“Prior to the lockdown, the UIF paid benefits only to retrenched workers who had contributed to the Fund. The process was typically initiated by individual walk-ins to Labour Centres,” said Nxesi.
However, the national lockdown changed this, as the UIF needed to support all laid-off workers who applied for relief – even those whose employers had not registered for UIF.
“Let’s be clear. The UIF is not some ‘money tree’ with unlimited resources. So, as we repurposed the fund to deliver to laid-off workers, we also needed to build in the necessary financial controls and ensure the liquidity and long-term sustainability of the Fund itself,” Nxesi said.
Nxesi said that these controls included:
- The use of reference and ID numbers to prevent duplicate payments.
- Verification of banking details.
- Password protection.
- Checking claims against UIF and SARS databases.
- Engaging with independent external experts to carry out data analytics on all suspicious transactions.
- The Auditor-General agreed to conduct an interim audit, probing issued directions, processes and document in preparation for the full audit of the COVID-19 benefit payments.
“I said at the time: ‘we don’t start paying out benefits before controls are in place.’ Again, further delay – but I believe this was necessary,” said Nxesi.
At the time of his statement, Nxesi said that 75 cases of suspicious transactions had been identified.
16 of these cases had been finalised – with two criminal cases being instituted – while the other 59 cases remained under investigation.
“Control measures are constantly reviewed and strengthened. We are determined that theft from the state and from laid-off workers will not go unpunished,” said Nxesi.
He added that since the start of the lockdown, the UIF has distributed R28 billion in TERS benefits, which has covered 520,000 employers and provided income support to about 6 million workers.
“This scale of support is unprecedented,” he said.
Security flaw in the TERS system
The UIF TERS system recently suffered major security flaws that have forced it offline.
Business for SA uncovered an urgent security flaw in the TERS application system and recommended to its members that they not submit their applications.
“We realized there was a problem soon after 13:00, when a few businesses that were attempting to lodge claims on behalf of their employees notified us they were seeing details of other firms’ applications. We then issued the warning,” said Business for SA.
It reported the issue to the UIF commissioner, and the system was taken down.
However, after the system was redeployed on 24 June, the issues persisted, resulting in the UIF taking down the system again.
South Africans will receive their money
Nxesi confirmed that the UIF was aware of the risks of fraud with its new system, and had planned accordingly.
“They [The UIF] will tell you of the strategy which was developed to ‘follow the money’, and that we budgeted for a complete audit to account for every cent paid out,” said Nxesi.
“We also made this very clear to the employers … We said: we will support you and your workers, but when this is over, you will be audited.”
Nxesi also confirmed a previous statement made by UIF commissioner Teboho Maruping regarding outstanding TERS payments.
“I can assure the Committee that the UIF will honour its commitment to pay special COVID-19 TERS benefits for three months, with June being the last of these payments,” said Nxesi.
According to Maruping, the UIF believes that testing of its application system will be completed by Friday 10 July, and the system will be opened over the weekend if everything goes according to plan.
“The good thing is that the data is safe and we will ultimately be able to finalise the claims and pay monies due to employees once we have resolved the current issues,” he said.
“I wish to apologise to employers and employees for further delays, we are however working around the clock to fix the problem.”