COMPENSATION FUND EXPOSED: Incompetence, dysfunctionality and mass fraud.

COMPENSATION FUND EXPOSED

INCOMPETENCE, DYSFUNCTIONALITY AND MASS FRAUD

By Rona Bekker

Dear employer

NEASA applauds parliament’s public finance watchdog, Scopa, for not only refusing to further tolerate the Compensation Fund’s total incompetence and dysfunctionality, but actively tightening the noose around the Fund’s corrupt officials’ necks.

During the National Assembly’s hearing on the irregular, fruitless and wasteful expenditure, as well as the annual report and financial statements of the Compensation Fund for the financial year 2019/20, Scopa Chair, Mkhuleko Hlengwa, ordered Employment and Labour Minister, Thulas Nxesi, to conduct a full-scale investigation into the Fund after numerous adverse reports by the Auditor-General.

The Department’s Director-General, Thombile Lamati and the Fund’s Commissioner, Vuyo Mafata, during said hearing, ridiculously stated that the issues in terms of reporting are “due to employers not complying, not registering, not submitting relevant documents or updating documents”.

The culprits further, unsuccessfully, attempted to hide behind the excuses of transitioning from old, outdated and ineffective data systems which they have ‘inherited’. It is common knowledge that the dysfunctionality of the Fund is due to incompetence on the part of the fund, a corrupt and unproductive workforce and a dysfunctional online submission and registration system. To attempt to lay the blame at the feet of employers, who have been complaining about the dysfunctionality of the Fund for years, is nothing but a red herring aimed at diverting the attention from the Fund’s deep-seeded issues.

As Scopa confirmed, the endless reports on continuous irregular, fruitless and wasteful expenditure was but the tip of the iceberg with regards to the true issues of the Fund.

The following deeply concerning issues were, not only raised by the various probing parties at the hearing, but also fully acknowledged by the Fund’s Commissioner and Director-General, as well as the Minister:

• incessant, blatant, rampant, and unprosecuted fraud by the employees and                      management of the Compensation Fund, for the past 10 years;
• complete lack of skills of the employees at the Fund, from top management through        the ranks;
• millions of Rands wasted on irregular, fruitless and wasteful expenditure, with                  absolutely no consequences for the responsible parties;
• the incompetence of the Minster, the Commissioner and the Department’s Director-        General, as well as the Fund’s COOs, CFOs and other managers. Despite which,            still received performance bonuses and thirteenth checks;
• in an attempt to ensure proper skills attraction, as well as the avoidance of                      corruption, an argument for the conversion of the Fund to a full Schedule 3a entity          was made by the Minister – therewith effectively acknowledging that any Fund                administered by the State will ultimately fail;
• the Minister and Commissioner’s baseless argument that the failure of the Fund              should be attributed to the non-registration and non-compliance of employers, yet          they have no functional arm that ensures compliance; and
• no functional claim systems – backlog in claims, dysfunctional website and lack of            proper communication.

NEASA has, for years, reported on and criticised this rotting Fund. NEASA has also condemned the Fund with regards to the proposed amendments to the COID Act, which aims to remove the only remaining functional elements of the Fund, which are the ceding of claims to banks and other financial institutions and the use of third-party administrators to handle all claims.

With yet another State-controlled fund collapsing into ruins, it begs the question, is it not time for government to realise that they are incapable of running these types of funds and that it should be outsourced to the private sector?

Rona Bekker is a Senior Policy Advisor at the National Employers’ Association of South Africa (NEASA).

For more information:
NEASA Media Department
media@neasa.co.za