Nxesi UIF ters grant suspension

Minister of Labour and Employment, Thulas Nxesi.
Photo by Ashley Vlotman/Gallo Images

UIF Ters: Minister Nxesi ordered to explain suspension of payments

The DA and SA’s business community are dismayed by the decision to suspend the Ters system due to a fraud probe by the Auditor-General.

Nxesi UIF ters grant suspension

Minister of Labour and Employment, Thulas Nxesi.
Photo by Ashley Vlotman/Gallo Images

Demands have been raised by the South African business community and opposition parties for Employment and Labour Minister Thulas Nxesi to explain the suspension of the troubled COVID-19 Temporary Employer-Employee Relief Scheme (Ters) system on Wednesday 26 August.

The Unemployment Insurance Fund (UIF) suspended the payment system after the Auditor-General of South Africa (AGSA) launched a probe into “system integrity problems” involving the fund and Department of Labour.

The suspension means that relief funding for workers experiencing financial distress during the nationwide lockdown will no longer be distributed until the conclusion of the investigation; which is focused on understanding disturbing reports that people who are deceased, imprisoned, or who are minors have received past payments. 

B4SA accuse UIF of inability to manage Ters payment system  

Business4SA (B4SA) confirmed that the system was no longer active on Wednesday 26 August in a statement that bemoaned the unnecessary failure of the initiative to assist workers facing financial hardships.

“It is understood that the Auditor-General is investigating system integrity problems at the UIF related to the TERS system,” they said.

“None of the already significantly delayed payments on claims for the July/August period, for which claims opened only on 17 August, have been made,” they said, adding that efforts to catch up on backlog payments going back as far as April have also been halted.

The damning allegations against the UIF point to possible corrupt activities having taken place; B4SA said that the investigation must bring any potential perpetrators of fraud to book. 

With that being said, they bemoaned the suspension of the service in line with the ongoing investigation, saying that “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”.

“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,” they said. 

UIF Ters system hampered by persistent issues  

Disbursements of funds have been hampered by consistent system failures. April and May’s payments were not fully paid out, and payments for June came through at a trickle. 

A survey conducted by the National Employers’ Association of South Africa (Neasa) earlier in August indicated that more than half of employers who applied for Ters benefits for employees had yet to receive their June funds, and those that did receive Ters payouts in June were not all paid in full. 

It also reported that a small number of employers are still struggling to get payouts for May and April.

UIF claim anti-fraud measures are in place  

Speaking to MoneyWeb on Wednesday, UIF spokesperson Makhosonke Buthelezi confirmed that issues surrounding past payments to ineligible recipients – such as the dead and minors – are AGSA’s primary concerns. 

“This issue is under investigation, however, we normally check IDs against the Home Affairs database. That is why in some cases we’ve been able to stop payments where Home Affairs confirms that the applicant is deceased,” Buthelezi said.

He said that the Department of Labour has started a process of investigating AGSA’s findings, adding that measures have previously been introduced to prevent fraudulent activity within the UIF. 

“Some of the things we’ve done to curb fraud include bank verification prior to payment, blocking the payment where anomalies are detected such as multiple UIF reference numbers against one bank account, and we’ve also introduced business rules to deal with some of the control deficiencies like payments to underage or overage claimants,” he said. 

“We’re still going to appoint a team of auditors to follow up on all payments made.”

DA call on Nxesi to address anxious workers  

The Democratic Alliance (DA) said that the suspension is unacceptable, as it puts the livelihoods of millions of struggling workers in jeopardy. They have demanded that Nxesi explain the root of the problem at the UIF and alive the anxieties of those desperately awaiting payment. 

“Minister Nxesi must share with the public the real extent of the problem as uncovered by the Auditor-General and explain what is being done by specialist forensic auditors to get to the bottom of it,” said Michael Cardo, the DA’s Shadow Minister of Employment and Labour.

“Minister Nxesi must communicate with anxious workers when they can expect Ters payments to recommence.”

‘UIF serially defrauded’ – DA 

Cardo said that the UIF has long been suspected by the DA of being “serially defrauded”, and said that “fraud and corruption associated with the Ters scheme is deep-seated and widespread”.

“We know that the Ters scheme has been serially defrauded, including one well-known case in which a single individual received and laundered R5.7 million intended for 1 400 workers.”

“[Nxesi] needs to indicate whether any officials from the UIF and/or the Department of Employment and Labour have been suspended pending the outcome of the investigation,” he said.