Employers face questions on wage subsidy

The Serious Fraud Office says it has started a number of inquiries into alleged abuse of the Government’s Covid-19 wage subsidy.

Serious Fraud Office director Julie Read said the allegations related to multiple complex cases of potential fraud that have been referred to the agency following investigations by the Ministry of Social Development (MSD).

Last year, the SFO received funding from the Government to specifically tackle fraud arising from the Covid-19 pandemic. She said investigating allegations of serious abuse of the Covid-19 wage subsidy met the mandate for that funding.

‘‘We are pleased to be supporting the extensive work already being undertaken by MSD in response to abuse of the Covid-19 wage subsidy, by contributing the expertise of our specialist investigative teams to look into cases of a particularly challenging and complex nature.’’

The wage subsidy was rolled out quickly in March 2020 to help businesses retain staff during lockdown. There was criticism that the scheme was open to abuse by businesses that might not have met the criteria. Initially, the scheme required businesses to have suffered a 30 per cent drop in revenue. That has since been shifted to 40 per cent.

In March, it was reported that 11,000 businesses that received the subsidy had been audited and hundreds were being investigated. As at October 8, 20,493 wage subsidy recipients had refunded some of the money they received, to a total of $759.7 million.

In May, Auditor-General John Ryan gave a generally clean bill of health to the ‘‘high trust’’ subsidy scheme that paid out $13 billion to employers last year.

But he suggested follow-up checks by the MSD to prevent fraud had not been as robust as the ministry had implied when it described them as ‘‘audits’’, and recommended it seek written evidence from some applicants.