Social Grants Anti-Fraud Campaign: Special Investigation Unit briefing

Social Development

29 August 2006
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Meeting Summary

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Meeting report

PORTFOLIO COMMITTEE ON SOCIAL DEVELOPMENT

SOCIAL DEVELOPMENT PORTFOLIO COMMITTEE
30 August
2006
SOCIAL GRANTS ANTI-FRAUD CAMPAIGN: SPECIAL INVESTIGATION UNIT BRIEFING

Chairperson:
Ms T Tshivhase (ANC)

Documents handed out:
Investigation into Social Grants

SUMMARY
The Special Investigation Unit addressed the Committee on its progress in investigating fraud in the social grants system. They reported that they had had reasonable success, but that the problem was widespread.

The Committee commended the Unit on its success and asked questions of clarity relating to its relationship with other agencies and department in the social services cluster; weaknesses in the regulatory system; the Unit’s budget and funding for work done on contract for state departments and disciplinary steps against public servants involved in grants fraud.

MINUTES

Special Investigating Unit (SIU) presentation

Mr W Hofmeyr, SIU Head, reminded the Committee that the SIU was not the Scorpions, but was an independent body. They did not have powers of arrest, but were able to summons people to appear before them. The unit looked at corruption and incidents of maladministration. For example, if they discovered that a tender was awarded without following the correct procedure, they could litigate to have the tender canceled. The staff of the SIU had grown from 67 in 2001 to 442 at present. It was hoped that by the end of 2006, the staff would number 600. He explained that the difficulty in investigating corruption was that the evidence was difficult to obtain. The child support grant was the one grant which was the most vulnerable to fraud. More than half of the corruption cases were in KwaZulu-Natal (KZN). This was partly because the provincial government had spent quite a bit of money on investigating fraud by the time the SIU got involved. He pointed out that there was no capacity in the Northern Cape as they were working from the Free State at the moment. He added that some of the cases discovered were people who were unemployed when they received the grant and had not disclosed that they were now employed. There were however a number of people who were removing themselves from the system. The numbers of these incidents were increasing. Interest on the amounts owed was charged from the time of signing acknowledgment of debt documents.

Discussion

The Chair said that the information presented was something that the Committee had been waiting for. The previous week, the Committee had visited the Eastern Cape where the Deputy Regional Director
had briefed them on the issue of corruption.

Mr M Masutha (ANC) said that the work that the SIU was doing was commendable. He pointed out that the SIU depended on funds from the different departments that sub-contracted them. He wanted to know whether this was a permanent arrangement or whether the government would give them more money. He wanted to know what the future relationship between the SIU, the SA Social Security Agency (SASSA), the Department of Social Development (DSD) and the Inspectorate would be. The creation of the Inspectorate arose because Parliament could see that an entire establishment was needed to look at the issue at hand. The Inspectorate was not being established at the pace that they had envisaged. SASSA had said that they would do quality control and they did not see another body doing this. The future relationship between these bodies was therefore important. It could happen that some agencies could feel that others were taking over their responsibilities. He felt that it was important for the different government systems to interact with each other. He pointed out that that the SIU had the power to sell assets to recover money owed to government departments. He had not heard this mentioned in the presentation. He wanted to know whether the SIU had identified any weaknesses in the regulatory framework which needed to be strengthened. The Constitutional Court had ruled on the issue of imprisonment for the failure to pay debt. From the presentation it seemed as if there was still this possibility.

Mr F Davids, Deputy Head of the SIU, said that SASSA was a new entity and they were having discussions with them. The incidents of fraud were widespread and systemic and therefore SASSA would need the SIU beyond the current three years because of its capacity and expertise. The role of the Inspectorate was currently being assessed as far its mandate and the functions it would have were concerned. Issues around the integrity of the people doing investigations was however very important. The SIU had the capacity and was independent. Referring to the regulatory framework, he said that the SIU had not actually applied its mind to the issue. They would however look at this later.

Mr Hofmeyr said they had received significant funding from Treasury as well. Over the last three years, the SIU's budget from Treasury had tripled from R20 million to R60 million a year. This was overshadowed however by the R100 million which it received from the different departments each year. They had made presentations to Treasury and had requested more funds as they did not want to become too dependent on the departments. Using the powers of the Asset Forfeiture Unit (AFU) was a possibility. It was however not viable if small amounts such as R3000 or R10 000 had to be recovered. Where syndicates were involved, the AFU would be brought in. The issue of government systems talking to each other was a very critical issue, but was not an easy one to solve. Treasury had started a review of all its transversal systems and how it “talks” to the systems from other departments. The aim was to try to integrate the system. Referring to imprisonment, he said that at the moment, the court could issue a fine for a certain amount if a person was found guilty of a criminal offence. If the person failed to pay the fine, the person could be imprisoned. For civil debt however this was different. The Constitutional Court ruling had stated that you could not force someone to pay an amount they could not afford. It was the policy of the SIU to try to persuade people to pay their debts before they were taken to court.

