• Department of Employment and Labour director-general Thobile Lamati has resigned.

• His resignation follows a R5 billion scandal at the UIF which was stopped in its tracks.

• It also follows calls from business and labour for intervention in the UIF`s `chaotic` administration.

The director-general of the Department of Labour and Employment, Thobile Lamati, has resigned. 

His resignation follows reports of backing a controversial project to channel billions from the Unemployment Insurance Fund (UIF) into a private investment company, as part of a job creation scheme. 

Lamati conveyed the news to his top management in a WhatsApp message earlier today. 

Lamati`s fate has been in the balance for the past month, as President Cyril Ramaphosa considered a report on the matter submitted by Minister of Labour and Employment Thulas Nxesi. Only Ramaphosa has the power to hire and fire directors-general. 

While the contents of Nxesi`s report are unknown, it was an open secret in the department that he wanted Lamati out. The scheme in question involved an R5 billion transaction part loan and part grant funding - with Thuja Capital, owned by businessman Mthunzi Mdwaba. 

Under the scheme, Mdwaba would buy stakes in various companies and then use his power as a shareholder to promote job creation. Thuja Capital was hastily registered last December, shortly before Lamati and UIF commissioner Teboho Maruping pushed for the deal to happen. But the transaction was scuppered by a report in the Sunday Times that exposed the plan. 

Maruping`s future is still to be determined. A departmental official said that they now expected `the dominoes to start falling`.

Earlier this month, Business Unity SA (BUSA) and Cosatu called for a crackdown on the UIF, which they described as chaotic and dysfunctional. They appealed to Nxesi and Ramaphosa to put the fund under administration. The UIF is an employer- and employee-funded social security fund collected through a payroll tax on all formal sector workers. 

But workers, who can draw on the funds when they become unemployed or take maternity leave, are made to wait months for benefits, if these are paid at all, due to UIF repeated systems failure. 

The UIF has generated large surpluses over time. At present it sits on investments of about R130 billion, managed by the Public Investment Corporation (PIC).