More than 1,500 business directors benefited from Covid-19 social grants

09 December 2020 - 14:42 By andisiwe makinana
The second special audit report on Covid-19 relief funds was published on Wednesday.
The second special audit report on Covid-19 relief funds was published on Wednesday.
Image: 123RF/INSTINIA

More than 1,500 directors of companies that do business with the state also benefited from the state's welfare grants meant for the poor.

“The matter requires further investigation and hopefully recovery from the people who benefited inappropriately,” said auditor-general Tsakani Maluleke.

This is one of the AG's findings revealed in the second special audit report on Covid-19 relief funds, published on Wednesday.

The AG's other findings include that:

  • R95.84bn of the R148.06bn her office is auditing (65%) had been spent by September 30 2020, with most initiatives completed or close to completion, while some had been abandoned or redirected.
  • The Unemployment Insurance Fund has recovered about R3.4bn of the Covid-19 Temporary Employer/Employee Relief Scheme (Ters) funds that may have been disbursed incorrectly.
  • More than 67,000 people benefited inappropriately from Sassa grants. By  the end of August, just under a million of the 2.95 million people who were rejected for the special Covid-19 grant had been approved and received the grants, backdated from the date from which they were entitled to the benefit.
  • Sassa spent R31bn up to the end of September delivering benefits to vulnerable households in communities throughout SA.
  • 5.26 million people benefited from the special relief grant while 11.8 million and their families benefited from the top-up grant and a number of their families benefited from food parcels.
  • Distribution from the sport, arts & culture relief fund remained slow, with only 34% having been paid out by the end of September 2020. The payments went to assist artists, athletes and technical personnel affected by cancellation and postponement of sport and arts events, and to fund digital solutions.
Covid-19 social and economic relief.
Covid-19 social and economic relief.
Image: Nolo Moima

Maluleke highlighted that there have been improvements in the distribution of some relief packages, especially when compared with the findings of the first audit report published by her predecessor Kimi Makwetu in September.

She highlighted the UIF as using the first audit report as a critical tool to reflect on its overall control environment and identify areas for improvement.

“Where there is responsiveness after the audit by the auditor-general, we do see some benefit,” she said.

“At the end of the first report, we shared with the executive authority responsible for the UIF – labour and employment minister Thulas Nxesi - our key findings and observations and concerns relating to inappropriate payments to people who should not have benefited from the Ters benefit.

“When we shared those findings, what was pleasing is that there was some responsiveness.”

Nxesi held a press conference the same afternoon as the previous AG published his report, where he suspended five senior UIF officials, including its commissioner.

Maluleke said as a result of this action, the subsequent transactions after the first audit look a lot better than in the first phase. While issues remained, they were fewer.

“There were consequences meted out to people who performed poorly and had maintained systems that resulted in that level of loss to the UIF - and there was a diligent effort to recover what had been paid inappropriately,” she said.

“As we speak now, R3.4bn has gone back to the coffers of the UIF because there was responsiveness.”

The same improvements were seen with regards to the Sassa systems, which were also flagged in the first report as having a number of beneficiaries who did not qualify, as they were either employed by the state, incarcerated or dead.

It's unusual that a director of a company that's active in commercial endeavour should need to benefit out of that R350 grant.
Tsakani Maluleke

Maluleke said they raised the red flag with the social relief grant beneficiaries who were also directors of companies that are conducting business with the state, and asked Sassa and the different components of the fusion centre to investigate.

“We submitted these findings and how we arrived at them to the fusion centre. The reason we raised the flag is not to say that none of those directors should not have got this benefit; it may well be that they are not benefiting from these contracts and are just directors on these companies and there was no inappropriate benefit. We are not sure.

“We are just raising the alarm to say, 'maybe look at this, it looks odd.' It's unusual that a director of a company that's active in commercial endeavour should need to benefit out of that R350 grant," she said.

She said they needed some conclusion and a recovery if that is what should happen.

Maluleke said they also used the matter to point out the need for Sassa to tighten up its systems so they can detect these things and respond to them quickly.

It would also let them look across the different data sets at government and compare what is at Sars with what is in the different procurement systems of various departments with their own database.

This would help identify inappropriate applicants and to recover funds that have gone to people who shouldn't have received them.

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