UIF TERS: SIU reveals rampant corruption and weak systems

THE stench of corruption, maladministration, and outright fraud emanating from the Unemployment Insurance Fund’s (UIF) Temporary Employee Relief Scheme (Ters) is enough to make even the most hardened South African taxpayer gag.

A damning briefing by the Special Investigating Unit (SIU) to Parliament’s Standing Committee on Public Accounts (Scopa) has laid bare the rot within the UIF, exposing how millions of rand meant to cushion workers and businesses during the Covid-19 pandemic were siphoned off through fraudulent claims, irregular procurement processes, and a shocking lack of accountability.

The SIU’s investigation, initiated under two presidential proclamations (R23 of 2020 and R8 of 2021), has uncovered a litany of failures, from the UIF’s inability to verify claims to the brazen theft of funds by government employees, companies, and even inmates.

The findings paint a picture of an entity ill-prepared to handle the rollout of a critical relief scheme, with weak IT systems, poor risk management, and a culture of impunity that allowed corruption to flourish.

Under Proclamation R23, the SIU investigated allegations of maladministration in the procurement of media services to create awareness about Ters. The UIF had awarded contracts worth R6.1 million to five media houses, claiming they were the sole providers of the required services.

However, the SIU found that the UIF’s bid adjudication committee had misled the entity, as the media houses had only claimed a sole mandate for specific products, not the entire service.

“The media houses did not state they were solely mandated to provide media services. However, officials at the department misread the letters and then misled the bid adjudication committee by saying that the media houses had the sole mandate to provide all media services,” acting chief national investigations officer of the SIU, Zodwa Xesibe, said.

The SIU found that the UIF should have conducted an open tender process, and the payments to the media houses were irregular. Despite this, no action has been taken against the bid adjudication committee members who made the misleading claims. Instead, senior officials implicated in the scandal were given final written warnings and a one-month salary deduction—a slap on the wrist that the SIU itself deemed inadequate.

“The SIU did not believe the sanction befitted the wrongdoing committed by the officials, and raised this with the UIF,” the report noted. This lack of consequence management is a recurring theme across government departments, where officials implicated in wrongdoing often escape with minimal repercussions.

The second phase of the investigation, under Proclamation R8, focused on fraudulent Ters claims by individuals and entities not entitled to the benefit. The SIU found that at least 6 000 government employees had double-dipped, receiving salaries while also benefiting from Ters. Shockingly, only 174 of these employees have been referred for disciplinary hearings, with no dismissals reported.

“The low number of referrals and no dismissals were made, which concerned the Committee and further highlighted the issue of applying consequence management across government departments,” the report stated.

The SIU also uncovered cases where companies fraudulently used the information of former employees to submit claims. In one egregious example, a doctor in the Eastern Cape misappropriated funds meant for taxi drivers. “The doctor purported to represent all the taxi associations based in the Eastern Cape and made claims on behalf of all the taxi drivers in the province. The doctor subsequently misappropriated the funds released by the UIF for the drivers,” Xesibe revealed.

Even more alarming were the cases of inmates and deceased individuals whose identities were used to claim Ters benefits. “The SIU audited the ID against the data it obtained from the Department of Correctional Services and discovered that some inmates had claimed to benefit from Ters,” Xesibe said.

Foreign nationals were also implicated, using stolen IDs to submit fraudulent claims.

A recurring theme in the SIU’s findings was the UIF’s weak IT systems and failure to integrate with other government departments, such as Home Affairs and the Companies and Intellectual Property Commission (CIPC). This lack of integration made it easy for fraudsters to exploit the system.

“The UIF did not have the capacity to review each application to verify whether the applicants qualified to benefit from the scheme or not,” head of the SIU Advocate Andy Mothibi said. He further said that the UIF’s failure to perform due diligence allowed companies to continue claiming Ters benefits even after their operations had resumed.

The SIU recommended that the UIF integrate its systems with Home Affairs to verify identities and update its employee and payroll database annually. However, these recommendations come too late for the millions of rand already lost to fraud and corruption.

Perhaps the most damning aspect of the SIU’s findings is the lack of accountability for those implicated in wrongdoing. Despite overwhelming evidence of misconduct, senior officials at the UIF have escaped with minimal consequences.

ActionSA’s Alan Beesley expressed his frustration, saying: “It is surprising that the UIF dismissed no officials for the offences committed, which underlines the broader issue of a lack of consequence management across government.” He suggested that independent disciplinary hearings be introduced to address conflicts of interest and intimidation.

The SIU echoed this sentiment, with Mothibi saying: “The outcomes of the disciplinary processes against the 174 officials were demonstrative of weak consequence management and may warrant further consideration by the government regarding the use of independent disciplinary panels.”

The UIF Ters scandal is a stark reminder of the systemic failures that plague South Africa’s public institutions. From weak systems to a culture of impunity, the rot runs deep. While the SIU has done commendable work in uncovering the extent of the corruption, the real test lies in whether the government will take decisive action to hold those responsible accountable.

As the DA’s Patrick Atkinson aptly put it: “The senior officials in the UIF should lose their jobs because they cannot detect the extent of the fraud.” Until there is meaningful consequence management, South Africans can expect more of the same—a cycle of corruption, waste, and broken promises.

The UIF Ters scandal is not just a failure of governance; it is a betrayal of the millions of South Africans who looked to the government for relief during one of the darkest periods in the country’s history. The question now is whether those in power have the will to fix what is broken—or if they will simply allow the rot to fester.