Social Development on investigation into social grant fraud

Update on the investigation into irregular payment of social
grants by Special Investigation Unit (SIU) and the Department of Social
Development

27 July 2006

In April 2005 the SIU was requested by the Minister of Social Development,
Dr Zola Skweyiya, to investigate fraud and irregularities in social grants and
pensions. The Department agreed to fund the full cost of the SIU investigation
– in 2007, it will contribute R60 million to enable the SIU to employ 200
investigators to work on the investigation. About 100 of these have already
been employed.

To date the major focus of the SIU has been to remove an estimated R1.5
billion of the irregular grants from the system. In the past year, 110 000
grants were cancelled though the joint efforts of the SIU and the Department.
This will save taxpayers more than R400 million per year. The SIU aims to
cancel another 125 000 grants worth R500 million in the current year.

Since the inception of the investigation we have concentrated on the Civil
servants registered on Social Pension System (SOCPEN) and receiving a social
grant.

Over the last 12 months:

* about 44 000 government employees receiving grants have been
investigated;
* 21 588 have been found to be on the system irregularly and will be referred
to their departments for disciplinary action;
* 22 117 have been found to be entitled to a social grant
* approximately 7 000 are foster care grants
* approximately 15 000 were either temporary workers or stopped working but
remained on Persal
* over 15 000 have had their grants cancelled already
* nearly 14 000 of those irregularly receiving a grant are being considered for
prosecution
* over 1 300 criminal investigations were completed
* about 650 government employees have already been convicted.

The majority of the convicted accused have been sentenced to a suspended
term of imprisonment. A number of the accused have also been sentenced to an
additional fine.

In most cases the convictions and sentences have been the result of a plea
bargaining arrangement between the State and the Accused. These plea-bargained
cases are in accordance with prosecution guidelines which have been determined
by the National Prosecution Authority. In other cases where Accused have
pleaded guilty the courts have imposed similar sentences.

Another 2 000 cases should be brought to court this year.

The SIU has also tried to recover money from those who are able to repay the
irregular grants they received, whether they are government employees or
private citizens. However, this is extremely cumbersome as a court litigation
is required to compel a debtor to repay, and they cannot be compelled to pay
more than they can afford.

In the meantime, nearly 3 000 people have agreed to start repaying some of
what they owe. The SIU has arranged that this be done through a salary
deduction and/or a formal Acknowledgement of Debt that is enforceable in court
should they default. This is not a settlement of their debt to the state, and
the Department or SIU is still able to use normal court processes to recover
the full amount owing, including any interest.

From an assessment done by the SIU in April, it emerged that:
* 65% agreed to pay their debt within 3 years
* 91% agreed to pay their debt within 5 years
* 97% agreed to pay their debt within 8 years
* 3% agreed to pay their debt over more than 8 years.

It is clear that a relatively small group have agreed to repay substantially
less than what they should be able to afford. In these cases, it is
unacceptable that they repay small amounts over long periods despite the fact
that they earn substantial salaries.

Thus the SIU has already identified a list of cases where it intends to take
legal action to ensure that proper repayments are made. The SIU is already in
the process of employing further staff for the project, and will be able to
take action on a larger scale soon.

The next phase of the investigation will focus on private individuals who
are receiving a social grant irregularly. We have compared Social Pension
(Socpen) system to a number of private and public employee databases and found
more than 400 000 private individuals who earn above the means test. These
cases are being further investigated.

This joint investigation by the SIU, the Department and the South African
Social Security Agency (SASSA), is on an unprecedented scale in South Africa.
Some 200 staff will work full-time for several years investigating hundreds of
thousands of potential cases, and taking thousands of cases to court for
criminal prosecution.

It is vital that we focus our efforts on those areas where we can make the
greatest impact to ensure that the investigation achieve the goal of saving
taxpayers and government billions of rand over the next few years, and to
ensure that government grants reach those who are most in need.

For more information, contact:

Special Investigating Unit : Trinesha Naidoo
Cell: 084 400 6721
Tel: (012) 8430028
or
Department of Social Development : Lakela Kaunda
Cell: 082 782 2575
Tel: (012) 312 7653

Issued by: Department of Social Development
27 July 2006

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