Fradulent claims from SSG

Published Date: 08 January 2018 12:00 AM

News Parliamentary Replies

Name and Constituency of Member of Parliament

Mr Patrick Tay Teck Guan, West Coast GRC

Question

To ask the Minister for Education (Higher Education and Skills) (a) whether he can provide a detailed account of the recent spate of fraudulent claims from SkillsFuture Singapore (SSG); (b) what are the counter-measures taken; and (c) whether a full review will be undertaken to prevent future breaches.

Name and Constituency of Member of Parliament

Mr Desmond Choo, Tampines GRC

Question

To ask the Minister for Education (Higher Education and Skills) what will be the measures taken to prevent future abuses of SkillsFuture claims without stifling the growth of the SkillsFuture movement.

Name and Constituency of Member of Parliament

Mr Zaqy Mohamad, Chua Chu Kang GRC

Question

To ask the Minister for Education (Higher Education and Skills) (a) what is the outcome of the Government's internal investigation into the weakness of its controls over the $40 million scam on SkillsFuture claims; (b) whether there have been additional safeguards put in place since $2.2 million have been identified as false claims earlier in March 2017; (c) why did the rectification measures put in place from the earlier incident fail to prevent the recent occurrence; and (d) whether any staff or personnel have been suspended pending investigations on the lapse.

Response

1. The members asked about two separate cases of fraudulent claims. They were unrelated and of different natures.

2. In the first case, more than 4,400 individuals were found to have made false SkillsFuture Credit claims within a very short period last year, amounting to over $2 million. The fraudulent claims were made by individuals who did not attend any training, but falsely claimed to have done so. They acted largely on their own accord, prompted by a viral Whatsapp message. As at December, over 90% of these individuals have either made full payment or have made arrangements for instalment payments. Those who did not respond will be blacklisted for all future SkillsFuture grant claims until they have repaid. We will also not rule out further legal and enforcement actions.

3. Arising from that episode, SSG has reviewed the claims processes for SkillsFuture Credit. Individuals can no longer be directly reimbursed by SSG for use of SkillsFuture Credit. Instead, payments will be made to training providers, who then reduce the course fees chargeable accordingly. This arrangement has significantly reduced the risk of false claims under SkillsFuture Credit. At the same time, the claim process is still convenient and easy, and has not affected the number of individuals using their SkillsFuture Credit every month.

4. The second case involves $40 million of fraudulent claims. It did not involve SkillsFuture Credit or new SkillsFuture programmes. Instead, the fraudulent claims were for training grants drawn from the Skills Development Fund (SDF). The SDF was established in 1979 to support the training and retraining of workers and workforce upgrading programmes, and is built up through levies collected from employers. It is therefore a scheme that has been around for many years.

5. From its preliminary investigations, the Police believes that a criminal syndicate was behind this. The syndicate operated an organised network that utilised business entities, comprising employer companies and training providers to submit fraudulent claims. CPF documents provided by the syndicate listed employees that the Police believe were fictitious. In short, this appears to be an elaborate and conscious effort.

6. These fraudulent claims were made in 2017, with the majority being made in October. When these irregular claims were detected, SSG immediately suspended all payments of grants to the relevant business entities and reported the case to the Police. Five persons have been charged with various offences, such as engaging in a conspiracy to submit forged documents, and concealing the benefits from criminal conduct. The Police has also seized $6.7 million in cash and 11 kg of gold, and frozen slightly more than $10 million in bank accounts.

7. As investigations are on-going, I am unable to disclose more details about the case. What is clear is that this case involves fraudulent claims amounting to a large quantum. This should not have been allowed to happen. While we cannot always prevent all forms of fraudulent activities, SSG should have detected this case much earlier, especially when it was so egregious and the amounts involved were so large.

8. SSG’s priorities are as follows: Firstly, work with the enforcement agencies on the current prosecution to ensure that any perpetrators will face the full consequences of the law; secondly, systematically plough through other claims it has received over the past year. So far, there is no evidence of other cases of a similar nature.

9. Thirdly, improve the system of fraud detection, checks and audits. SSG has formed an Inter-Agency Process Review Task Force, overseen by the SSG Board, and comprising members from SSG management, the Accountant-General’s Department, Commercial Affairs Department and Ministry of Education. The task force is conducting a thorough review of how the fraudulent cases happened, and will evaluate the current fraud detection system and make recommendations to improve the system.

10. Specifically, I have directed SSG to strengthen its fraud detection system through data analytics. Fraudsters, who are going all out to cheat, are getting more sophisticated and their plans more elaborate. They will also evolve their approach. SSG’s detection system must be improved and become more sophisticated too. Through appropriate use of data analytics and drawing on data across government agencies, we can better detect false claims, without significantly affecting genuine employers applying for training grants to upgrade the skills of their workers. SSG is currently getting help from both private sector consultants and GovTech to get this done. It has restructured and strengthened the fraud detection and audit team. SSG has started implementing some of the measures manually, and will progressively automate and systemise them. By Q3 2018, we will have a good and effective data analytics system in place.

11. In response to Mr Zaqy Mohamad’s question, as of now, no staff member has been disciplined or suspended arising from the latest fraud case, as there has been no evidence of wrongdoing by any staff member thus far. But SSG will take necessary management measures to remedy this weakness in fraud detection capability. We must also take the real culprits to task, send a strong deterrent signal, so that SkillsFuture continues to serve the working people of Singapore.

12. We cannot afford a repeat of fraudulent claims of such egregious nature and of such scale. SSG will do a thorough review and rectify any shortcomings in grant administration that it may have. But at the same time, we should not allow this case to detract from the important task of re-skilling and up-skilling the workforce, in this period of technological disruptions and economic restructuring.

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