The Asset Forfeiture Unit (AFU) is investigating ‘a glaring instance of fraud and money laundering’, the Sunday Times reports, after a substantial amount of money was reported to have been paid into a single account.
The paper reported that R5.7 million in UIF funds, which was intended for 200 workers impacted by the Covid-19 lockdown, was paid to a single person.
“In an instant he went from having R12 in his account to more than R5 million,” the Sunday paper said.
The money was then quickly sent to friends and businesses over the course of five days.
The AFU and the UIF are now investigating the matter, and 28 bank accounts have been frozen in connection with the fraudulent transaction.
“We are investigating whether there was complicity on the part of those working at the UIF. There is a suspicion that there may have been criminal activity between UIF officials and the end recipient of the money,” said the NPA’s Sipho Ngwema.
The Sunday Time reported that while the person was registered to receive financial relief, it was not the ‘windfall’ that came his way.
Mfopha said analysis of the person’s transaction history showed that they disbursed R5.5 million in a series of payments to four people. They also spent R5,000 on cryptocurrency through the online trading platform Luno.
Follow the money trail
Minister of Employment and Labour Thulas Nxesi said this past week that the Unemployment Insurance Fund has appointed auditors ‘to follow the money trail’ and track whether coronavirus financial relief is being distributed fairly to employees.
Nxesi said that there are already indications that some people and companies have allegedly taken advantage of the help being advanced to workers and are seeking to enrich themselves.
“It is alleged that there are companies that have not paid the workers what is due to them. We are aware of some companies allegedly loaning employees the money and that is not legal.
“We are also aware of other companies that are allegedly paying part of the money and not the full amount, as well as companies using the money for something else other than the intended purpose. If this all this allegations are true, we appeal to companies to do the right thing still,” said Nxesi.
He has also appealed to companies to ensure that they are compliant with the Unemployment Insurance Act, adding that the fund has made payments even in cases where companies are not fully compliant because it did not want to disadvantage workers.
UIF and job losses
UIF commissioner Teboho Maruping, meanwhile, stated that an increase in job cuts could affect the UIF’s ability to provide much-needed coronavirus support to employees.
Maruping said in a statement on Friday (19 June), that the ‘biggest worry’ the fund now faces is the number of jobs that are being shed, or are going to be shed, and how this will put a strain to the liquidity of the fund into the future.
“With the announcement by President Cyril Ramaphosa this week on advanced level 3 of the lockdown, a lot more people will be going back to work in various sectors. This will partly relieve the fund. This is a good time for employers to do right and declare and contribute for workers to the UIF.
“If ever UIF demonstrated how critical it is to the lives of workers, the contribution that it has made during the lockdown should be evidence enough. We hope those companies that have not declared their workers will do right and declare all workers,” he said.
The commissioner added that he has instructed the fund to ensure that, going forward, it will find the best ways to remain liquid while ensuring that they make the difference to the workers who need them the most at the moment.
In May, the UIF disbursed close to R6 billion to 1,440,757 individuals to help them cope with the worst effects of the lockdown. Cumulatively since 16 April, the UIF said it has paid over R23 billion to 3,663,932 workers represented by 322,422 employers.
The relief payments are part of the basket of services government has laid out to different sectors as a means to ride out the worst of the Covid-19 pandemic which has seen businesses close and workers left without an income.
The UIF says it has plugged this hole for most workers who are able to take care of their families with this income replacement.