department of correctional services were identified as claiming from the relief fund, to the value of R40,657.

The SIU's Johnny le Roux told MPs that said 68 “deceased” individuals, using 72 bank accounts, were paid Ters benefits totalling R441,144. Seven of the “deceased” beneficiaries had multiple bank accounts.

The SIU also found that R327,638 was paid to SANDF staff members. A total of 59 SANDF members associated with 55 bank accounts were identified.

“Furthermore, three bank accounts have multiple beneficiaries and four SANDF members have multiple bank accounts,” said Le Roux.

The SIU says it wrote to the defence force and the departments of correctional services and home affairs last week to confirm the status of the ID numbers for the deceased individuals who received Ters benefits.

The unit revealed that 11 suspects were arrested by the Hawks last week relating to the fraud perpetrated against the UIF. The arrests are linked to five companies suspected of making fraudulent Ters claims amounting to R14.5m. The UIF has recovered R4.7m of the R4.8m claimed by one company.

The SIU said 70 criminal cases amounting to almost R1.5m had been registered with the police and were being investigated by the Specialised Commercial Crime Unit. No arrest have been made.

SIU head Andy Mothibi said their observation was that there had been a failure of people processing systems.

“From the people side, one would observe that there has been a measure of collusion and fraudulent activities that ultimately result in these corrupt activities. Processes were clearly just deliberately overlooked or circumvented for purposes of paying out these monies fraudulently,” he said.

MPs heard that the SIU was applying for an extension of the current Covid-19 proclamation in order to investigate all Ters matters, with an estimated value of R985m.

The unit also investigated findings by the auditor-general in September this year that no proper supply chain management processes were followed in the appointment of five companies to run an awareness campaign about the UIF's Ters benefit and that the appointments were made based on the motivation for a sole service provider.

The value of the five contracts amounted to R6.1m

The five service providers were required to conduct advertising campaigns to create awareness about the UIF Covid-19 Ters, for the duration of 45 seconds, three spots per day, for four weeks on their respective radio channels and related television channels.

The UIF’s bid adjudicating committee requested for a deviation from the normal procurement processes to appoint the service providers and all the service providers were appointed on a deviation.

The SIU said it was conducting a full-scale investigation to confirm and/or refute corruption and maladministration allegations, and/or to determine if there were any undue benefits or gratifications paid to the UIF officials to influence the supply chain management process.

It has so far found that:

  • The five service providers were appointed without following the proper supply chain management process.

  • Where relevant, practice note no 8 of 2007/8 requires that for all procurement of goods and services not exceeding R500,000, at least three quotations must be obtained. This was not followed as it was motivated that the five companies were sole service providers.

  • These appointments were not in compliance with the constitution and the Public Finance Management Act.

  • The UIF acted unlawfully because there were other commercial radio stations registered with Icasa in those provinces and the SABC was able to deliver the same message through 11 languages.

  • The communication and marketing department misrepresented to the bid adjudicating committee that the service providers were sole source providers and the misrepresentation caused the UIF actual prejudice.

  • One supply chain management official failed in her duties when she allowed the marketing and communication department to predetermine the names of the service providers on the specifications. This failure resulted in an irregular expenditure for the UIF.

  • The recommendations, approval, appointments and the payments of these service providers were in contravention of the Public Finance Management Act.

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