{"id":249883,"date":"2023-02-13T15:03:06","date_gmt":"2023-02-13T13:03:06","guid":{"rendered":"https:\/\/www.groundup.org.za\/article\/strict-new-measures-to-combat-lottery-corruption\/"},"modified":"2023-02-13T15:03:06","modified_gmt":"2023-02-13T13:03:06","slug":"strict-new-measures-to-combat-lottery-corruption","status":"publish","type":"post","link":"https:\/\/www.myza.co.za\/press\/strict-new-measures-to-combat-lottery-corruption\/","title":{"rendered":"Strict new measures to combat Lottery corruption"},"content":{"rendered":"<div id=\"article_body\">\n<p><a class=\"bigger-image\" href=\"https:\/\/www.groundup.org.za\/media\/uploads\/images\/Graphics\/lisa_nelson\/groundup-lotto_large.jpg\" target=\"_blank\" rel=\"noopener\"><img decoding=\"async\" alt src=\"http:\/\/www.myza.co.za\/press\/wp-content\/uploads\/2023\/02\/strict-new-measures-to-combat-lottery-corruption.jpg\"><\/a><\/p>\n<p class=\"caption\">The NLC told MPs that it has introduced stringent new protocols for proactive funding. Graphic: Lisa Nelson<\/p>\n<ul>\n<li>The NLC\u2019s new board has introduced a number of measures to prevent corruption, including establishing a new anti-corruption division.<\/li>\n<li>Three audit firms have been appointed to investigate various aspects of fraud and corruption involving Lottery funds.<\/li>\n<li>The Trade, Industry and Competition parliamentary portfolio committee recently completed an oversight tour of dodgy Lotto-funded projects.<\/li>\n<li>A hotline to report Lotto corruption has seen three tip-offs referred for forensic investigation.<\/li>\n<\/ul>\n<p>The National Lotteries Commission (NLC) has introduced stringent new protocols for the allocation of grant funding, including the establishment of a new division to prevent the rampant corruption that has overwhelmed the organisation in recent years.<\/p>\n<p>The establishment of the new Inspectorate for Due Diligence and Compliance was revealed in a <a href=\"https:\/\/www.groundup.org.za\/media\/uploads\/documents\/briefing_for_the_portfolio_committee_03_february__2023_-_final.pdf\">presentation<\/a> to members of the Trade, Industry and Competition parliamentary portfolio committee during an oversight visit last week to the NLC\u2019s Pretoria headquarters.<img loading=\"lazy\" decoding=\"async\" alt class=\"leave\" height=\"1\" id=\"gu_counter\" src=\"http:\/\/www.myza.co.za\/press\/wp-content\/uploads\/2023\/02\/strict-new-measures-to-combat-lottery-corruption.gif\" width=\"1\"><\/p>\n<p>The NLC Risk Division has also implemented fraud risk assessments to \u201cidentify fraud trends\u201d, while internal audits would test \u201cinternal control and conduct and forensic investigations\u201d, the NLC told MPs.<\/p>\n<p>The current head of the risk division Marubini Ramatsekisa is on suspension and facing a disciplinary hearing for his alleged role in the looting of lottery funds.<\/p>\n<p>Judy Hermans (ANC), who is the portfolio committee\u2019s chairperson, said the committee had made two unannounced visits to NLC projects. \u201cThe committee was concerned about what would happen to incomplete capital projects currently under investigation. It urged the NLC to resolve these matters as far as possible,\u201d she said.<\/p>\n<p>Hermans said she was not mandated to comment on behalf of the ANC, which had previously vigorously defended the NLC in the face of evidence of widespread corruption. Instead, she referred GroundUp to committee member and ANC whip Simanga Mbuyane.<\/p>\n<p>But Mbuyane failed to respond to a WhatsApp message asking him for comment on behalf of the party.<\/p>\n<p>Mbuyane previously unsuccessfully attempted to have the media and representatives of civil society organisations <a href=\"https:\/\/www.groundup.org.za\/article\/mp-tries-exclude-public-meeting-appointment-new-lottery-chair\/\">barred<\/a> from a public virtual meeting of the committee at which the appointment of a new board chairperson was discussed.<\/p>\n<p>He has also previously <a href=\"https:\/\/www.timeslive.co.za\/politics\/2020-03-11-anc-mps-hail-lotteries-commission-as-expos-journalist-clashes-with-activist\/\">questioned<\/a> why GroundUp was following the activities of the NLC and blamed \u201can element of the third force.\u201d<\/p>\n<p>With the exception of single MPs from the FF+, DA, and EFF, the rest of the group that conducted the oversight visit were from the ANC.<\/p>\n<p>Jaco Mulder (FF+) said his party welcomed \u201congoing investigations of the SIU into allegations of fraud under the previous administration \u2026 as well as investigations and reports on fraud and irregular expenditure.