Wage Subsidy fraud goes beyond New Zealand borders

Hundreds of thousands of New Zealanders have benefited from the government’s Wage Subsidy Scheme but unfortunately, there have been a number of people who have also received the benefit through fraudulent means as per the information obtained by Indian Newslink.

‘The Covid-19 Wage Subsidy’ made a flat payment for 12 weeks at $585.80 per week per employee working at least 20 hours a week and $350 per employee working less than 20 hours a week.

The applicant (employer) had to declare that the amount will be paid to the employee against whose name Inland Revenue Department (IRD) made the payment.

Employers are not allowed to use this amount for any other purpose and the Scheme was implemented in good faith as financial relief to New Zealanders.

The core requirements of the Subsidy Scheme are the GST or in its absence, the New Zealand Business Number (NZBN).

As of May 27, 2020, the government has paid $10.963 billion to 581,751 applicants, including employers, professionals and the self-employed- each of them a company registered under the Companies Act.

There have been reports of fraud- perpetrated by a few employers- which prompted the government to institute a process of audit (see related story in this section), while the Serious Fraud Office will investigate complaints received from any source.

Fraud from overseas

Indian Newslink has received information on the modus operandi of another kind of fraud –of individuals or groups using the IRD Numbers of people who are not in New Zealand.

They are either people who have left New Zealand on expiry of the visas or stranded overseas because of the closure of borders here and in other countries.

A substantial amount of money is suspected to have been collected through this method.

The damage has been done in the first tranche and this Report is to alert the authorities of similar fraud as the next stage of the pay-out under the ‘Covid-19 Wage Subsidy Extension Scheme’ will commence on or about June 10, 2020. This will involve payment of eight weeks salary applying the same formula.

How the Fraud Scheme works

Our investigation relates to fraud that is alleged to have involved South Asian communities.

Here is how the fraud scheme is alleged to have worked:

Someone sends a notification through the Messenger on social media (this is the most popular form of contact) to Mr S or Ms T saying, “New Zealand has launched a Wage Subsidy Scheme and employers there are applying for their employees. Do you want some extra cash in hand? There is no risk. I am only helping in making some money.”

The recipient (target) then asks invariably this question: “I am now India or Sri Lanka. I would like to return to New Zealand. Can you help?”

The perpetrator replies, ”I am only helping you make some money. I cannot help you to move to Australia, New Zealand or Canada. Many people have made a lot of money. No one gets to know because the employer in New Zealand shows that you are working under them and fills some form for you. There are so many who have done this.”

The recipient (target) asks: “How much will I get?’

“It is Rs 40,000 (about $852). This is the safest now. No one can find out because after sometime, the names will be deleted from the system.”

Many have succumbed to the temptation and a few honest people did not.

Wage Subsidy fraud goes beyond New Zealand borders