Venkat Raman
Auckland, April 24, 2020
The government has stepped up its procedures to verify if companies are properly utilising the wage subsidy scheme implemented on March 25, 2020 following the enforcement of Alert 4 to contain the spread of Covid-19.
Thus far, the government has paid out $10.4 billion to more than 1.6 million people.
Complaints of irregularity
However, there have been complaints of irregularity and non-compliance.
Indian Newslink understands that these include non-payment in full or part of the wage subsidy to employees, use of the wage subsidy to pay employment termination obligations, use of the wage subsidy for purposes other than its prescription and other misappropriation.
Finance Minister Grant Robertson said that the wage subsidy scheme was introduced to protect the integrity of New Zealand businesses.
He said that now an audit process is now being conducted on priority to investigate into the complaints that have been received.
Detecting fraudsters
Social Development Minister Carmel Sepuloni said that a dedicated team from the Ministry of Social Development (MSD) is working with Inland Revenue Department (IRD) and the Ministry of Business, Investment and Employment (MBIE) to ensure that businesses using the scheme as intended and are not being undermined by the actions of a few.
“We moved quickly to get support in place for businesses and workers early by designing a high-trust model for the wage subsidy to get money out the door. We knew that a majority of New Zealand business owners would access the scheme as intended, to protect jobs, support workers’ wages and stay connected during the lockdown. It is great to see these business owners doing right by their workers,” Mr Robertson said.
He said that the government is keen to ensure that the taxpayers’ money is not misused.
From the start, those applying for wage subsidy were told that they would have to repay the subsidy if they provided false or misleading information in their application. They were also told that they may be subject to civil proceedings for the recovery of any amount received that they were not entitled to, and/or prosecuted for offences under the Crimes Act 1961.
The Team and Numbers
A team of 104 fraud experts and investigators is working to identify cases that may require investigation.
MSD has thus far completed 2435 random and targeted audits, of which 2252 have been resolved and additional reviews of 183 cases are being undertaken.
It is understood that 292 allegations have been received thus far and that MSD has resolved 88 of these allegations.
As on April 20, 2020 there were 1170 complaints and allegations received by MSD, MBIE and IRD.
As at April 21, 2020, about 1280 applicants had voluntarily advised that they want to refund all or part of the subsidy. This has led to $16.2 million of refunds requested and $6.9 million has already been refunded.
As at April 21, 2020, the government’s auditing had resulted in 56 applicants being asked to refund either all or part of their subsidy. A total of $1.25 million has been requested from these applicants with $168,000 already refunded.
MSD will lead criminal prosecutions in collaboration with other agencies.
Chance to correct
Ms Sepuloni said that a majority of businesses are doing the right thing and hence do not have to worry about the audit process.
“For some businesses, circumstances change following receipt of the subsidy, including where insurance may have been received, or new revenue forecasts show the business will not suffer a 30% drop. A number of businesses have come forward when this happens by offering to repay the subsidy, and we encourage any business who may have made a mistake to do the same. But New Zealand taxpayers and those who have accessed the scheme properly expect to see a fair process. If a business provides false or misleading information and knowingly commits a crime, they will be held to account. That is a given,” she said.
*
