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Bank error in your favour… State is treating pandemic funding with the same contempt it has for your taxes

05 July 2020 Gareth Stokes

A few months into lockdown, and the fault lines in how government handles and distributes ‘other people’s money’ are already beginning to show. Recent media reports range from the possibly benign overpayments at the UIF, to the usual allegations of tender fraud, to the 20 major crimes being investigated by the Health Sector Anti-Corruption Forum (HCACF).

Bank error in your favour

The so-called ‘finger slip’ or administrative overpayment varies from one incident to the next. It is, for example, quite easy to add two zeros to a pay-out if the online cashier is not paying attention. R350 becomes R3 500. But these slip-ups, which might be excused, quickly accelerate to the next level. Many locals will remember the 2017 NSFAS error that resulted in a student receiving R14,1 million to further her studies at the Walter Sisulu University. The beneficiary of this mishap (sic), who was expecting a mere R1 410 from the fund, went on an R810 000 spending spree lasting three months, before handing herself over to the Hawks. It is not clear if her case has been finalised; but we assume that the overpayment, minus the spent amount, would have been clawed back by now. 

This weekend the Sunday Times revealed the tip of the iceberg in the processing of pandemic-related salary assistance through the Unemployment Insurance Fund (UIF). A whopping R5,7 million that was intended for 200 workers was paid into an individual’s bank account. The newspaper does not believe this to be an isolated incident, adding that the Asset Forfeiture Unit (AFU) has already frozen 28 bank accounts for similar contraventions. A system that relies on an employer to disburse emergency funding to his or her staff is fraught with risk, especially when the business receiving the pay-out is experiencing serious cash flow problems due to the impact of lockdown on income. We should imagine that a national audit of pandemic-related UIF payments will reveal both intentional and unavoidable misallocation of such funds. Imagine, for example, the nightmare situation where a UIF receipt, intended for employees, is offset against an overdrawn bank account. The bank may simply not allow the business owner to disburse these funds. 

Flattening the job loss curve

South Africa was fortunate to enter crisis at a time when the UIF was cash flush. Although the fund was designed to support the unemployed, it made sense to unlock some of these funds to prevent a jobs bloodbath. One might say that government used this fund to flatten the unemployment curve. The UIF reports that is has paid out more than R23 billion since mid-April 2020, benefiting more than 3,5 million employees at more than 320 000 employers. Time will tell whether these funds filtered through to the intended recipients. We will also soon learn whether they dipped into the UIF too early, because the fund will soon have to make pay-outs to the millions who lose their job due to lockdown-inspired business rescue processes, insolvencies, and liquidations. 

Another area of concern is around the oversight of funds dished out by government directly and via its Solidarity Fund. It should not surprise patriotic South Africans that a mountain totalling somewhere near R500 billion in cash will lure a criminal element. The Special Investigations Unit (SIU), quoted by Fin24.com, has warned of corrupt and fraudulent tendencies among those who intend to grab a share of government’s social relief funding. They noted that the HSACF was already investigating more than 20 allegations of serious corruption, fraud, and maladministration relating to the disbursement of said funds.

Apologies for my sports car splurge

Much of the media storm around misuse of pandemic relief funding has centred on race-based procurement practices and price gouging in the supply of personal protection equipment (PPEs). David Makhura, premier of Gauteng, was forced to answer questions about whether he had links to a certain businessman who was allegedly awarded a R100 million tender. This after the businessman in question apologised for circulating a video showing off his purchase of three Porsches, a Lamborghini Urus SUV, and a Jeep. 

We leave it to you to grade the premier’s dismissal of said allegations, made during a presentation by the Gauteng Provincial Command Council. He claimed: “Out there in the social media, there are those tweets that are out there to try and link us with people we do not know, people we have never met in our lives”. As an aside, we notice that the ruling party is quite taken up with the phrase: ‘command council’. Quite soon after the National Coronavirus Command Council was introduced, certain media outlets started dropping ‘Coronavirus’ from their reporting. It is probably too early to delve into what this means for our political future, except to say there are already moves afoot to change the constitution to allow for the combining of local and national elections. 

Stamping out corruption

Some progress is being made with regards a sub-set of the pandemic-related corruption allegations; though the list offered up by the SIU may include pre-pandemic matters. They told Sunday Times that 45 health sector related cases, amounting to more than R3 billion, were at an advanced stage of investigation by the Directorate for Priority Crime and Investigations: “Fifteen of those cases are on the court roll, five cases are pending decisions, and 25 are pending investigation”. But those among us hoping for tough action against the politically connected should not hold our collective breath. 

The ruling party recently reinstated two of its Limpopo leaders implicated in the VBS Mutual Bank scandal, despite criminal prosecutions getting underway. It would appear that the position, sanctioned from the top, remains ‘innocent until proven guilty’. And senior politicians can swear by this adage because the justice system is broken. NPA head, Shamila Batohi, is wholly immersed in rebuilding an institution that was severely compromised by a decade of political interference; meaning the political prosecutions continue to take a back seat.

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