Charges of fraudulent subsidy use climb

The Ministry of Social Development has ramped up its investigations of fraudulent use of the wage subsidy scheme, doubling the number of those criminally charged in just the past month.

The subsidy scheme paid out close to $14 billion to businesses that could prove a loss in income due to the pandemic and related restrictions.

Along with public pleas for businesses to return funding they did not need, the Ministry of Social Development (MSD) redeployed the majority of its benefit fraud investigations staff to the task of monitoring the scheme.

Investigators initially sought written confirmation from about 1000 businesses it had identified as needing to provide further information they had met wage subsidy criteria.

MSD has now revealed it has filed criminal charges in 14 cases involving close to $630,000 of public money — an increase from seven cases and nearly $370,000 as of May.

The cases are being heard across the country including in the Auckland, Waita¯kere, Christchurch and Hawera district courts.

One case resulted in a guilty plea in the Auckland District Court in February when the individual admitted three charges of receiving wage subsidy funds they were not entitled to, totalling $18,745.60, which they had since repaid.

Sentencing is expected this year. That case was understood to be the first criminal prosecution relating to improper access to the “high-trust” subsidy scheme.

MSD’s fraud investigators have completed 14,836 pre-payment and post-payment checks on wage subsidy applications, resolved 5553 allegations of misuse, completed 533 wage subsidy-related investigations, and to date recouped $797.9 million in repayments.

A spokesman for MSD said more prosecutions were to come as investigations into individuals and businesses were completed.

MSD has also referred 10 cases involving larger sums of money and complex investigation to the Serious Fraud Office.

Data released in May showed the wage subsidy schemes had supported 47 per cent of jobs in the country.

In 2020, 69 per cent of employed men and 54 per cent of women were supported by a wage subsidy.

This fell to 54 per cent and 41 per cent respectively in 2021.