Social grant syndicate arrested for fraud

This week, 17 suspects were arrested who are linked to a social grant fraud syndicate that was operating within the South Africa Social Services Association (SASSA) grants system. In addition to the 17 arrests, one person handed themselves in to the authorities.

A statement released by SASSA said that the suspects were arrested through the co-operation of the Directorate for Priority Crime Investigations (HAWKS), Crime Intelligence of the SAPS, the Fraud Management and Compliance Department of SASSA, together with a private auditing and accounting firm.

This is not the first time SASSA has been the focus in media reports. In May Justmoney looked at government’s plans to stop deductions being taken off of people’s social grants, as well as the legality of some of the products sold to social grant beneficiaries.

The syndicate

SASSA revealed: “The syndicate operates inter-provincially and the operation is the biggest one to date. More than 500 cases of ID fraud related to these fraudulent social grants were uncovered during the internal investigation.”

SASSA added: “This syndicate is implicated in having defrauded SASSA of more than R2.3 million involving more than 400 social grants. This syndicate forms part of a broader on-going criminal investigation involving more than 4,776 fraudulent social grants amounting to more than R34.7 million identified to date. Eight SASSA officials and 14 Cash Paymaster Services (CPS) employees remain under investigation.”

Despite the 17 arrests, SASSA highlighted that more arrests related to the syndicate and social grant fraud were imminent. According to SASSA, items found at the sites of the arrests included: laptops, scanners, copying machines, ID’s, copies of ID’s, ID templates, CPS enrolment machines, printers, electronic storage devices, bank cards and SASSA cards.

Reactions to the fraud

Lorraine Botha, Western Cape spokesperson on community development and Democratic Alliance (DA) constituency head for Cederberg and Bergrivier, said: “The DA in the Western Cape is alarmed that Easy Pay and Cash Paymaster Services (CPS), both subsidiaries of Net1, will continue to disburse social grants to millions of beneficiaries despite reports of unlawful deductions taking place under their tenure, which has led to an R800 million loss to SASSA of which a mere R1,5 million has been recovered.”

Botha revealed that, in her capacity as chairperson of the Standing Committee on Community Development in the Western Cape Provincial Parliament (WCPP), she “will call a joint committee meeting, along with the Standing Committee on Public Accounts (SCOPA) where SASSA must explain the impact of the R800 million loss in grant money. I will also call on the entity to report on all matters relating to its financial management.”  

According to Botha, SASSA will continue to use CPS to disburse grants until the contract runs out in nine months, despite the fraud that has been committed. However, she noted: “Terminating the contract before the nine month period runs out would result in beneficiaries not receiving their grants at all as SASSA does not have the capacity to disburse grants themselves.”

Botha added: “We are extremely concerned about the R800 million that has been lost by SASSA due to corruption and the impact this may have on its ability to deliver to beneficiaries who totally depend on social grants.

“I have commissioned a committee report detailing the unlawful deductions. The report will focus on the failing Dispute Resolution Measures that have been in place since 2012, as was presented to the Standing Committee on Community Development [on 31 May 2016]. The report will also contain the submissions made by the public to the committee as well as recommendations made by the committee.”

Handy tip: Keep an eye on your credit report to see if any fraudulent activity has been carried out on your accounts.