The Department of Employment and Labour’s Compensation Fund has addressed recent allegations of financial misconduct, with millions in losses over the last two financial years.
The Compensation Fund has faced serious allegations of bullying, intimidation, and poor governance, with reports indicating that injured workers often wait years for their payments, despite the fund holding over R150 billion in reserve.
This fund, managed by the Department of Employment and Labour, offers insurance to employees for injuries, diseases, or deaths that occur in the workplace.
It also covers medical expenses and lost income for employees while protecting employers from direct financial liability regarding workplace accidents.
The fund has received 14 consecutive audit disclaimers, raising long-standing concerns about its financial controls, leadership issues, and overall service delivery.
The fund has suffered significant financial losses, rising from R10 million in the 2022-23 fiscal year to R71 million over the past two fiscal years, allegedly due to fraudulent activities.
The Citizen reported that this figure reflects only identified fraud, suggesting that further fraudulent activities may yet be uncovered. This implies that the financial losses could be even more significant.
The fund has confirmed that fraud cases are currently under investigation, with some matters being referred for prosecution and civil recovery processes underway to reclaim misappropriated funds.
These actions, according to the fund, are part of a broader initiative to strengthen consequence management, reinforce accountability, and rebuild institutional credibility.
While acknowledging ongoing challenges, such as historical audit disclaimers and weaknesses in legacy systems, the fund stressed that reforms are being implemented to stabilise operations.
“The fund acknowledges fraud losses over recent financial periods; however, it is critical to emphasise that these losses have been brought to light,” said the department’s Acting Director-General Jacky Molisane.
Molisane reiterated the department’s commitment to restoring public confidence, emphasising that transparency, accountability, and ongoing corrective actions are essential to rebuilding trust.
She said that these losses were discovered largely through the fund’s own audit, oversight, and investigative processes.
“Reflecting a maturing system that is increasingly capable of detecting, exposing, and responding to fraud rather than allowing it to remain hidden,” she said.
Concerns over governance
Molisane said the fund is working to enhance accountability and safeguard the resources entrusted to it for the benefit of workers and their dependents.
She stressed the seriousness of the situation and the urgency for corrective action, emphasising that any diversion of funds intended for injured workers is unacceptable and calls for decisive intervention.
Molisane claimed that the exposure of fraud should not be interpreted as evidence of institutional inaction; rather, it reflects improved transparency and strengthened internal controls.
The fund said it has made strides in reducing fraud-related losses. Through efforts with banks and the Asset Forfeiture Unit, the fund has recovered about R46 million linked to fraudulent activities.
Additionally, preservation orders have been secured in nine finalised cases, freezing R22.9 million to prevent criminals from accessing the stolen funds while legal processes are underway.
In October 2025, the fund implemented biometric identity management controls, such as fingerprint verification, to secure high-risk systems.
Since this implementation, the fund has reported zero incidents of fraudulent changes to banking details, closing a major loophole that had been historically exploited.