Mr M Waters (DA) commended the SIU on the work they were doing. The conviction rate of 91% was very high if one considered the rate of convictions for other crimes in the justice system. Referring to public servants who had lied on their application forms, he asked if there was a benchmark set for the amount of money received which determined whether they were taken to court. He felt that stronger action needed to be taken should people not pay after signing an acknowledgment of debt. He wanted to know what interest rate was being charged and why there was no backdating of the interest to when the fraud had begun. In the case where the recovered money was taken from people's pension payout, he wanted to know if interest was charged.

Mr Hofmeyr agreed that the 91% conviction rate was high, but that in most cases people were pleading guilty. In the case where people had lied on application forms, he said that guidelines had been developed with the National Prosecuting Authority (NPA) and the fine was related to the amount of money that the State had been defrauded of. The interest rate was 15, 5%. Backdating the interest was an issue. The reality however was that the investigators knew roughly how long the people had been on the system and what they had been paid. For somebody however to actually calculate the backdated interest for each individual was not in the power of investigators or within their capabilities. Backdating the interest would also depend on the fraud being proven. The SIU also felt that interest needed to be charged on debt when it was taken from people's pension payouts.

Mr Davids referred to the benchmarking and said that the amount taken was not used as a benchmark. The grading was done as in the presentation.

Ms H Bogopane-Zulu (ANC) also commended the SIU for the work they had done. Referring to people receiving child support and disability grants fraudulently, she asked if the SIU's investigation included verification of documents with the Department of Home Affairs, especially for the child support grant. She gave the example of cases where children died and no death certificate was issued and parents still received grants. She also wanted to know if the fraudulent disability cases were disabled people who were corrupt.

Mr Hofmeyr said that they did work with Home Affairs in order to verify beneficiaries’ details.

Mr P Bishop, Programme Manager in the SIU, added that SOCPEN ran its database once a month against the population register. Provinces however sometimes take more than a month to report deaths to the national office so these might not be picked up on a monthly basis.

Mr Hofmeyr added that it was difficult especially in cases where there was a birth certificate for non-existent babies. The databases were big and it was not always possible to check on all beneficiaries. They did however appeal to the public to help in reporting these cases. The DSD had a hotline and some of these cases were being picked up from there. Referring to the disability fraud cases, he said that one of the main concerns were doctors who certified people as disabled even though they were not. Many of them get paid to do this. This was organised crime and was one of the focus areas at present. There were cases as well where doctors classified people as disabled because the case was not very clear and they felt sorry for them. People with AIDS were a problem as classification depended on their CD4 count and these counts could fluctuate. This was a policy issue and needed to be sorted out with the Committee.

Mr Davids added that the SIU had discovered about 1 800 cases in Krugersdorp relating to organised crime involving disability cases. An agent would approach someone and then produce false documents to enable a person who was not disabled to be declared disabled. 

Ms H Weber (DA) asked if the Department of Home Affairs was co-operating in dealing with the fraudulent child support grant cases and how they dealt with this.

Mr Hofmeyr said that they had fairly good co-operation with Home Affairs. The integrity of the data however was a problem as certain documents could be bought fraudulently.

Mr B Mkongi (ANC) referred to private beneficiaries and asked what the relationship was like between the SIU and other departments. He gave the example of some people who produced fraudulent death certificates. He wanted to know whether the grants that were lapsing included those that were because of death or whether it was voluntary lapsing. He wanted to know whether the SIU thought that it had qualitative capacity to continue, compared to the private sector, since people were paid more in the private sector for this kind of work.

Mr Hofmeyr said that the lapses included lapses from all sources. They were however looking at the increase in lapses above the normal amount. The amount had doubled which would imply that this was due to people voluntarily allowing the grant to lapse. He added that they did not have a big enough budget. The other problem however was to find the expertise needed for the unit. This was a slow process and even if they had the money, the challenge would be to find the people with the right skills for the job. They had a programme however where they were training young investigators. The budget however would be increasing by 70% in the coming year.

The Chair referred to some women who were receiving three grants for one child and also to cases where people had been dead for some time and yet the family was receiving a grant.

Mr Bishop said that in order to apply for a child support grant, the parent would have to get a clinic card for a child in order to get a birth certificate. The parent could take the child many times in order to get the birth certificate and then get onto the system. Investigating these cases requires investigators to visit homes that required capacity. The means test could be used as well to combat this practice. Referring to the disability grant he said that people were selling false medical certificates in order for people to get onto the system.

Mr Hofmeyr said that some of the numbers given might be frightening. In discussion with the British social security agency they had estimated that they had a 3% fraud rate. They had a very good system that had been running for years. Three percent of the 10 million persons in South Africa on grants would translate into 300 000 persons. It was important to remember that over the last few years the whole system had been broadened. Over the last four years an extra 7 million child support grants had been given. In this process of broadening the system, it should be expected that problems such as fraud would be picked up as well.

