The Compensation Fund has acknowledged that more than R70 million in losses were partly linked to fraudulent changes to banking details and weaknesses in its legacy systems, as it responded to recent media reports.
Farzana Fakir, Acting Commissioner of the Compensation Fund at the Department of Employment, said the fund is exposed to fraud like any institution, citing “determined syndicates and internal staff that are colluding with hackers.” However, she assured the public that such individuals form only about 5% of employees within the fund, with the rest committed to transparency and integrity.
Fakir explained that the modus operandi involved hackers infiltrating the fund’s networks—particularly infrastructure shared with SITA—leading to intercepted payments and exploited control weaknesses. In response, the fund implemented a biometric system and an account verification system as enhanced controls.
Regarding the reported R71 million fraud disclosed in the fund’s financial statements, Fakir noted a significant reduction in the last financial year, with only R3 million in fraud recorded. She attributed this decline directly to the enhanced controls and the fund’s serious engagement with Auditor-General recommendations over the past three years.
The fund has recovered R46 million and has a further R22.9 million under a preservation order, working closely with law enforcement entities including the SAPS, the NPA Asset Forfeiture Unit, banks, and the Fusion Centre, which also involves SARS.
Addressing a report that the fund spent R60 million on a non-operational biometric system, Fakir corrected the facts, stating that the biometric validation was implemented in October 2025. The Auditor-General of South Africa audited the functionality in February 2026 and confirmed implementation.
On internal disciplinary action, Fakir confirmed that the fund applies consequence management, including internal disciplinary processes and criminal cases. She testified that employees had appeared in court, been found guilty of fraud allegations. The biometric system now protects honest employees by linking sensitive transactions to fingerprints, preventing profile hacking unless a fingerprint is physically given.
Fakir confirmed that arrests have been made of external stakeholders colluding in fraud.
