National Lottery Commission chair Alfred Nevhutanda. Picture: SOWETAN
National Lottery Commission chair Alfred Nevhutanda. Picture: SOWETAN

Parliament’s trade and industry committee is expected to ask trade and industry minister Rob Davies to look into the use by the National Lotteries Commission (NLC) of its proactive fund, which amounts to about R140m annually.

Committee chair Joan Fubbs said on Tuesday that the minister would also be asked to probe the allegations made by NLC chair Alfred Nevhutanda that its computer system had been hacked.

The NLC’s role is to regulate all lotteries and distribute funds via agencies to good causes. It gave a presentation to the committee on its work on Tuesday, during which DA MPs questioned executives about the use of the proactive fund.

The commission was empowered, through a 2015 amendment to its enabling act, to grant funding proactively to worthy causes without the need for applications. This was to address the need by organisations for funding when they did not have the ability to submit formal applications.

A lot of the projects funded through the proactive fund are infrastructure projects such as schools and early childhood development facilities.

DA spokesperson on trade and industry Dean Macpherson claimed that there were problems with the proactive fund, which he said was being used as a “slush fund” to enrich very few people.

“We know that there are shady characters that exist in the murkiness of proactive funding,” Macpherson said.

“There are some serious questions that exist within the proactive funding model. The only way to deal with this is to institute a forensic audit into all transactions that have taken place through the proactive fund.”

Fubbs said, however, that the committee would not ask for a forensic inquiry. A ministerial inquiry had proved effective in the past and would be resorted to again. 

DA deputy spokesperson on trade and industry Ghaleb Cachalia referred to media reports that some unworthy projects had been funded through the proactive fund. This was of “considerable concern”, he said.

There were media allegations of a conflict of interest involving a senior NLC executive and the granting of funds to an organisation of which his brother is a director.

Nevhutanda insisted that all pro-actively funded projects were closely monitored and that the NLC strictly applied its conflict of interest policy.

He said the NLC had recently learnt that the information about all NLC projects since 2001 was in the US, with a backup in the Western Cape. This was the source of a series of media reports. Journalists were being paid to write “fake stories” about the misspending by the NLC, Nevhutanda said. The intention was to bring down the organisation.

The NLC had reported this to the State Security Agency, which planned to investigate the NLC’s computer system to identify the culprits.

Macpherson rejected what he said were conspiracy theories.

ensorl@businesslive.co.za