South Africa: Sassa Recovers R150-Million in Ineligible Grants Payments

But the agency is bleeding funds due to fraudulent payments still being made

SASSA has managed to get back about R150-million in Social Relief of Distress (SRD) grant payments made to ineligible beneficiaries. But the Auditor-General, briefing MPs in Parliament, added that there were serious non-compliance issues, confirming that grant payments are still being made to ineligible beneficiaries. This comes amid a shocking discovery by two Stellenbosch University students that their ID numbers had been used to defraud SASSA by illegally applying for the R370 SRD grant using their ID numbers. The Department of Social Development (DSD) also underspent R1.5-billion on social assistance, primarily in child support grants and SRD grants. The Auditor-General has urged SASSA to improve the system it uses to verify beneficiaries.

The Social Security Agency of South Africa (SASSA) says it has recouped nearly R150-million in Social Relief of Distress (SRD) grant payments made to ineligible beneficiaries. However, the Auditor-General noted serious non-compliance issues, confirming that grant payments are still being made to ineligible beneficiaries.

This comes amid a shocking discovery by two Stellenbosch University students that their ID numbers had been used to defraud SASSA by illegally applying for the R370 SRD grant using their ID numbers. They first revealed this while speaking to the HeartFM radio news team and GroundUp on Thursday.

While using legal methods to dig further into the system, the students checked about 37,000 ID numbers from 2006 and discovered that there had been a high SASSA application rate for people born between January 2006 and May 2006. This means that almost all of the people born in the country during this period would have applied for the SRD grant around that same time and as soon as they turned 18, which is extremely unlikely. We will be publishing more articles on this in the coming weeks.

Meanwhile, the Auditor-General on Wednesday briefed the Portfolio Committee on Social Development on its latest report.

Senior audit manager Puleng Molapo explained that between May 2020 and August 2021, SASSA made payments to individuals who were not eligible for the SRD grant. “This was because internal controls were inadequate to perform validations and prevent payments to ineligible persons as the entity did not maintain effective, efficient and transparent systems of financial and risk management and related internal controls,” Molapo told MPs.

This resulted in non-compliance with the Public Finance Management Act Framework.

He said that the Auditor-General recommended that SASSA consider working with companies that retain data to ensure that beneficiaries are checked for eligibility before payments are made.

Other irregularities identified include a R74-million payment for services not rendered and overpayments amounting to R316-million to the controversial company Cash Paymaster Services (CPS). Molapo said CPS was still undergoing liquidation and “the process to recover the overpayment is still in progress”.

R1.5-billion underspend on social assistance

Molapo said the department underspent R1.5-billion on social assistance. He explained that the “largest portion” is attributed to the child support grant (R792-million) and the SRD grant (R591-million). “This was as a result of the changes in the SRD means test and the qualifying criteria for beneficiary applications,” he said.

He said the majority of beneficiaries receiving child support grants are between 18 and 35 years old. This could give an indication of the number of unemployed youth who have children between 0 -18 years and who are dependent on the grant. “We have a crisis and something needs to be done within the government at large so that these individuals can be self-sustaining,” Molapo said.

The Auditor-General also revealed that nearly R15-million in grant payments was paid to people who had died. This is because the national population register kept by Home Affairs is not always updated, and deaths in rural areas aren’t always registered immediately.

R1.5-million worth of social grants was paid to SASSA employees and R133,800 to Postbank employees, even though this is not allowed. “SASSA only relies on the beneficiaries themselves to declare their alternative sources of income. There are no systems in place to detect all incomes received by beneficiaries,” he said.

The Auditor-General recommended that SASSA develop a plan to verify the eligibility of grant beneficiaries on a regular basis and talk to SITA (State Information Technology Agency) to interface different financial systems which will indicate the beneficiaries already on Socpen, a government payment system, who earn an income and review them for eligibility.

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Another recommendation was for disciplinary action to be taken against SASSA employees who do not declare that they get social grants.

Michelle Magerman, business executive at AGSA, said although means testing is necessary, it should be done “without frustrating citizens”.

“There must be a balance. We must be cautious that when we implement the means test, we are not so stringent that we frustrate the citizens. If I, as a beneficiary, go to SASSA and they scan my thumb, it should already tell them which bank I’m with, what account I have, whether I’m registered on the CIPC, if I earn income etc. It should happen in real-time,” she said.

Bridget Masango, committee chair, criticised the lack of consequence management within the department which she said has allowed financial mismanagement to continue. “There’s a link between the increase in the money being lost and a lack of consequence management.”

On the transition from using CPS to the Post Office to pay grants, Masango said, “We were told the Post Office has the best footprint in rural South Africa. But where are we sitting now? We are back to where beneficiaries have to spend money to travel to collect their grants, but when they get to the pay points, there’s no money.”

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