The Special Investigating Unit (SIU) has called for lifestyle audits to be the norm at the National Lotteries Commission (NLC), which has been dogged by corruption and looting allegations.
The SIU — the state’s corruption-fighting investigating body — provided MPs with an update on how former NLC board members and executives siphoned funds from the entity amounting to at least R500m to purchase luxury properties and goods including Rolls-Royce cars. The funds were earmarked for worthy causes such as the construction of old-age homes and drug rehabilitation centres.
“Lifestyle audits [should] to be conducted for all NLC officials and board members … The NLC should adhere to the policy of transferring money to the NPO’s in tranches as opposed to transferring the grant amount in one tranche prior to receiving progress reports,” the SIU said in a submission to parliament’s trade, industry and competition committee.
There have been many corruption allegations levelled against the NLC recently, mainly centred on the distribution of proceeds from the national lottery. NLC executives, including former COO Phillemon Letwaba, who resigned recently before a disciplinary hearing could be conducted, have been accused of diverting multimillion-rand grants to NPOs that are connected to family and friends.
The NLC, which is overseen by the department of trade, industry & competition, regulates lotteries and the distribution of funds to charitable organisations. It generates its funding and operational budget, which amounts to at least R2bn annually, from the proceeds of the national lottery.
In 2015, the NLC’s enabling act was amended, authorising it to fund worthy causes without the need for applications. The so-called proactive funding, which was limited to about 10% of the NLC’s total annual disbursements and was deemed necessary to help organisations that lacked the ability to submit formal applications, opened the process to abuse and corruption.
The SIU called for a committee to deal with new proactive funded matters to be established to eliminate the risk of individuals ultimately awarding grant funding projects to family members and friends.
Highlighting some of the looting uncovered during its ongoing investigations, the SIU pointed out that in once instance, during the period of August 2016, a former board member identified as “board member 2” purchased a Rolls Royce using funds from the NLC.
We will pursue all those that have resigned on the litigation and criminal side.
— Andy Mothibi, SIU head
A document dated 31 August 2016 indicates that R6,3m was invoiced for the vehicle.
“Payments for ‘former board member 2’s’ Rolls Royce were received from an entity that has been contracted by NPO’s and also received grant funding,” the SIU said in its submission.
Another NPO received grant funding of R28m for the construction of Vhafamadi Secondary school in Limpopo.
After receiving the first tranche of R20m in August 2016, the NPO transferred R15m to an entity that then transferred the money for the purchase of a property for former board member 2.
An NLC senior official was identified as a trustee at the time when the property was purchased.
The SIU said civil litigation to set aside and recover the stolen funds is under way, while some of the cases have been referred to the National Prosecuting Authority (NPA) for prosecution.
SIU head Andy Mothibi told MPs that whenever there are findings against any board member, a process to make recommendations to declare the individual delinquent is instituted to ensure they do not serve in such a role again.
“Resignations only terminate [the] employer-employee relationship, so we will pursue all those that have resigned on the litigation and criminal side,” Mothibi said.
“[Often] officials in state institutions when they are confronted with evidence of wrongdoing, they are quick to resign and then resurface in other state institutions. Firstly, what we do is we freeze their pensions … to ensure that they feel the pain. We have been in contact with the department of public service and administration, so that in their systems they are able to track where these officials resurface and then we are able to follow them wherever they are.”
Trade, industry & competition minister Ebrahim Patel said lifestyle audits will help stop the rot.
“I believe it’s a sensible approach to have lifestyle audits in the NLC given their history and this matter came up in the last meeting I had with the board,” Patel said.
DA MP Mat Cuthbert said the SIU had done a good job in uncovering the rot the NLC, but it will be a travesty of justice if criminal prosecutions do not follow.
“The fact is the ANC was the root cause of the corruption that took place at the entity. These are the same individuals who shielded former board members from scrutiny... The grotesque use of funding to buy luxury cars and homes, which was actually intended for old age homes, drug rehabilitation centres just shows how twisted these individuals are,” Cuthbert said.
ANC MPs described Cuthbert’s comments as opportunistic as there were no findings against the governing party
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.