SINGAPORE: An inter-agency task force has been set up to conduct a “thorough review” of SkillsFuture claims, after a series of offences that involved S$40 million worth of fraudulent claims being paid out by SkillsFuture Singapore (SSG).
Speaking in Parliament on Monday (Jan 8), Minister for Education (Higher Education and Skills) Ong Ye Kung said that the task force, which is overseen by SSG’s board, will also evaluate the current fraud detection system and make recommendations for improvements.
Under the SkillsFuture national movement announced in 2015, Singaporeans aged 25 and above receive a S$500 credit from the Government to attend courses by approved training providers. The scheme is overseen by SSG.
A criminal syndicate is believed to have been behind the S$40 million scam, the largest defraudment of a public institution in Singapore to date.
SSG said last month that five suspected members of a criminal syndicate have been charged with offences such as conspiring to submit forged documents to obtain training subsidies.
The syndicate operated in an organised network, and used business entities comprising companies and training providers to submit fake claims, Mr Ong said. CPF documents provided by the syndicate listed employees that the police believe were fictitious.
“In short, this appeared to be an elaborate, conscious effort to cheat,” he said.
When the irregular claims were detected, SSG immediately suspended all payments of grants to the relevant business entities, and reported the case to the police, Mr Ong said. The police also seized S$6.7 million in cash, 11kg of gold, and froze more than S$10 million in bank accounts.
“As investigations are ongoing, I am unable to disclose more details about the case, but what is clear about the case is that it involves fraudulent claims amounting to a large quantum,” he said.
“This should not have been allowed to happen.”
Mr Ong also told Parliament that the scam should have been uncovered earlier. “While we cannot always prevent all forms of fraudulent activities, SSG should have detected this case earlier, especially when it is so egregious, and the amount involved so large,” he said.
He outlined SSG’s priorities following this incident: To work with enforcement agencies to ensure any perpetrators would face the “full consequences of the law”, and “systematically plough through” any other claims it has received over the last year.
There has been no evidence of other cases of a similar nature so far, he added.
SSG TO SET UP DATA ANALYTICS SYSTEM TO DETECT FRAUD
Mr Ong said he has also 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,” he said. “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.”
He added that SSG is getting help from private sector consultants and the Government Technology Agency to get this done, and has restructured and strengthened the fraud detection and audit team.
By the third quarter of 2018, SSG will have a “good and effective data analytics system in place”, he said.
In response to a supplementary question from MP Zaqy Mohamad, who asked if the system would be made more onerous for genuine employers, Mr Ong stressed that this would be “putting (your) effort in the wrong areas”.
“I think the natural instinct is, because this thing happens, so let’s check everything and check the huge numbers, and then we’ll impede the whole system. That’s when genuine employers who want to train their workers will be affected,” he said. “But we don’t have to do that.
“What we want to do is, through data analytics, we can work out the pattern of cheating, and detect them much better, and that pattern of cheating has to keep on evolving because they are evolving too,” he explained. “And if we can do that well - and we must do that well - we do not overburden employers.
“The bottom line is, the system has a big capability gap today. It could have been prevented, and we will take the necessary actions to remedy this.”
SIMILAR FRAUD CASES WITH PIC, WCS
Responding to queries regarding the Wage Credit Scheme (WCS) and Productivity and Innovation Credit (PIC) scheme, Second Minister for Finance Lawrence Wong said that between 2014 and 2017, S$5.57 million was denied or clawed back by IRAS.
This is because employers had either provided false information, contrived to fraudulently obtain payouts that they did not qualify for, or were non-compliant.
The PIC scheme funds businesses to become more productive and profitable over time, while the WCS is designed to support businesses in sharing sustainable wage growth for lower- and middle-income workers.
Mr Wong told Parliament that the Inland Revenue Authority of Singapore (IRAS) uses a risk-based approach to safeguard against abuse. This means that all potential WCS payouts and PIC applicants are first checked against signs for possible gaming.
IRAS also uses analytics, field intelligence and other sources of information including whistle-blowing to complement the checks.
Cases assessed to be of a higher risk profile, such as claim amounts that are not commensurate with the scale of the business are subject to more detailed investigations which includes an examination of pay slips, banking statements, interviews, invoices and field visits.
“IRAS will continue to take strict enforcement and legal actions against those who abuse the schemes. This includes disqualifying offenders from other government schemes, and taking legal action against such offenders,” Mr Wong said.
To date, IRAS has prosecuted 13 cases for fraud under the PIC scheme, and one case under the WCS.