Coordinated Attack on New Lottery Board

There was massive corruption at the National Lotteries Commission until recently. Finally the old corrupt board and management were replaced. The new board and management appear to have been trying to run the organisation properly. But there appears to be a fightback by some of those who were implicated in corruption and it seems they have the EFF and the head of Parliament’s trade and industry portfolio committee on their side.

• For years the board and management of the National Lotteries Commission were involved in massive corruption, stealing funds meant for good causes.
• Finally in 2022 and 2023 a new board and commissioner were appointed that has, as far as we can tell, made a concerted effort to clean up the Lottery.
• But last week in Parliament, it became clear that there is a fightback and an attempt to oust the new board and commissioner. It is being led by ANC and EFF MPs with the support of some dodgy characters we have previously reported on.

The National Lotteries Commission is under attack from what appears to be a well-coordinated “fightback” campaign to force the minister responsible for the lottery to dissolve the Commission’s board and dismiss the Commissioner.

The pressure was ramped up last week when some MPs – with the ANC and EFF taking the lead – launched a withering attack on the NLC in Parliament.

The NLC was in Parliament on 18 September to report on its performance to the Trade, Industry and Competition (TIC) portfolio committee.

Instead, the report took a back seat and the NLC delegation, consisting of board chairperson Reverend Barney Pityana, Commissioner Jodi Scholtz, and other senior executives, faced a grilling by MPs.

Many of the MPs’ questions appeared to be based on recent media reports and allegations contained in two letters to Minister of Trade and Industry Parks Tau. The first anonymous letter claimed to be from NLC staff, and the second letter was from a self-proclaimed activist linked to some members of the NLC’s former board and executive.

The letters and media reports appear to be part of a coordinated campaign pushing for the dismissal of Scholtz, who was appointed early in 2023, and the dissolution of the NLC’s board led by Pityana.

An NLC source described what was happening as a “fightback”, while a second source said it was an attempt to capture the NLC.

Under Scholtz and Pityana, the NLC has begun rebuilding an organisation that was hollowed out by corruption. It has worked closely with the Special Investigating Unit (SIU), which has been investigating corruption involving lottery grant corruption since 2020, to hold the people involved to account.

Only minutes into last week’s portfolio committee meeting began, it became clear that the knives were out for the NLC.

Pityana had barely begun with his report on the progress the NLC has made in curbing corruption and restoring the organisation’s battered reputation when he was halted and told that there was limited time available for the meeting – and, anyway, MPs had copies of the report.

One of the letters sent to Tau was from Tebogo Sithathu – described by investigative reporters amaBhungane as a professional sock puppet – in his capacity as chairperson of the United Civil Society in Action (UCSA). Sithathu is currently being investigated by the SIU in connection with a R9.7-million grant to his now-defunct Gospel Music Association of South Africa.

An anonymous email, supposedly from unnamed NLC staff, was also sent to Tau and copied to members of the committee and senior DTIC staff. Like Sithathu’s letter, it made serious allegations of corruption, nepotism, conflicts of interest, and discrimination against staff without offering evidence.

Another letter to Tau was from Desmond Msumi of the Mageza Heritage Foundation complaining that they were yet to be paid a R1.23-million grant allocated for the 2023 South African Traditional Music Awards (SATMA) staged in Durban last year.

GroundUp has reliably learned that the SIU, which is investigating the grant, had asked the NLC to withhold payment until their investigation is completed. Before this grant, Mageza had received about R16-million in Lottery funding between 2018/2019 and 2021/2022.

The chairman of the committee, ANC MP Mzwandile Masina, has also written to the minister calling for the board to be dissolved and for Scholtz to be removed, according to a source who has seen the letter.

In the meeting, Masina told the NLC delegation: “It seems that while we were watching Zondo others were implementing another state capture. How was the Commissioner appointed? Was there a proper process followed? Members [MPs on the Committee] are raising very pertinent points.” He offered no evidence to back up his suggestions of impropriety.

Former ANC Cabinet Minister and portfolio committee member Musi Gigaba supported Masina’s stance on the NLC. Without evidence, he questioned the independence of the NLC board and the appointment of Scholtz. (Gigaba himself has been implicated in numerous corruption scandals.)

Among the allegations against the NLC is that several current senior NLC staff and board members had previously worked for the Department of Trade, Industry and Commerce (DTIC) or the SA Bureau of Standards, both of which fall under the department. EFF MP Mbuyiseni Ndlozi complained that there was “too much recycling of people … people are in circulation in the space. Perhaps you [the NLC] need a new board”.

You need people who do not know people, he said, adding: “If you want to do things new then you need a new board.”

Pityana said in his report: “… we want to say that we are resetting the grant-making mechanism of the NLC such that we can be confronted less with criminal abuses … to improve the way in which the resources can be utilised to support ‘worthy good causes’”.

“It is against that background that we wish to frame the flurry of activity in recent weeks about the NLC. Some of it no doubt is self-serving and should be taken with a pinch of salt, but there are others that deserve further investigation.”

Pityana said there was no reason to suspect corruption at the NLC is continuing in the way it used to.

“Nor is it true that the Commissioner refused a bonus to staff and awarded the bonus to some select members of staff,” he said in response to one of the allegations made to the Minister. “There is no evidence for such.”

Scholtz told MPs that the new administration had inherited a chaotic situation and had to review – and, in many cases, update – dozens of policies. In many ways it was like “starting a new organisation” from scratch, she said.

For the first time, identity numbers of people involved in grant applications are being captured so multiple grant applications by individuals on behalf of different organisations can now be tracked.

Scholtz previously told GroundUp that it was clear that the IT system had been “designed with corruption in mind”.

She told the committee that the fusion system, in which grants are administered, also had to be upgraded to reduce opportunities for corruption.

Grant applications would in future be checked against external databases including those of the Department of Social Development and the Companies and Intellectual Properties Commission. Memorandums of understanding would be signed with other entities like SARS to check on tax compliance as the system was expanded.

Monitoring and evaluation had also been beefed up and the NLC was now doing site visits to all organisations that apply for funding, rather than on a sample before a decision was made, she said.

Vincent Jones, the NLC’s chief audit executive, said that 44 investigations had been completed this year and 14 complaints had been lodged with the police as a result. The NLC had also completed 14 lifestyle audits of its top management and 40 more were about to begin.

Wrapping up the fiery two-hour long meeting, Masina said he would be writing to Tau to ask him to dissolve the NLC board. “We hold the view that the board members [of the NLC] and executive are not objective,” he said.

“This is wrong, it is not ethical and cannot be done on our watch,” he said, again without evidence. (Masina was a fervent supporter of former President Jacob Zuma. AmaBhungane exposed his questionable involvement in a vehicle collision with a state vehicle in which a cover-up appeared to have taken place.)

“I will write to the minister to dissolve the board. If he does not accede. We will call him [to appear before the committee] to explain,” he said.

Trade and industry ministerial spokesperson Yamkela Fanisi said on behalf of Tau: “We have given the NLC board time to report to us on their work and the state of the entity. This will include the process they are engaged in on finding a new lottery licensee.”

“We want to put it on record that we are committed to stabilising governance and administration at DTIC and its listed entities, NLC … included,” he said.

This is the first in a short series of articles on attacks on the new Lottery administration. On Monday: The men behind the attack on the Lottery.

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