<\/p>\n<p>\u201cThe committee should carry out more physical, unannounced oversight visits more often to ensure the transformation to an accountable NLC under a new board,\u201d he said.<\/p>\n<p>Mat Cuthbert (DA) said, \u201cWhilst we welcome the opportunity to have visited several hijacked NLC projects in order to see the damage for ourselves, we remain sceptical about the Damascene conversion by ANC members of the portfolio committee. Since 2018 they were consistently warned about the industrial-scale looting that was taking place at the NLC and yet they chose to protect the NLC\u2019s leadership at the expense of the vulnerable\u201d.<\/p>\n<p>He added that new NLC leadership has \u201cinspired confidence thus far in terms of their transparency and willingness to deal with the rot in the organisation\u201d.<\/p>\n<p>Mgcini Tshwaku (EFF) did not respond to a WhatsApp message asking for comment.<\/p>\n<h2>New blood for NLC<\/h2>\n<p>The NLC presentation reveals extensive steps that the <a href=\"https:\/\/www.groundup.org.za\/article\/new-board-appointed-scandal-ridden-lottery\/\">new NLC board<\/a> has taken to uncover corruption and to hold those responsible to account, including acting against five senior officials who have been suspended. Of these, one has resigned and the other four are on suspension and will face disciplinary hearings. This does not include former NLC Commissioner <a href=\"https:\/\/www.groundup.org.za\/article\/lottery-boss-resigns-with-immediate-effect\/\">Thabang Mampane<\/a> and former chief operating officer <a href=\"https:\/\/www.groundup.org.za\/article\/lottery-coo-phillemon-letwaba-has-resigned\/\">Phillemon Letwaba<\/a>, both of whom resigned last year ahead of facing disciplinary hearings.<\/p>\n<p>New NLC <a href=\"https:\/\/www.timeslive.co.za\/news\/south-africa\/2022-07-11-cabinet-appoints-76-year-old-barney-pityana-to-chair-lotteries-commission\/\">board chair<\/a> Barney Pityana and a <a href=\"https:\/\/www.groundup.org.za\/article\/new-board-appointed-scandal-ridden-lottery\/\">board<\/a> were appointed last year, and a <a href=\"https:\/\/www.groundup.org.za\/article\/new-board-appointed-scandal-ridden-lottery\/\">new commissioner<\/a> Jodi Scholtz took office on 1 February.<\/p>\n<p>The portfolio committee delegation was told that interviews for a new Chief Financial Officer have been conducted and a preferred candidate recommended to the NLC board for consideration. Interviews for a Chief Audit Executive had also been conducted and the preferred candidates will now undergo a competency assessment.<\/p>\n<p>Headhunting for a new Chief Operations Officer has begun, while the post of Executive Legal Services has been advertised.<\/p>\n<h2>Investigations launched<\/h2>\n<p>The NLC told the committee that it has also appointed audit firms, <a href=\"https:\/\/tsuinvestigations.com\/\">TSU Investigations<\/a>, <a href=\"https:\/\/www.fundudzi.co.za\/\">Funduzi Forensic Services<\/a>, and <a href=\"https:\/\/www.maphosalaw.com\/forensics\/\">Maphosa<\/a> to investigate various aspects of fraud and corruption involving Lottery funds. These include questionable payments to service providers, irregular procurement, and <a href=\"https:\/\/www.groundup.org.za\/article\/lotteries-commission-cracks-down-on-sky-high-spending-on-lawyers\/\">sky-high spending on lawyers<\/a> and other service providers.<\/p>\n<p>Also under investigation are the tens of millions of rands in spending on media and communications, in many cases, expensive advertorials intended to counter <a href=\"https:\/\/www.groundup.org.za\/topic\/lotto\/\">GroundUp\u2019s reporting<\/a> on NLC corruption.<\/p>\n<p>Two of these investigations have been completed and a third is in draft stage. A fourth investigation by <a href=\"https:\/\/skx.co.za\/\">SkX<\/a> was completed in 2020 but then buried by the previous NLC administration.<\/p>\n<p>The investigations are a direct response to issues <a href=\"https:\/\/www.groundup.org.za\/article\/tens-of-millions-in-irregular-expenditure-and-accounting-errors-at-national-lotteries-commission-finds-auditor-general\/\">highlighted in damning reports<\/a> by the Auditor-General and issues flagged as needing further investigation in a series of reports by SkX report, a source with knowledge of the investigations, who asked not to be identified as they are not mandated to speak to the media, told GroundUp.<\/p>\n<h2>Dodgy projects<\/h2>\n<p>The portfolio committee briefing at the NLC\u2019s Pretoria headquarters came at the end of a four-day visit to projects funded by government entities, including the NLC, over which it has oversight. The visits were all unannounced.