Investigation and Review into Fraudulent Claims for Government Schemes

Mr Pritam Singh asked 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.

Sir, the Wage Credit Scheme (WCS), Productivity and Innovation Credit (PIC), and the SkillsFuture movement were designed for specific economic and social objectives. For businesses, especially small and medium enterprises, the PIC provides funding support so that they can become more productive and, hence, more profitable over time. Through 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.

Mr Patrick Tay asked about WCS. 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.

Over the same period, which is from 2014 to 2017, the Inland Revenue Authority of Singapore (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 four-year period. The media had reported the figures recently, but they were not a recent phenomenon. So, the 1,000 cases were all acted upon over the entire period of WCS, since it started. But IRAS recently publicised these figures to caution employers against attempts to abuse or game the system.

Mr Patrick Tay and Mr Pritam Singh also asked how Government agencies go about investigating fraudulent claims. The Minister for Higher Education and Skills has covered SkillsFuture, and so I will cover WCS and PIC.

Essentially, 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 predetermined criteria for signs that indicate possible gaming. This is complemented by the use of analytics, field intelligence and other sources of information, including a whistleblowing platform.

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 payslips 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 evidence. IRAS may also conduct field visits to understand the applicant’s business, for example, how the PIC equipment is used in the business.

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 one case under WCS.

More generally, the Ministry of Finance (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.

I thank the Second Minister for Finance for his reply. I refer to the latest Estimates Committee Report where it was made known that about 313,000 PIC cash payouts have been submitted over the years and 98,000 ­– almost one third of them – were selected for review and, out of that number, 64% of the claims were rejected upfront. The reply from MOF to the Estimates Committee also stated that for the remaining 215,000 PIC claims, I quote, "they may be selected for review based on other factors". Are there any additional factors that IRAS specifically considers for claims which fall outside their usual risk-based approach? From the reading of MOF's reply to the Estimates Committee, it appears that more review is going to be done for claims which were not originally audited.

Mr Deputy Speaker, as I had mentioned earlier, IRAS takes a risk-based approach. Taking a risk-based approach means not 100% sampling. As Minister Ong Ye Kung earlier mentioned, doing 100% checks is going to be counter-productive to a large extent because it will entail a large bureaucratic process.

So, taking a risk-based approach means sampling according to risks and when IRAS says that it has done audits for 98,000 cases, then it has identified these as the higher-risk cases and done detailed audits on them. To the extent that there are cases with lower risks, then the sampling will be lower as well.