Nearly R5.7 million in Covid-19 relief funds, intended for 200 workers at risk of starvation, were allegedly diverted to just one man in what Asset Forfeiture Unit (AFU) investigators are calling a glaring instance of fraud and money-laundering.
In an apparent manipulation of the Unemployment Insurance Fund (UIF) relief system, a large labour broker’s Covid-19 Temporary Employment Relief Scheme (Ters) claim was allegedly paid to one man, Tshepang Phohole.
It is claimed Phohole went from having R12 in his account to having more than R5m, much of which was then quickly funnelled to friends. Within five days, he had gone through nearly R5.7m, according to the allegations.
On Friday, the National Prosecuting Authority (NPA) secured a preservation order from the Pretoria high court, freezing money in 28 bank accounts. The NPA said in its application that, on 14 May, Phohole’s bank balance surged from R12.46 to R5 688,814.66, and that he immediately began channelling the cash to people in his circle of friends in and around Pretoria.
By May 27, when the Financial Intelligence Centre froze Phohole’s account, only R7 155.86 remained. Another R100 201.33 was found in another Capitec account in his name and a total of R3.2m in friends’ accounts. Nothing is known about what has happened to the remaining R2.4m.
The NPA’s Sipho Ngwema said investigators acted quickly to secure the money that remained. ‘We are investigating whether there was complicity on the part of those working at the UIF. There is a suspicion that there may have been criminal activity between UIF officials and the end recipient of the money.’
According to the Sunday Times, the alleged fraud occurred when there was a system change at the UIF to pay claims directly to individuals rather than to their employers.
News24 reported that the Gauteng High Court in Pretoria dismissed the DA’s bid for the minister of small business development to stop using BBBEE status, race, gender, age or disability when considering who gets Covid-19 aid.
But the court ruled that the criteria by which people were chosen to receive aid under the Debt Finance Scheme and the Business Growth Resilience Fund be set aside and declared unlawful for being too vague.
In its judgment, the full bench of the High Court said: ‘The outbreak of Covid-19 in South Africa has brought sharply into focus the fissures in our society caused by race, gender and other forms of egregious discrimination.’
The court ruled that the minister must include race in the redrafted regulations, despite the DA’s arguments to the contrary.
Judge President Dunstan Mlambo said: ‘In the reformulation of criteria to be employed in the distribution of funds under either the Debt Finance Scheme or the Business Growth Resilience Fund, the minister must take into account race, gender, youth and disability.’
The DA had asked the court to declare it impermissible and unlawful for government to use Broad-Based Black Economic Empowerment (BBBEE) status, race, gender, age or disability as criteria for determining who will receive aid from government during the Covid-19 pandemic.
But the judgment said: ‘If we need any persuasion about the importance of our past and the [deep] seated racial divide in contemporary South Africa and how the need for scarce resources fall overwhelmingly on those who are poor and therefore black, look no further than on whom the brunt of the effect Covid-19 falls.’
Positive cases rose by 4 621 to 97 302, and the toll rose to 1 930, said Health Minister Zweli Mhkize.