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Picture: Supplied
Picture: Supplied

Valued at R180bn, the national lottery is one of the country’s largest tenders and given the money involved, members of parliament’s trade, industry & competition portfolio committee say close scrutiny of the adjudication process is essential.

The National Lotteries Commission (NLC) board and the minister of trade, industry & competition, Parks Tau, will decide who gets this tender for the next eight years.

The new portfolio committee, which will be responsible for oversight of the new lottery operator, includes Mzwandile Masina, a former Ekurhuleni mayor and former deputy minister of trade, industry & competition; his ANC colleague Malusi Gigaba, who has held several cabinet posts;  Mbuyiseni Ndlozi of the EFF; Tony Chance, DA spokesperson on trade, industry & competition; and Nobuntu Hlazo-Webster, deputy leader of Build One South Africa (Bosa).

Several committee members who spoke to the FM say they are keeping a close watch on the process of choosing an operator, which is crucial to the transparency and integrity of the lottery system, but do not want to overstep their mandate.

Masina, chair of the committee, says: “We can only be involved after the announcement of the new operator and then we can ask critical questions.”

There are eight shortlisted entities, among them the incumbent, Ithuba; Thebe Investments; Hosken Consolidated Investments, led by Johnny Copelyn and Yunis Shaik; the Umbulelo consortium led by Afrirent Holdings; and Giya Games.

The new operator was supposed to have been  announced in September, but Tau postponed this indefinitely after MPs made allegations of corruption and other irregularities against NLC board members and bidding companies.

Chance says appointment of a new operator is 18 months overdue and the committee wants the process to be expedited to avoid a six-month gap in the distribution of funds to community organisations. “We should give the NLC board the benefit of the doubt. There is still doubt. We cannot be certain there won’t be political interest served in the appointment of the new operator.”

He says the adjudication committee, the NLC board and Tau must ensure that political conflicts do not affect appointments, and that the new operator is chosen based on merit and qualifications.

The previous board has been mired in corruption allegations. The Special Investigating Unit (SIU) has been looking into these over several years.

In 2015, the Pretoria high court found that the decision by Tau’s predecessor, Ebrahim Patel, to grant Ithuba a licence was irrational. But Ithuba still runs the lottery, and  its licence has been extended to May 31 2025. The extension raised concerns about the lack of consequences for past irregularities and highlighted the need for transparency in the selection process.

The court also froze assets  connected with the former board chair Alfred Nevhutanda, according to Raymond Joseph, who has exposed lottery shenanigans in reports for GroundUp.

New board chair Barney Pityana and new NLC commissioner Jodi Scholtz have undertaken a huge cleanup ahead of the new operator’s appointment.

Hlazo-Webster says hopes were that Tau would have named a new operator by now and she expects an announcement soon. She has submitted questions to Tau on how the seven-member panel that will pick the next operator was chosen. She has also asked for a breakdown of all payments by the department of trade, industry & competition to board members. There has been no response from Tau.

The Bosa deputy leader has submitted a promotion of access to information request for more details on the identities of the adjudicators. “I want to know who is on the independent panel,” she tells the FM. “We want the names of all the consultants and experts advising the bid evaluation committee.”

For the sake of vulnerable communities that rely on the lottery funding and for the preservation of public trust in government, the process must be open and transparent
Nobuntu Hlazo-Webster,

She says it’s vital that the process is above board. “For the sake of vulnerable communities that rely on the lottery funding and for the preservation of public trust in government, the process must be open and transparent.”

Masina says it’s never too late to ask the critical questions. “People should not be irritated when we ask questions. This is public money.”

He says transparency and accountability in handling public funds are important, especially when it comes to projects that affect vulnerable people, and thorough oversight measures are in place to prevent any misuse of resources and ensure a fair and efficient lottery system.

In recent weeks, the parliamentary committee questioned the NLC and the National Treasury about the transfer of about R300m in surplus funds from the NLC to the national revenue fund. The NLC had sought an outside legal opinion on the Treasury’s instruction for it to do so, but parliament’s chief legal adviser said that as a public entity it could not retain surplus funds. The NLC had failed to apply to the Treasury for permission to do so. 

Parliament’s legal office pointed out discrepancies between the Lotteries Act of 1997 and the Public Finance Management Act of 1999 (PFMA), but said the PFMA took precedence. The Treasury was therefore entitled to order its instruction, it said, and the NLC then complied.

MPs say this incident highlighted the need for clarity and alignment between different pieces of legislation governing public funds.

In a letter to the parliamentary committee, Treasury director-general Duncan Pieterse says the NLC did not submit an application to retain the surplus funds within the 30 days allowed. “Based on a Treasury formula, R300m was calculated as an amount to be surrendered by the NLC to the national revenue fund.”

MPs were concerned that despite the huge surplus, the NLC rejected 6,500 requests for funding from charities and individuals in financial 2023. It rejected 920 requests for funding during financial 2024 and  another 145 applications are awaiting adjudication.

The parliamentary committee says the matter is now closed, but Gigaba says he wants to ensure there is proper governance and that the Treasury doesn’t act on its own. “We have been attacked in raising the issue. We have a responsibility to ask the questions simply because our integrity is being impugned. We can’t keep silent.”

Chance says the NLC must focus on “bigger fish”. He says the appointment of a new lottery operator must take place urgently and there cannot be another six-month gap when no funds are distributed to organisations in need of them.

He says the committee will hear from the Hawks and the SIU on November 5, when they will update it on action against members of  the previous NLC board.

President Cyril Ramaphosa signed a proclamation four years ago allowing the SIU to investigate the NLC.

“The SIU investigations found fraud and corruption at the NLC to the value of R344m, where board members and senior employees of the NLC and their family members and friends enriched themselves with NLC grants allocated for projects to assist in mostly impoverished communities,” SIU spokesperson Kaizer Kganyago said at the time.

According to media reports, former Hawks spokesperson Hangwani Mulaudzi was also investigated along with music producer Arthur Mafokate and actress Terry Pheto.

The investigations revealed a web of corruption involving high-profile individuals, shedding light on the extent of the fraudulent activities within the NLC board. MPs say they have to ensure this does not happen again and that grants are used for their intended purpose of uplifting disadvantaged communities — not to pay for the lavish lifestyles of connected individuals.

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