Ms M Mosheshe, Director: Compliance and Grants Review in SASSA, said that many of the problems was due to the lack of integrity of the data. SASSA hoped to clean this up. SASSA depended on correct data, such as identity numbers from Home Affairs, to award grants. The challenge was to work closely with these other departments so that the data received was reliable. They have been engaging with Home Affairs at a high level. There is a strong anti-corruption unit in the department which will follow up on cases that were identified. The lack of integrated data from other sources has also been a challenge. The example given was that in order to award a foster care grant, a valid court order number was needed. This would mean that everything was in order. The Department of Justice however did not have a central database of court order numbers. This meant that they could not verify these court order numbers. SASSA was hoping to sign high-level agreements with these departments which would ensure that systems and data were more reliable.

Ms X Makasi (ANC) said that it was not easy to catch everyone. In some cases people would go to doctors with crutches in order to be declared disabled. She suggested that community workers be strengthened as they worked on the ground. They could then administer the means test in the homes.

Mr L Nzimande (ANC) asked what the relationship was like with other agencies that also did investigations as he was concerned that they might overlap. He also said that there were also cases where people had informed the DSD to stop a child support grant but the DSD continued to put the money into their accounts. They were now being held accountable for this amount. He also wanted to know what the equity plans of the SIU were especially regarding the disabled.

Mr Davids replied that inter-agency co-operation was one of the critical success factors in these investigations. The SIU had a number of investigations where it needed the co-operation of other agencies. It had therefore developed a number of service level arrangements with these agencies. The premise was to have a win-win situation with these agencies. The SIU operated at times on the border of its mandate. They had a very good relationship with the South African Police Services (SAPS) at high level. Regarding the Scorpions, he said that some of the SIU personnel were part of a joint task force which investigated organised crime. The National Director of the NPA was kept informed of investigations done by the SIU. These mandate issues were constantly monitored so that they did not move onto other agencies’ turf.

Mr Hofmeyr said that they were aware that there were cases where beneficiaries had informed the DSD to be taken off the system, but were not. Given the scale of the problem, it was not possible to get to everyone.
 
Mr Waters asked what disciplinary programmes existed in each department. He also wanted to know why the public servants did not apply for amnesty when it was offered to them.

Mr Hofmeyr said that the amnesty that had been offered did not apply to public servants. Referring to the disciplinary measures, he said that government was trying to take initiatives to ensure that all the disciplinary processes did not disappear into a decentralised system where there is not enough capacity. The Department of Public Service and Administration (DPSA) was trying to set up a system of accountability. The guidelines would not be totally uniform.

Mr Masutha said that he was also concerned about employment equity plans in the SIU, regarding disabled people, as it helped in job creation. He suggested that perhaps the foster care grants should be done administratively by the DSD instead of the courts. They had observed this in Australia. The courts were clogged with so many things and perhaps it could be freed if the DSD took this responsibility over. He pointed out that foster care placements lapsed automatically after two years. People were not taken off the system however because it was just too complicated to do.

Mr Hofmeyr said that the SIU took the issue of employment equity as a serious matter. Their efforts at present were to address racial and gender issues. This was a real challenge in the area in which they operated. Traditionally, white males dominated this area. The programme that had been started to train new investigators was a one-year learnership. In this programme 50% of the participants were women. Top management was still a problem. At middle management, they had approximately 40% women. The issue of disability was highlighted as something that had to be addressed. It was not easy however as investigators needed to be out on the road most of the time. The challenge was therefore to create an enabling environment for disabled people. They were keen to talk to organisations in this sector to help them in this. Referring to the clogging of the courts, he said that this was problem that was being worked on. There were problems dealing with things only administratively as well. It was important that people doing this were people of integrity.

Ms Mosheshe added that SASSA had been engaging with DPSA around the
issue of disciplinary proceedings. All the departments had a backlog of cases. It was not an easy process and there were many challenges involved. A body had to be constituted that would deal with all these cases per province. SASSA had agreed with DPSA, and engaged the premier's office in various provinces and encouraged them to take responsibility for these cases.
 
Ms Bogopane-Zulu said that they had told the DSD many times that doctors should not be used to certify disabled people. A doctor could be used for a chronic illness which was not a disability. She requested SASSA to address this. A disability was permanent normally and a panel should be used to certify disabled people. Those with AIDS should be classified as chronic and not as disabled. She pointed out that it was important for SASSA to communicate properly with the public in order to combat fraud. Referring to the chaos in the Department of Justice, she said that data needed to be centralised electronically. She suggested that the Committee should push for this.

Ms I Direko (ANC) said that using social workers to secure foster care grants might be a problem as many of them were “questionable”. Some of them were in cahoots with foster parents. It was therefore important that trustworthy people do it.

The Chair thanked the team from the SIU and said that the Committee was very happy with what it had heard. There were still issues that had to be resolved which they would like to be informed of in future.

The meeting was adjourned.
 

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