Picture: RAYMOND JOSEPH
Picture: RAYMOND JOSEPH

The DA has called on trade & industry minister Ebrahim Patel to fire the corruption-accused National Lotteries Commission board and place the entity under administration.

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, which allows the commission to grant funding to worthy causes without the need for applications, represents about 10% of its total annual funding.

This provision was part of a 2015 amendment made to to address the need for funding when organisations lacked the ability to submit formal applications, it also opened the fund to abuse and corruption.

Some National Lotteries Commission 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 on funding recipients has led to increased suspicion of the commission’s work. It has previously insisted that the list of beneficiaries should not be made public, citing complaints by some beneficiaries of alleged extortion and harassment.

In May, online news website GroundUp reported that the National Lotteries Commission paid out millions of rand more in grants to organisations already involved in questionable, unfinished lottery-funded projects. In several cases, the projects had ground to a halt because they had run out of money and the service providers, many of them small businesses, have struggled to be paid.

On Wednesday, the director-general of the department, Lionel October, informed MPs that an investigation into corruption at the commission conducted by the department had been handed over to law enforcement agencies. The forensic investigation found evidence of corruption with millions of rand unaccounted for.

The full report will not be made public to allow law enforcement agencies to complete their own investigation, October said.

The department investigated four projects: Life for Impact (which received funding of R10m); I Am Made for God’s Glory (R11m); Zibsimanzi (R4.8m); and Denzhe Primary Care (R27.5m). DA MP Mat Cuthbert pointed out that these allegations include the hijacking of a drug rehabilitation centre, that was never completed, to shelf companies (linked to the National Lotteries Commission hierarchy) that received grants.

Cuthbert said each of the cases occurred under the current leadership of the commission, yet they have remained untouched.

“Despite attempts by the National Lotteries Commission’s leadership to distance themselves from this corruption — the DA remains unconvinced. There can be no other option for minister Patel than to show leadership and bring this sorry crisis at the commission to an end, once and for all,” Cuthbert said.

In February, the commission’s board appointed an audit firm to conduct an independent investigation into the allegations of corruption. This was separate from the department’s investigation.

The commission has rubbished the allegations of corruption levelled against it.

“In the past three years there have been a small percentage of beneficiary projects that have been mismanaged, and the National Lotteries Commission has sought to correct these and in all instances instituted investigative inquiries, some of which are ongoing,” it has said previously.

On Wednesday, National Lotteries Commission executives told MPs on the trade & industry portfolio committee that the organisation has initiated a process whereby applicants/beneficiaries declare any possible conflict when submitting their applications.

phakathib@businesslive.co.za

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