Covid-19 Omicron: Charges filed for seven alleged abuses of wage subsidy scheme

Social Development Minister Carmel Sepuloni. Photo / Mark Mitchell

The Ministry of Social Development has filed criminal charges in seven cases of alleged abuse of the Wage Subsidy Scheme, involving close to $370,000 of taxpayer money.

It is also preparing criminal charges for a further eight cases, and taking civil action in 11. This is on top of 10 larger and more complex cases referred in October to the Serious Fraud Office.

The latest data shows close to $800 million has been recouped in recouped in Wage Subsidy repayments.

The subsidy scheme paid out close to $14 billion to businesses which could prove a loss in income due to the pandemic and related restrictions.

Along with public pleas for businesses to return funding they did not need, MSD redeployed majority of its benefit fraud investigations staff to the task of monitoring the scheme.

Investigators initially sought written confirmation from about 1000 businesses it had identified as needing to provide further information they had met wage subsidy criteria.

The Ministry has now revealed it has filed criminal charges in seven cases involving $369,738.80 of public money, in the Auckland, Waitākere, Christchurch and Hawera District Courts.

"They involve a mix of receiving, dishonestly taking or using a document, and forgery charges," a spokesman said in a statement.

"We will not be commenting on details of individual cases while they are before the courts."

One of those cases resulted in a guilty plea in the Auckland District Court in February when the individual admitted three charges of receiving wage subsidy funds they were not entitled to, totalling $18,745.60, which they have since repaid.

Sentencing is expected to happen this year.

That case was understood to be the first criminal prosecution relating to improper access to the "high trust" subsidy scheme.

MSD has completed 14,525 pre-payment and post-payment checks on wage subsidy applications, resolved 5535 allegations of wage subsidy misuse, completed 528 wage subsidy-related investigations, and recouped $794.6 million in Wage Subsidy repayments.

"MSD is preparing criminal charges for a further eight cases of wage subsidy abuse and is progressing civil recovery action in another 11 cases," the statement said.

"This is on top of ten cases involving larger sums of money and complex investigations that were referred by MSD to the Serious Fraud Office in October 2021.

"MSD has carried out an extensive range of work in order to identify and check possible wage subsidy fraud or incorrect payments.

"Checks are under way, involving a mix of individuals and businesses, and we expect there will be more prosecutions to come."

It comes as this morning Minister for Social Development and Employment Carmel Sepuloni revealed new data that showed the wage subsidy schemes had supported 47 per cent of jobs in the country.

In 2020, 69 per cent of employed men and 54 per cent of women were supported by a wage subsidy.

This fell to 54 per cent and 41 per cent respectively in 2021.

"This new report shows that the wage subsidies served to protect jobs and support businesses that might otherwise have been lost," she said.