The Department of Employment and Labour's Compensation Fund has noted the article titled “Whistleblower flags R142m consultant scandal at Compensation Fund." While the issues raised are acknowledged as matters of public interest, the article presents a narrative that is, in several respects, incomplete and potentially misleading, as it does not fully reflect the broader legal, operational, and governance context within which the Fund operates.

The Compensation Fund reiterates its commitment to lawful governance, transparency, and the responsible stewardship of public resources. All decisions and actions undertaken by the Fund are guided by applicable legislative and regulatory frameworks, including those governing public finance, risk management, internal controls, and financial reporting.

The procurement processes referred to in the article were conducted in line with applicable statutory requirements and established governance procedures. These processes were subject to oversight by duly constituted structures, including Bid Evaluation and Bid Adjudication Committees, and were further supported by probity assurance measures aimed at ensuring fairness, compliance, and integrity.

It is also important to note that some of the concerns reflected in the article appear to originate from individuals who are currently, or have previously been, subject to disciplinary or performance management processes. These processes relate to matters such as non-performance, insubordination, and failure to fulfil assigned responsibilities. While such accountability measures are necessary within a well-governed institution, they may give rise to differing perspectives. Accordingly, it remains important that all allegations are assessed objectively and within their full context.

The Compensation Fund operates within a complex environment that incorporates social insurance functions, high-volume claims administration, medical benefits processing, and investment management.

The audit challenges experienced by the Fund are longstanding and systemic, spanning approximately fifteen years, and stem from entrenched institutional factors such as historical data limitations, gaps in employer verification processes, fragmented claims records, and weaknesses in audit trails and supporting documentation.

These issues have evolved over time and cannot be attributed solely to recent interventions.

With regard to the EMS Solutions contract, the Fund clarifies that this was not a duplication of prior work. Bid TCF 03:2024/25 constituted a separate and competitively conducted procurement process, informed by evolving operational requirements and the need to strengthen ongoing audit remediation efforts.

The decision to engage external technical expertise was based on identified internal capacity constraints, particularly in specialised financial, accounting, and actuarial areas required to address complex legacy challenges.

The suggestion that public funds were expended without corresponding value does not adequately reflect the progress achieved. The interventions implemented have contributed to measurable improvements, including the timely submission of annual financial statements, progress in addressing audit disclaimers, strengthened internal controls, enhanced financial reporting processes, improved data integrity, and the introduction of additional control measures such as biometric and account verification systems.

At this stage, no confirmed procurement irregularities have been identified, and accordingly, no matters have been referred to law enforcement or investigative bodies. The Department remains committed to taking appropriate action should any substantiated concerns arise and continues to prioritise transparency and accountability in all its operations.

Commenting on the matter, Acting Director-General Ms Jacky Molisane stated:
“The Department remains committed to ensuring that all procurement and governance processes are conducted in a lawful and transparent manner, and that they are able to withstand appropriate levels of independent scrutiny. In this regard, the Honourable Minister, Nomakhosazana Meth, has directed that a formal request be submitted to the Auditor-General of South Africa to prioritise a review of the tender in question, to provide additional assurance and further strengthen public confidence in the integrity of the process."

The Compensation Fund remains focused on strengthening governance, improving audit outcomes, and ensuring that it delivers effectively on its mandate to protect and support workers in South Africa.

For media inquiries, please contact:

Teboho Thejane

Departmental Spokesperson

082 697 0694/ teboho.thejane@labour.gov.za

-ENDS-

Issued by: Department of Employment and Labour

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