<\/p>\n<p>Two Lottery-funded projects, one in Louis Trichardt in Limpopo and the other in Pretoria, were among those visited by the committee.<\/p>\n<p>In Louis Trichardt, the MPs visited the supposed location of Musina Arts Development, an NPO that <a href=\"https:\/\/drive.google.com\/file\/d\/1JKRbMrywXSuzr1Rb4RRrfvH8NxQSBomo\/view?usp=sharing\">received R1.64-million<\/a> in the 2018\/19 financial year for a \u201cjazz event.\u201d But they found no sign of the funded non-profit at the address supplied on the NPO\u2019s application for funding. A call was made to a phone number supplied for the project\u2019s contact person on the original funding application, but they refused to meet with the MPs.<\/p>\n<p>The following day, the MPs visited a <a href=\"https:\/\/www.groundup.org.za\/article\/how-lawyer-used-lottery-funded-project-his-personal-atm\/\"> drug rehabilitation centre<\/a> in Pretoria, <a href=\"https:\/\/drive.google.com\/file\/d\/1v3SesypYQN7ELbRatFox9NUFm3Wq4Om2\/view?usp=sharing\">which received over R27.5-million<\/a> between 2016 and 2018. Of the money given to Denzhe Primary Care, a non-profit that was<a href=\"https:\/\/www.groundup.org.za\/article\/how-hijacked-npos-scored-millions-lottery\/\"> hijacked<\/a> and used to apply for lottery funding, over R22-million is still unaccounted for.<\/p>\n<p>The MPs were taken on a tour of the poorly-built facility where two different independent quantity surveyors estimated that only R4.8-million of the grant was spent. Floors and walls are cracking because of poor construction and inadequate foundations; roofs are sagging because of a lack of supporting trusses; and doors are poorly fitted throughout the facility. A construction company <a href=\"https:\/\/www.groundup.org.za\/media\/uploads\/documents\/buildingsquote_report_1.pdf\">has quoted R11.5-million<\/a> to repair and complete the facility.<\/p>\n<p>Ado Krige, who owns the property on which the facility is situated, told the MPs how he had tried to warn the NLC about the abuse of Lottery funding but was ignored. Instead, he was sued for R17-million by <a href=\"https:\/\/www.groundup.org.za\/article\/lawyer-lottery-and-millions-dodgy-grants\/\">dodgy lawyer<\/a> Lesley Ramulifho, who was behind the hijacking of Denzhe. The NLC used this <a href=\"https:\/\/www.groundup.org.za\/media\/uploads\/documents\/nl_inc\/8_denzhesummons2.pdf\">civil lawsuit<\/a>, which almost four-and-a-half years later Ramulifho has failed to pursue, as an excuse not to take action to recover the misappropriated millions meant for the drug rehab.<\/p>\n<p>A <a href=\"https:\/\/www.groundup.org.za\/article\/minister-of-justices-law-firm-bungled-lottery-corruption-probe\/\">series of reports<\/a> by law firm Ndebele Lamola Inc (NL Inc), two of which were investigated at a time when Justice Minister Ronald Lamola was a director, recommended that the Lotteries Commission wait for the outcome of the civil lawsuit before deciding how to proceed.<\/p>\n<p>\u201cWe were \u2026 unable to make any finding on issues that are currently before the court,\u201d NL Inc said in one of its reports. On \u201cwhether any funds could be recovered or frozen immediately\u201d it stated: \u201cThis step will be triggered by the outcome of the court process.\u201d<\/p>\n<h2>New rules for funding<\/h2>\n<p>The NLC told the MPs that it has introduced stringent new protocols for proactive funding, which was key to the <a href=\"https:\/\/www.groundup.org.za\/article\/national-lotteries-commission-ignored-warnings-about-corruption\/\">looting <\/a>of hundreds of millions of rands. This type of funding allowed the NLC, in consultation with its board, to allocate grants without requiring an application for funding.<\/p>\n<p>The new board had placed a moratorium on proactive funding, but based on the presentation this will be lifted with strict new rules in place. These include setting up a panel of \u201cstrategic partners\u201d, like food security organisations, with expertise in key areas. Their appointments will be \u201cthrough a process of expression of interest\u201d that would ensure \u201ctransparency in the funding process\u201d. This would include conducting \u201cprobity checks \u2026 on strategic partners prior to appointment,\u201d the NLC told the MPs.<\/p>\n<p>\u201cFunding for strategic [proactively-funded] projects will be allocated a percentage of the budget approved by the board,\u201d the NLC said.