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UIF coronavirus payouts halted amid new fraud probe

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The Unemployment Insurance Fund (UIF) has halted making payments to workers who lost their income due to the Covid-19 crisis as its systems are investigated, Business For South Africa (B4SA) says.

B4SA represents SA’s largest companies, and was formed to coordinate the corporate response against Covid-19.

“It is with deep disappointment that B4SA has learned from its representatives at Nedlac that all payments of Unemployment Insurance Fund (UIF) Temporary Employer/Employee Relief Scheme (TERS) benefits have been halted pending investigations by the Auditor-General. B4SA has been advised by organised labour representatives that they share this disappointment.”

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It is understood that the Auditor-General is investigating system integrity problems at the UIF related to the TERS system, B4SA says.

UIF spokesperson Makhosonke Buthelezi confirmed that payments have been temporarily suspended as control “deficiencies” – including past payments made to people who are deceased, imprisoned, or who are minors – are investigated

The auditor-generals office alerted the department of labour and employment to the irregularities, Buthelezi told Moneyweb.

“B4SA strongly supports the mitigation of fraud risks, and urges that criminal charges should be brought against all alleged perpetrators. However, the unilateral halting of all payments, and the very poor communication of the situation by the UIF leadership, is grossly unfair to all employees and their employers who have legitimate claims,” the organisation said in a statement. “That the UIF system is incapable of remedying the relatively small number of fraudulent claims without disadvantaging the millions of legitimate claimants is an indictment on the UIF system.”

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Business Insider SA has asked the UIF and the department of labour and employment for confirmation, but has not yet received a response to queries.

The TERS payouts have been hit by instances of fraud, with one group of fraudsters receiving a payment of R5.7 million which was intended for 1,400 workers.

The UIF has also picked up thousands of claims that have been submitted on behalf of dead South Africans, and found that 100,000 fake ID numbers were used in claims.

The TERS payouts have also been marred with long delays and technical problems, with companies complaining that their employees’ applications not being processed or paid. Other applications were denied without explanation and businesses struggled with a general failure to get a response from the UIF.

“The continued delays and lack of transparency from the UIF in regard to their capacity challenges has had the unintended consequence of creating mistrust between employers and employees,” B4SA says.

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It also alleged that UIF Call Centre capacity has been “radically reduced” as of last week, which will add to frustrations.

“B4SA has been urging the UIF for some time to engage meaningful third party support. A team from B4SA members is lined up to provide assistance on a pro bono basis, but so far this offer has not been taken up. Urgent intervention is required.”

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