It is interesting to note that South Africa was not alone in having to contend with an army of fraudsters as soon as it became known that the usual tender checks and balances were to be dispensed with in handing out emergency Covid relief and funds for protective personal equipment (PPE). The Special Investigating Unit in the police last year was investigating R5 billion in dodgy PPE tenders, covering 658 contracts. That’s about half the total spending announced by the government last year for Covid-19.
This story from the US appears to prove the point that, huiman nature being what it is, wherever free or easy money is doled out, the fraudsters will pick up the lion’s share.
This story would be funny were it not have such tragic consequences: it seems a good portion of the money went to fraudsters in China, Nigeria, Russia and elsewhere. In SA, a long parade of chancers and tenderpreneurs made off like thieves with billions of rands that were intended to alleviate suffering and sickness. The local press reported on the story of Hamilton Ndlovu who made the fatal mistake of boasting on social media about his new, expanded luxury car fleet. SA Revenue Services decided to pay him a visit, and a more subdued Ndlovu then issued an apology.
The wheels of justice sometimes move slowly, but they do move eventually. All the more reason to get accountants involved in the process – especially when “emergency” funds are being dispensed – at an early stage. – Editor
Blake Hall, CEO of ID.me, a fraud prevention service, told Axios that the US has lost more than $400 billion to crooked claims.
The US may have been robbed of as much as half of all money given out through unemployment benefits during the pandemic, Hall told the outlet.
Haywood Talcove, the CEO of LexisNexis Risk Solutions, estimated that most of the stolen money, at least 70 percent, probably ended up outside the US, according to Axios.
Much of the pilfered funds likely went to criminal syndicates in China, Nigeria, Russia and elsewhere, he said, according to the outlet.
“These groups are definitely backed by the state,” Talcove told Axios.
A lot of the money was also likely stolen by US street gangs, who have been taking a greater share of the stolen funds in recent months, Axios reported.
Criminals were likely able to defraud the government by stealing personal information and using it to impersonate would-be unemployment claimants, Axios reported.
Other groups, the report said, may have tricked legitimate claimants into handing over their personal information.
Low-level criminals, or so-called mules, would then be given debit cards and asked to withdraw money from ATMs, the report said. That money could then be transferred abroad, often via untraceable cryptocurrencies like bitcoin.
It’s long been assumed by many politicians and government watchdogs that criminals would make off with at least some of the emergency pandemic relief funds.
State unemployment systems were ill-prepared for the demands of the pandemic. It was widely assumed that some of the hundreds of billions doled out would slip through the cracks, but many politicians said it was critical to get the money out as quickly as possible.
Now, the latest estimates reveal the scope of the fraud that took place over the past year.