- Business executive at the office of the Auditor General Nnana Sekoati said the audit found alarming gaps in the scheme's preventative controls.
- Minister Thulas Nxesi said there was evidence that still needed to be tested on over-payments, underpayments and inflated claims in the payment system.
- The audit found applications below the legal age of employment, payments to invalid identity numbers as well as payments to deceased and imprisoned South Africans.
The Office of the Auditor General told Parliament's Portfolio Committee on Employment and Labour that the Unemployment's Insurance Fund's Temporary Employer-Employee Relief Scheme was riddled with gaps which cause the fund to lose the payment of large sums of money through irregular payments.
The TERS relief was developed by government as a central intervention to assist businesses and their employees during the Covid-19 pandemic and national lockdown, allowing businesses to continue paying their employees through the restrictions on business operations during the lockdown.
President Cyril Ramaphosa directed Auditor General Kimi Makwetu to audit the transactions of government's various interventions into the pandemic, including the UIF TERS in July. Makwetu found over-payments of benefits and a high number of payments that required further investigation.
Minister of Employment and Labour Thulas Nxesi announced on Wednesday that he placed Unemployment Insurance Fund Commissioner Teboho Maruping and the management of the UIF on precautionary suspension following the audit and its findings.
Business executive at the office of the Auditor General Nnana Sekoati told the committee on Friday morning that the audit found alarming gaps in preventative controls, including that the system allowed single applicant to submit claims on behalf of multiple employers or bargaining councils.
"The UIF does not corroborate whether these representatives are duly authorised to represent the employers or bargaining councils they purport to be representing.
"There were also no appropriate system validations of the input data submitted by employers and bargaining councils as the basis of claims payment to prevent the processing of non-eligible and invalid claims," said Sekoati.
Dead, imprisoned, double dipping
Sekoati said the audit also found incorrect system calculations of the TERS benefit payment for the first lockdown period as well as inadequate verification of employer details, banking details, verification of salaries.
"For the payments that were made between 27 March 2020 and 30 April 2020, the system used a standard lock down period of 35 days to calculate the benefit amount even when the employer's indicated period of inactivity was less than 35 days. As a result, the UIF overpaid for some of the claims that were processed during this period," said.
The audit also found applicants that are below the legal age of employment, duplication of identity numbers, payments to invalid identity numbers as well as payments to deceased and imprisoned South Africans.
"Individuals below the legal age of employment of 15 years were paid by the UIF. A total amount of R 224 677 was paid for 53 applications for the period up to 30 June 2020. A claim of R4 027 was paid to an individual who has the same identity number as a UIF employee.
"Individuals who were indicated as deceased as per Home Affairs database received TERS benefits totaling R441 144. 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," she said.
The audit also found applications with the same banking details as some UIF employees. It found double dipping with R140 556 822 paid to 35 043 applicants who received benefits from other state institutions including the National Student Financial Aid Scheme and the National Defence Force.
Nxesi told the committee that there is evidence that still needed to be tested on over-payments, underpayments and inflated claims in the payment system. He said the department was working with law enforcement agencies such as the Special Investigating Unit to probe these, in accordance with the Auditor General’s recommendation.