Fraudulent Claims for Government Schemes08 Jan 2018
Parliamentary Question by Mr Patrick Tay Teck Guan:
To ask the Minister for Finance (a) whether he can provide a detailed account of the recent spate of Wage Credit Scheme claims; (b) what are the counter-measures taken; and (c) whether a full review will be undertaken to prevent future breaches.
Parliamentary Question by Mr Pritam Singh:
To ask the Minister for Finance in light of recent fraudulent claims made under the Productivity and Innovation Credit, Wage Credit Scheme and SkillsFuture (a) what considerations determine whether additional audits or investigations of a forensic nature ought to be carried out for claims under these schemes; and (b) whether there is any threshold of fraudulent claims which can lead to the suspension/review of such Government schemes in view of the administrative burden of assessing fraudulent claims.
Parliamentary Reply by Second Minister for Finance, Mr Lawrence Wong:
The Wage Credit Scheme (WCS), Productivity and Innovation Credit (PIC), and the SkillsFuture movement were designed for economic and social objectives. For businesses, especially SMEs, the PIC provides funding support so that they can become more productive and hence more profitable over time. Through the WCS, the Government supports businesses by sharing in sustainable wage growth for workers, especially for our lower- and middle-income workers. As for SkillsFuture, this is a national movement to empower individuals to take charge of their own learning and adapt to a changing world.
2 Mr Patrick Tay asked about the Wage Credit Scheme. A total of more than $4.7 billion in Wage Credit payouts has been given out to employers from 2014 to 2017. This includes the recent payout in 2017, where more than $0.6 billion of Wage Credit payouts were made to over 85,000 employers.
3 Over the same period (2014 to 2017), IRAS denied or clawed back $5.57 million of WCS payouts. IRAS found a total of over 1,000 cases where employers either gave false information or contrived to fraudulently obtain payouts that they did not qualify for; or which were otherwise non-compliant. The vast majority of these payouts were denied upfront, with the remainder being clawed back by IRAS largely within a year. These figures cover cases of attempted fraud which IRAS detected and acted against over the 4-year period. IRAS has publicised these figures to caution employers against attempts to abuse or game the system.
4 Mr Patrick Tay and Mr Pritam Singh also asked how IRAS goes about investigating fraudulent claims. The Minister for Higher Education and Skills has covered SkillsFuture. I will cover WCS and PIC.
5 IRAS uses a risk-based approach to safeguard against abuse. This methodology is used for all IRAS programmes, including WCS and PIC. All potential WCS payouts and PIC applications are first checked upfront against a set of pre-determined criteria for signs that indicate possible gaming. This is complemented by the use of analytics, field intelligence and other sources of information including a whistle-blowing platform.
6 Cases that are assessed to be of a higher risk profile, say claim amounts that are not commensurate with the scale of the business, are subject to more detailed investigations. For WCS, this may entail examination of supporting documents such as pay-slips and bank statements, and conducting phone interviews to verify the authenticity and accuracy of the submitted wage increases. For PIC, this may entail examination of transaction details and verification of documents such as suppliers’ invoices and payment evidences. IRAS may also conduct field visits to understand the applicant’s business (e.g. how the PIC equipment is used in the business).
7 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. Offenders can be charged under the Penal Code or the Income Tax Act for abusing the schemes. To date, IRAS has prosecuted 13 cases for fraud under the PIC scheme, and 1 case under WCS.
8 More generally, MOF undertakes periodic reviews of government schemes to ensure that they are relevant, and achieve the purposes that they are designed for. Programmes which continue to serve their purpose will be retained. Others which are intended to be time-limited will be terminated at their end-date. Yet others may be continued with revised criteria, based on the actual experience of running the schemes, and the assessment of the scheme’s overall effectiveness, which includes a weighing of the scheme’s benefits against its administrative costs.