NEWS ANALYSIS: Cloud of reluctance hangs over MPs’ push to probe lotteries graft claims
MPs want to establish the extent of the reported rot at the National Lotteries Commission (NLC) after many corruption allegations were levelled against the organisation, but there are questions about the ANC’s stance on the matter.
The commission is tasked with regulating lotteries and the distribution of funds to good causes. It generates its funding and operational budget from the proceeds of the national lottery, which amounts to about R1.5bn-R2bn annually. Proactive funding represents about 10% of total annual funding by the commission.
The commission is empowered to grant funding to worthy causes without the need for applications through a 2015 amendment to its enabling act. While it was argued that the amendment was necessary to address the need for funding when organisations lacked the ability to submit formal applications, it opened funding to abuse and corruption.
Indeed, some NLC executives, such as COO Phillemon Letwaba, who was recently suspended, have been accused of channelling multimillion-rand grants to non-profit organisations that involve family and friends.
The lack of transparency has also led to increased suspicion of the commission’s work. It has in recent years insisted that the list of beneficiaries should not be made public, citing complaints by some beneficiaries of alleged extortion and harassment. It argued that while in the past such lists were published, on consideration of the laws governing private information, coupled with the complaints, the publication of such information was erroneous.
But an opinion by parliament’s legal advisers presented to MPs last week states that the commission, a public entity falling under the department of trade & industry, is required by law to disclose its list of grant beneficiaries, in line with the provisions contained in the Public Finance Management Act.
The legal opinion further states that “the constitutional right to privacy is not an absolute right but may be limited in terms of laws of general application and must be balanced with other rights entrenched in the constitution”.
Interpretation of the Lotteries Act shows that a culture of openness and transparency is required.
Parliament’s trade & industry committee gave the commission seven working days to table the list of beneficiaries, including those that benefited from the R150m Covid-19 relief fund.
Most embarrassingly, the ANC, who attempted every manoeuvre in the dark-arts playbook to try to prevent these lists from being published, have been forced to accede that this information should be made publicMat Cuthbert, DA MP
Committee chair and ANC MP Duma Nkosi said this should include the names, the amounts disbursed, and the categories it was paid out from. It should also include all beneficiary lists that have not yet been made public.
But there is scepticism about whether the ANC will be firm and hold the commission executives accountable for any transgressions uncovered. As recently as May, ANC MPs were defending the commission in parliament, with the party’s Simanga Mbuyane saying the corruption reports were being driven by “an element of the third force”.
The DA, which has been pushing hard to uncover the rot at the commission, has pointed out the ANC’s inconsistency.
“Most embarrassingly, the ANC, who attempted every manoeuvre in the dark-arts playbook to try to prevent these lists from being published, have been forced to accede that this information should be made public,” DA MP Mat Cuthbert said last week.
“All of a sudden they have dubbed themselves ‘champions of transparency and accountability’. However, the question must be asked where they were for the last four months.”
Cuthbert insisted that the commission has been reluctant to reveal the beneficiaries because the funds have been abused and channelled to friends and family of executives, and those politically connected.
Online news website GroundUp has reported extensively on the alleged irregularities at the commission. In May it reported that the NLC paid out millions of rand more in grants to organisations already involved in questionable, unfinished lottery-funded projects. In several cases the projects have ground to a halt because they have run out of money and the service providers, many of them small businesses, have struggled to be paid, GroundUp reported.
Late in 2019, GroundUp also reported that bank accounts belonging to a “hijacked” non-profit organisation, into which millions of rand in lottery grants were paid, were allegedly used by controversial lawyer and “Lottopreneur” Lesley Ramulifho to help fund his lavish lifestyle.
In February, the commission’s board appointed an audit firm to conduct an independent investigation into the allegations of corruption. Trade, industry & competition minister Ebrahim Patel has authorised a separate inquiry into some lottery-funded projects.
The commission has often labelled the GroundUp reports as biased.
“GroundUp’s biased and subjective campaign over the past number of years has failed to mention that over 90% of [the] NLC’s grants to worthy and needy causes are beyond reproach and have improved the lives of poor people throughout the country in a multiplicity of projects undertaken by non-profit organisations [NPOs],” it said in a statement on July 7.
It condemned the DA in another statement for suggesting there is a rampant corruption at the organisation.
“In the past three years there have been a small percentage of beneficiary projects that have been mismanaged, and the NLC has sought to correct these and in all instances instituted investigative inquiries, some of which are ongoing,” it said.
The DA appears to have “fallen in with a false characterisation by certain aggrieved civil society organisations of the NLC as corrupt”, it said.
The commission said section 67 of the Lotteries Act that deals with protecting beneficiary information is now being tested in the high court in Pretoria, which is weighing allegations of intimidation of NLC grant beneficiaries.
“Against this background, it comes as mischievous and malicious for the DA to institute the [legal] action they threatened.”
Earlier in July, the DA laid criminal charges against the commission for allegedly failing to carry out its duties and responsibilities, as well as for breaching access to information laws.
According to the party’s legal opinion, the commission’s refusal to disclose the names of fund beneficiaries to parliament on the basis that it is prohibited from doing so is unlawful and an error in law.
Cuthbert said the party will not withdraw the charges even if the beneficiary list is made public, because “a crime was still committed”.
“There must be accountability,” he said.
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