Wage subsidy dragnet sees dozens face courts

As of last week, the Ministry of Social Development said it has recouped $817.7 million in wage subsidy repayments. Photo / 123rf

Three years into a pandemic that resulted in billions of dollars being paid out, government agencies have prosecuted dozens of people for misusing Covid support schemes.

Ministry of Social Development (MSD) group general manager George Van Ooyen said: “We take our duty to taxpayers seriously and are committed to pursuing legal action, where appropriate, to recover any misused wage subsidy funds.”

Van Ooyen said 32 people had appeared before the courts to date, 11 had been convicted, and another dozen were in the process of having charges filed against them. These cases involved payments of around $1.5m.

These figures do not include the case of Hun Min Im, whose alleged offending was of such a scale that MSD referred the case to the Serious Fraud Office.

Last week the Serious Fraud Office filed fresh charges - bringing the total that Im faces to 95 - over allegedly fraudulent efforts involving forged documents to claim $2.3m. His efforts saw $624,000 paid out.

Im has pleaded not guilty to all charges.

Van Ooyen said that at its peak over the past three years, the ministry’s wage subsidy investigation team had 100 staff, and even today it still totalled 50. More than 15,000 wage subsidy applicants had been subjected to post-payment audits.

“We continue to review and investigate applications where potential fraud or incorrect payment has been identified,” he said. “We expect more court cases to follow as we continue our investigations, which involve a mix of individuals and businesses.”

Last week the Herald reported how clawbacks from Inland Revenue - which took over administration of many Covid payment schemes in mid-2020 - had occupied 55 staff who had so far issued 397 demands for repayment totalling $8.3m.

These prosecutions and clawbacks still represent only a tiny fraction of both the total number of recipients and the billions paid out by government over the pandemic years.

According to MSD figures, Covid-related support doled out over the past three years totalled $19.6b, and this was directed at just over 2 million people - more than half the working-age population of New Zealand.

Tens of thousands of voluntary repayments of wage subsidy funds over the past few years - mostly due to businesses finding that feared economic carnage failed to eventuate - had reached a total of $817.7m by last week.

“Our integrity work to date has given us confidence that the vast majority of businesses that received wage subsidies did so honestly. A lot of times where wage subsidies were wrongly claimed, it was an honest misunderstanding about eligibility rather than a deliberate attempt to deceive,” Van Ooyen said.