Government to deal with compensation fund corruption

The department of labour’s compensation fund unit has been mired by wide ranging fraud and corruption. To date, fraud cases in the department have amounted to about R 26-million.

The department’s director-general, Nkosinathi Nhleko, made this disclosure before the parliamentary select committee on labour and public enterprises last week. He assured the committee that the labour department was already dealing with these challenges; having devised a turnaround strategy to address them.

Other problems that dog the fund include a backlog in the processing of claims, revenue collection, low staff morale, poor communication with department stakeholders, debt management as well as non-compliance with the Public Finance Management Act (PFMA).

“We have received disclaimers, qualifications and are at risk of getting a disclaimer again due to the seriousness of the problems at the fund,” said Nhleko.

Nhleko added that some of the problems in the fund dates back years ago. The turnaround strategy for the compensation fund includes looking into business process and systems. The project team has been established within the fund which will report to him.

“The team has also conducted a leadership brainstorming workshop to review and confirm challenges and weaknesses and identify short, medium to long term turnaround interventions.”

He also revealed that the fund has also requested assistance from the Road Accident Fund (RAF) to look into its technical capacity from their turnaround experience. A forensic audit will also be conducted to investigate the main cause of inefficiencies and the extent of fraud.

Nhleko told the committee that the long-term intervention would look at defining the future business operating model which would incorporate areas of organisational values and culture, performance management framework and fraud and risk management strategy.

The compensation fund system has been manipulated by criminal elements within the department who defrauded it of millions of rands. This was evident in the recent case involving two employees of the department and a physiotherapist who made false claims to the fund.

Maxwell Ramaphosa and Samuel Mfeleng, both former employees of the department of labour’s compensation fund, are alleged to have defrauded the department of R2.1-million. The duo is facing 15 counts of fraud and 26 of money laundering. They are out on bail of R3 000 each.

It is alleged that they are part of a syndicate involving physiotherapist, Bonewamang Sehunoe of Rustenburg in North West. Sehunoe was convicted and given a suspended sentence of five years.

The compensation fund is a business entity of the department of labour. The fund handles cover for compensation of workers injured during work or diseases sustained or contracted by employees during the course of occupation.

It also makes provision for cover against death resulting from injuries and diseases sustained during work.