More than 1,000 employers tried to fleece a government assistance programme of $5.57 million with ruses like hiring phantom workers or inflating wages, the taxman disclosed yesterday.
The Inland Revenue Authority of Singapore (Iras) told The Straits Times that the cheating under the Wage Credit Scheme (WCS) had been going on for four years.
It was unearthed by a random audit of several thousand employers suspected of making dodgy claims.
The scheme, which can be tapped by around 85,000 employers, aims to help businesses cope with rising wage costs so that they can invest in efforts to boost productivity.
An Iras audit found more than 1,000 had abused the programme.
Some of the errant employers were denied payouts while others had payments clawed back after being found to have either given false information or contrived to fraudulently obtain funds. The scams included hiring phantom workers or inflating wages paid to family members who were not employees.
In some cases, the firm's beneficial owner appointed other individuals to be directors or shareholders in name so that he or she could qualify for the wage credit payout.
There were 105 cases that were deemed more serious and 21 of these were referred to the police for further investigation, Iras said.
The Iras added that offenders can be charged under the Penal Code and face up to 10 years' imprisonment and a fine.
Mr James Wong, founder of law firm Lex Advocatus, said: "Those qualifying for WCS encompass a significant proportion of employees in the workforce. It is conceivable that the abuse may be more extensive but not discovered yet.
"Given that the scheme requires a self-declaration of Central Provident Fund contributions, there could be consensual arrangements with workers to cover up inaccuracies."
Gibson Dunn & Crutcher lawyer Robson Lee added: "The large number who have cheated under WCS is a cause for concern. The Government should set up a review panel to uncover the reasons and identify any lax processes for the rather large number of lapses."
One has been convicted of cheating under the WCS. Chou Li Chen, 70, began a five-week sentence on Nov 9 after being convicted of defrauding Iras of $66,678.
The WCS was introduced in 2013, initially as a three-year programme. The Government co-funds 40 per cent of pay increases to employees. It has been extended to next year at a lower co-funding level.
The disclosures yesterday come a day after the SkillsFuture Singapore government agency, which promotes lifelong learning, said a criminal syndicate had allegedly made bogus claims totalling nearly $40 million.
The offences would make this the biggest case of a government agency being defrauded.