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JEREMY MAGGS: A very warm welcome. The Unemployment Insurance Fund [UIF] has welcomed the latest convictions of two people accused of swindling the fund’s Covid-19 Temporary Employer/Employee Relief Scheme; we know it better as Ters. Actions like this at the time were roundly convicted and the question, I guess, is what’s the response to it, and are there more outstanding cases and how much money in total went missing from how many cases?
With us is UIF Commissioner Teboho Maruping. Commissioner, a very warm welcome to you. First of all, just correct my numbers if you can; I am correct in saying that the two who were convicted claimed for 95 people who, in fact, were not working for their company. Am I right?
TEBOHO MARUPING: You are correct, yes. Just over 90.
JEREMY MAGGS: So what does the conviction say then, commissioner, about the state of law enforcement and the judicial system’s ability to tackle fraud and corruption? I’m assuming you would be welcoming this.
TEBOHO MARUPING: I think yes, you are spot on there, Jeremy. Us as the UIF, we are quite pleased that the NPA [National Prosecuting Authority], the Hawks, and also our work with the, the SIU [Special Investigating Unit] has proven to be working very well and that the state has its fingers on the pulse. To understand that most of the cases that we take to the NPA and the Hawks, we get convictions, we get people sentenced to prison. We’re also able to recover money from these people with the work of the Asset Forfeiture Unit [AFU]. So this joint collaboration so far has worked very well, [even to our] surprise.
Read:
Ters fraud: The authorities are closing in [Feb 2021]
Couple convicted of defrauding UIF Ters of R10m [Mar 2022]
UIF welcomes wave of arrests over R2.2m Ters fraud [Nov 2022]
JEREMY MAGGS: Commissioner, as far as this particular case is concerned, were you able to discern any more details on motive and perhaps where the weakness in the system was? In other words, how were they able to do this?
TEBOHO MARUPING: Yes, actually if you recall during 2020, in the beginning when we issued directives, the first directive that the UIF issued with the department was very strict. It excluded all companies that were not registered for UIF, all people who were not declared for UIF were not covered in the first phases of Covid.
And as a result, we were paying fewer claims. But upon engagement with the social partners and all the relevant stakeholders, we realised that the people we’re compromising [are] employees by non-compliance of employers. Then when that door was open, it meant companies could apply for people who had not declared. If a company had been functioning for three years and they’ve never declared to UIF, they’ve never made any contributions, but they’ve been functioning for the three years, we open that door for them to apply and we will then follow the money to these companies.
I think for us as UIF, that was the one gateway for the fraudsters to get through because we did not have a database to compare [names], except for Home Affairs because even Sars [South African Revenue Service] did not have the data.
Because they were not compliant with Sars, they were not compliant with UIF. But we needed to intervene on behalf of South Africans, and I think that was the main doorway. Otherwise, had you closed that one and said, don’t apply, then many people would not have benefited from the Covid Ters intervention.
JEREMY MAGGS: Commissioner, the tragedy of actions of fraud like this is that it took money away from people who really needed it at a time when they were absolutely desperate.
TEBOHO MARUPING: That’s the painful part, is we introduced an intervention for the country and then people take advantage. They look for a loophole, whatever that might be, they look for it and they abuse it. But I think in this instance, the good thing is the 91 people were ghost employees. So these were undeserving people who should not have been paid to start with, but the people who were supposed to be paid were paid.
The only problem is that we are paying even ghost employees, and this is now what we call fiscal leakage, where money goes the wrong way.
And that’s the money that could have intervened in other activities of government or even further for Covid Ters or other interventions as we move forward.
JEREMY MAGGS: How significant is this particular conviction in the context of the UIF’s attempts to protect its own resources, given that you are under financial strain?
TEBOHO MARUPING: This is very big for us. I think this is one of our greatest successes. One of our biggest ones was the 20-year sentencing that happened about six months ago, and a subsequent five years. So I think for us, this is us sending a message to all and sundry who might want to defraud any state institution, not only UIF, that the law of this country will catch up with you. We’re still following the money, and as we pick them up, we’ll take them through all the due processes, and they’ll be sentenced when they’re found to be guilty of fraudulent activities.
JEREMY MAGGS: Well in that respect then, how many more outstanding cases related to this scheme are currently under investigation?
Read: UIF paid out more than R1bn in December
TEBOHO MARUPING: I think so far, we have about 115 cases that are still under investigation, that are going through different processes, be it with the NPA or the Asset Forfeiture Unit or the SIU, but it’s about 115. There could be more as we follow the money, accountants are going on the ground to engage these companies.
JEREMY MAGGS: And are you able to give me an estimate of the total amount of money that was obtained from the Ters scheme in terms of fraudulent activity?
TEBOHO MARUPING: Fraudulently, so far there’s plus-minus R50 million that was defrauded in different pockets of the process. But we were able to recover, as soon as we started to arrest people, other people just deposited money into our account and it’s about R2.4 billion that was just deposited into our account.
As people were being caught, people just dumped money into our account.
We are investigating those too, because we want to understand why deposit money into our account without any explanation. So it might be bigger than what we have now.
JEREMY MAGGS: And just a final question, commissioner. I’m wondering to what extent these cases, albeit that there have been aspects of success, are affecting the public’s trust in the UIF and in relief schemes generally? Are you on the back foot in that respect?
TEBOHO MARUPING: I think we are on the back foot. But I think also the public needs to do justice to the UIF. The UIF intervened at the most difficult time in the country. No one was prepared, no one was ready, be it systematically or otherwise. All of us have learned from this process, and I believe we’ll be able to do better.
Read/listen: What’s happening at the SA Unemployment Insurance Fund?
But we also need to be careful in putting stringent controls in as we did with Covid Ters in the beginning. Many people could not benefit, but as we relaxed the controls, we were able to pay more South Africans, but in the process, some of the controls were exploited by fraudsters. So it’s that balancing act that you must apply as you’re intervening in this country,
JEREMY MAGGS: UIF commissioner, Teboho Maruping, thank you very much for joining me.
