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State pays out R21.8m to reimburse social grant fraud victims

Social development minister Lindiwe Zulu told parliament that 20,787 fraud cases had been registered with the Post Office by June 28 2019.
Social development minister Lindiwe Zulu told parliament that 20,787 fraud cases had been registered with the Post Office by June 28 2019.
Image: Trevor Samson

The state has forked out almost R22m in the past year to reimburse social grant beneficiaries who have been victims of social grant fraud.

Social development minister Lindiwe Zulu has told parliament that 20,787 fraud cases were registered with the SA Post Office by June 28, 2019. A total of 12,432 social grant beneficiaries had been reimbursed for the losses they suffered to the value of R21,779,451.47, she said.

Zulu was responding to a parliamentary question from Inkatha Freedom Party MP Liezl van der Merwe who wanted to know the number of fraud cases that had been reported over the 12 months between June 2018 and last month.

She revealed that none of the cases could be considered resolved despite the beneficiaries having been reimbursed, as the criminal investigations were still under way. She said no amounts had been recovered as this was dependent on the outcome of the criminal investigation.

Delivering her department's budget vote speech earlier this month, Zulu announced that the government was going to spend R68m to investigate social grant fraud.

In a separate response to parliament published on Tuesday, the minister explained that, due to the extensive delays in investigations, the Post Office had agreed to refund beneficiaries within 14 days of the fraud having been reported and relevant documents being submitted. The criminal investigations would continue with no negative impact on the beneficiaries.

Zulu said the delays in dealing with the initial number of cases reported was a result of the need to establish processes and ensure accountability for dealing with these matters, which were not foreseen when the service was initially implemented.

"The backlog is currently being worked down, so that the timeframe of 14 days for reimbursement, as agreed to, will be met," she said.

She said both the SA Social Security Agency (Sassa) and the Post Office were constantly trying to improve system controls to prevent the continuation of this fraud.

"Issues which are being addressed by Sassa include the rollout of biometric registration for all users who access the Socpen system, which is used to register new beneficiaries and generate payments.

"This biometric information will then be required to access the system, ensuring that there is non-repudiation for all transactions processed on the system," said Zulu.

Sassa is also implementing a verification process for changes to the method of payment elected by the beneficiary. This will mean that the change will not be implemented until verified by a second official, but that the initial method of payment will continue to remain in force until the change is verified, so as not to disrupt payments.

There will also be an implementation of a daily bank verification where the details of the beneficiary (name, surname and identity number) are confirmed by the banks as matching those of the bank account into which the social grant is paid prior to withdrawal of the money.

"Any records where the information does not match, apart from the payments to beneficiaries who receive payments through registered institutions, will not be extracted until such time as the record has been corrected. This will prevent payment into a bank account which does not belong to the beneficiary," she said.

Zulu said they would establish a working team which would include the Reserve Bank, the Banking Association of SA and the Banking Risk Information Centre to identify trends and weaknesses in the administrative processes, which will inform additional measures that should be implemented. 

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