<\/p>\n<p>In the case of normal applications-based grant funding, the NLC says its controls have been \u201cenhanced to strengthen internal controls\u201d. The measures are very basic and the absence of some of them helped enable widespread fraud and corruption.<\/p>\n<p>These include:<\/p>\n<ul>\n<li>Pre-Screening and verification of \u201ccredible applications\u201d through the verification of directors with the Companies And Intellectual Property Commission (CIPC), which keeps a record of companies\u2019 details, including directors and registered addresses. This is a new measure, according to the NLC.<\/li>\n<li>Physical verification of existence of organisations prior to funding;<\/li>\n<li>Signing of affidavits by directors and management of the organisation prior to funding;<\/li>\n<li>Submission of bank statements to verify project spending, and;<\/li>\n<li>Regular monitoring of <strong>all<\/strong> funded projects. (NLC\u2019s emphasis).<\/li>\n<\/ul>\n<h2>Hotline bears fruit<\/h2>\n<p>Despite the rampant corruption, SkX <a href=\"https:\/\/www.groundup.org.za\/article\/national-lotteries-commission-ignored-warnings-about-corruption\/\">previously reported<\/a> that the NLC\u2019s fraud hotline was not working, making it difficult for anyone with information to report corruption. As a result, the NLC is now using a Department of Trade, Industry and Competition anti-fraud hotline.<\/p>\n<p>Between October and December 2022, there were eight reports to the hotline. Two were about the recruitment of specific NLC officials and a further two involved alleged procurement fraud. A further three tip-offs had been referred for forensic investigation, while a fourth led to \u201cimprovements\u201d to the NLC\u2019s supply chain management processes.<\/p>\n<p>A total of 151 matters had also been directly reported to the NLC, of which 119 had so far been investigated, and 51 were reported to the police.<\/p>\n<\/p><\/div>\n<div id=\"article_copyright\">\n<p>\u00a9 2023 GroundUp. This article is licensed under a <a href=\"http:\/\/creativecommons.org\/licenses\/by-nd\/4.0\/\" rel=\"license\">Creative Commons Attribution-NoDerivatives 4.0 International License<\/a>.<\/p>\n<p>You may republish this article, so long as you credit the authors and GroundUp, and do not change the text. Please include a link back to the original article.<\/p>\n<p>We put an invisible pixel in the article so that we can count traffic to republishers. All analytics tools are solely on our servers. We do not give our logs to any third party. Logs are deleted after two weeks. We do not use any IP address identifying information except to count regional traffic. We are solely interested in counting hits, <b>not tracking<\/b> users. If you republish, please do not delete the invisible pixel.<\/p>\n<\/p><\/div>\n<p><img decoding=\"async\" src=\"http:\/\/www.myza.co.za\/press\/wp-content\/uploads\/2023\/02\/strict-new-measures-to-combat-lottery-corruption.jpg\"><a href=\"https:\/\/www.groundup.org.za\/\">Source: GroundUp<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>The NLC told MPs that it has introduced stringent new protocols for proactive funding. Graphic: Lisa Nelson The NLC\u2019s new board has introduced a number of measures to prevent corruption, including establishing a new anti-corruption division. Three audit firms have been appointed to investigate various aspects of fraud and corruption involving Lottery funds. The Trade, [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":249884,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","ngg_post_thumbnail":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[9928,3247],"tags":[28001],"class_list":{"0":"post-249883","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-groundup","8":"category-news","9":"tag-groundup","10":"entry"},"jetpack_publicize_connections":[],"jetpack_featured_media_url":"https:\/\/www.myza.co.za\/press\/wp-content\/uploads\/2023\/02\/strict-new-measures-to-combat-lottery-corruption.jpg","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/249883","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/comments?post=249883"}],"version-history":[{"count":0,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/posts\/249883\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/media\/249884"}],"wp:attachment":[{"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/media?parent=249883"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/categories?post=249883"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.myza.co.za\/press\/wp-json\/wp\/v2\/tags?post=249883"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}