Massive Covid-19 Relief Fund Fraud Exposed: R19.1 Million Misappropriated Through Phantom Employees

Five years after illicitly obtaining R19.1 million from the Covid-19 Temporary Employee-Employer Relief Scheme (Ters), Nikluis Manuel’s bank account holds a mere R74 balance. Manuel orchestrated a sophisticated scam involving 662 fictitious workers to fraudulently claim funds intended to support employees during the pandemic.

Exploiting the UIF’s Covid-19 Support Program

The Ters initiative was designed by the Unemployment Insurance Fund (UIF) to assist employers in paying workers who had lost income due to the Covid-19 crisis. However, Manuel allegedly submitted fabricated documents to unlawfully access these relief funds during the height of the pandemic.

Investigations revealed that Manuel’s company, NakoMang Trading Enterprise CC, was not even officially registered when it received its first Ters payment of R22,234.80 in May 2020. The business only became formally registered three years later, in May 2023, highlighting glaring procedural irregularities.

Legal Actions and Asset Recovery Efforts

The Special Investigating Unit (SIU) recently secured a preservation order from the Special Tribunal to recover the misappropriated funds from Manuel and his associates, including his partner Khanyi Angel Nokukhanya. Notably, Manuel transferred over R570,000 to Nokukhanya to facilitate the purchase of an apartment in Turfontein in October 2023.

The SIU is actively tracing the flow of illicit funds and plans to seize assets such as properties and vehicles acquired through the fraudulently obtained Ters money.

Scope and Complexity of the Fraud

According to SIU spokesperson Selby Makgotho, this case is part of a broader investigation into Ters-related fraud amounting to approximately R148 million. “The scheme was highly complex, involving falsified data submissions, inflated employee counts, and forged documentation,” Makgotho explained.

Investigators conducted an exhaustive review, including scrutinizing bank transactions, examining financial records, subpoenaing relevant documents, and interviewing witnesses to unravel the scheme.

Bank Transactions and Financial Discrepancies

Between May 2020 and October 2023, UIF deposited funds into Manuel’s bank account on 11 separate occasions. However, by the time the investigation commenced, the account balance had dwindled to just R74.

“This elaborate fraud diverted funds meant to support workers during the pandemic. Regrettably, the money was embezzled,” Makgotho stated.

Phantom Workforce and Non-Compliance

Manuel’s fraudulent applications claimed wages for 662 non-existent employees. The investigation confirmed that NakoMang Trading Enterprise CC had no actual staff and failed to meet legal business requirements, effectively rendering it a shell company.

“Our findings uncovered multiple irregularities, including non-compliance with regulations, improper fund allocation without oversight, and evidence suggesting system manipulation. Alarmingly, some payments were processed before the company’s official registration,” Makgotho added.

On-Site Investigation Reveals Virtual Operations

A visit by Sowetan reporters to the company’s former offices in Sunninghill, northern Johannesburg, revealed that the business vacated the premises approximately four years ago. An employee of the office park landlord disclosed that Manuel’s company primarily functioned as a virtual entity, only occasionally using the space for meetings.

“They stopped frequenting the office after law enforcement, including the Hawks, arrived with firearms and conducted raids. We could not pinpoint a specific office as they rarely operated from here,” the employee noted.

Next Steps: Criminal Referrals and Prosecution

The SIU has forwarded criminal case files to the National Prosecuting Authority (NPA) for further action. While the SIU lacks arrest powers, it plays a crucial role in gathering evidence and facilitating prosecutions.

“Our current focus is on tracing the misappropriated funds and securing preservation orders to recover the money. Subsequently, we will issue subpoenas to witnesses for statements that will support criminal proceedings,” Makgotho explained.

Wider Implications and Ongoing Investigations

This case underscores the vulnerabilities in emergency relief programs and the need for stringent oversight. Similar fraud schemes have been uncovered nationwide, prompting authorities to intensify efforts to safeguard public funds and hold perpetrators accountable.

As of mid-2024, the UIF and SIU continue to collaborate on multiple investigations targeting Covid-19 relief fund abuses, with total suspected fraud exceeding R200 million.

Source: Sowetan