The missing R1-billion: Labour Department must explain Compensation Fund figures

The Labour Department must explain what happened to R1-billion in Compensation Fund payouts, after a presentation to the Parliamentary Labour Committee this week revealed an inexplicable R1-billion shortfall in compensation paid out to injured workers in this last financial year.

During 2009/10 there has been a dramatic decline in payouts - from 150,090, amounting to R2,9 billion in 2008/09, to 87,800, amounting to R1,9 billion in 2009/10.

What is particularly peculiar is that the number of compensation claims made has remained steady in recent years (there was a fractional fall of just 1.5% in the number of claims made last year) yet the number of claims being paid out has halved in the space of a year:

• 2007/08: 209830 claims received; 1448 repudiated; 162411 paid
• 2008/09: 203711 claims received; 654 repudiated; 150090 paid
• 2009/10: 200599 claims received; 127 repudiated; 87800 paid

There may be a legitimate explanation for this, but neither the Director General of Labour, Jimmy Manyi, nor the Compensation commissioner, Mr. Shadrack Mkhonto, could provide one, when presenting the figures to Parliament.

These are finalised figures for 2009/10, barring the final month of March - and it is difficult to believe that in one additional month, an additional R1-billion of payouts will be registered.

There is obviously no good reason to expect that the number of legitimate claims could have halved in the space of a year. Either there were incorrect claims being made in the past, which warrants an explanation from the Department, or about 80000 legitimate claims to the Compensation Fund have simply disappeared from the system. Or, alternatively, the numbers are just wrong. Whatever the reason, we cannot have a situation where there is a R1-billion discrepancy in Compensation Fund payouts.

When questioned by the DA and members of the portfolio committee, Manyi, Mkhonto and their staff, including board members were unable to explain why the figures indicated such a drop in payments to injured workers. The committee resolved that this situation was unacceptable and have demanded that the Department of Labour and senior officials of the Compensation Fund return in 7 days with detailed answers to explain this situation.

What makes this all the more unbelievable is that Mr. Manyi attempted to claim an additional R1-billion was needed for his department, and he then, as the DA exposed, tried to invent a series of reasons why that money was needed. While there is no evidence to connect the two events, at the very least the Department of Labour should be carefully investigating where this R1-billion has gone, before they start asking for more money.

Statement issued by Ian Ollis, MP, Democratic Alliance deputy shadow minister of labour, May 6 2010

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