The Municipal Gratuity Fund (MGF) has been ordered to repay a benefit of over R800 000 plus interest to a member who was in prison when the money was fraudulently claimed by an identity theft syndicate.
Pension Funds Adjudicator Muvhango Lukhaimane found that the fund failed in its duty to the member by not confirming his imprisonment status before making the payment.
This comes after the complainant's fund credit was paid out to the wrong person in September 2018 while he was in prison.
The complainant argued that the fund accepted a fraudulent claim supported by a fake ID and an unsigned affidavit. While the fund claimed to have followed verification processes, Lukhaimane ruled that they did not exercise due care and diligence.
The complainant had worked at Pikitup Johannesburg until his imprisonment on November 29, 2016.
On September 7, 2018, the complainant’s fund credit of R810 413.07 was paid to the wrong person while he was in custody.
He approached the adjudicator for intervention and submitted that the photo on the identity document submitted to the fund was not his. The fund took into account an affidavit deposed by Correctional Services purporting to be him. He indicated that the affidavit was not stamped and signed as required.
The complainant said after he exited service with his employer due to his arrest, the employer completed exit forms notifying the fund of his membership termination. They also informed the fund that he was in custody.
According to his submission, between June and August 2018, the fund communicated with an individual who had created an email address using his name. In August 2018, the fund received claim documents from this email address and responded with instructions to the presumed fraudster in September. However the complainant argued that the fund processed the claim despite knowing he was imprisoned and unable to access email.
The fund submitted that as part of its verification process, they conducted a telephonic validation with the bank to confirm the account status. The account was confirmed as open, active and in the name of the complainant.
The fund acted on the instructions apparently received from the complainant, and the claim was finalised in September 2018.
However, in January 2019, the fund was informed by the bank that the withdrawal benefit payment may be part of a syndicate involved in identity theft and unlawfully claiming benefits of retirement fund members.
The fund notified the internal forensic department, which resulted in a formal criminal complaint reported to police.
Lukhaimane said: “The fund must first liaise with its members and their employers upon receiving exit documents to confirm the veracity and authenticity of the claim documentation.”
Lukhaimane ordered the fund to reinstate the complainant’s fund credit together with the investment returns earned and pursue legal action on the fraud committed against it.
MGF chief executive Christine Seierlein said it was unfortunate that identity theft was something faced in their industry.
“For that reason when members exit their employment, the MGF’s exit documentation is only accepted via their employer to curb fraudulent activity. If a member is no longer linked to his employer, which was the case of this specific member, it remains a challenge to identify the member.
As we are aware of this problem, we do everything possible to prevent such fraudulent claims. The request for payment of this specific case was accompanied by a written request on a Correctional Services letterhead, which ended up to be a fraudulent reproduction of the letterhead. The administrator performed a bank validation with the member’s ID number and full names, which was successful and the payment was made, but unfortunately it was a fraudulent bank account,” Seierlein said.
Cape Times