Department of Labour Compensation Fund: corruption and wasteful expenditure

OPEN LETTER

To:                 The Public Protector – Ms Thuli Madonsela
Copy:           The President of the Republic – Mr Jacob Zuma
                         The Auditor General – Mr Thembekile Makwethu
From:          The UDM President – Mr Bantu Holomisa, MP

subject:         Department of Labour Compensation Fund: corruption and wasteful expenditure

Dear Ms Madonsela

The above mentioned matter has reference.

R2,5 billion Compensation Fund investments misuse

The UDM understands that the main purpose of this fund is to compensate for occupational injuries and diseases. Reserved funds normally are invested with the public investment cooperation for unforeseen mass occupational injuries that might occur in future and to cater for increases on injury on duty, monthly pensions for employees and dependents.

Payment of advances to private companies – R546 million

There are serious allegations which fingers the Compensation Commissioner who has paid some companies in advance to the tune of R546 million. He is alleged to have undertaken a very risky action by paying advances to these companies without any invoices to reconcile the payments.

Debtor’s book has increased: R3,3 billion in 2010 to 8,9 billion in 2013

The Compensation Commissioner appointed a debt collector by the name of NICS since 2010 that has already been paid about R160m. In contrast, the debtors’ book has increased from to R3.3billion in 2010 when they took over from internal staff to R8.9 billion in 2013. This is evidence that NICS is not effective at all but is collecting on the efforts made by internal staff by charging 10% of collection.

The contract was deliberately manipulated and changed by the Compensation Commissioner to deviate from the initial tender specification whereby NICS was supposed to collect on older debts beyond 180 days. NICS collects on simpler cases to make quick cash while internal staff is also pursuing the same cases.

The Commissioner has flatly refused the legal advice by the Senior Council that the contract should have been terminated on grounds of poor performance.

We therefore appeal to your good office, President’s office and the Auditor General to speedily attend to this seemingly looting spree taking place at the Compensation Fund. As you will be reading this document, especially Mr President, you will find that the Minister of Labour Ms Mildred Oliphant is being accused of conflict of interest with the Accenture IT Company, where her close relative is a director. As a result of this apparent corrupt relationship, Accenture was procured to a closed tender and the Minister did not declare her relationship to Accenture.

Kindly advise.

Mr Bantu Holomisa, MP
UDM President