Lottery Blows Millions of Rands on Lawyers

The National Lotteries Commission spent almost R13-million on litigation involving whistleblowers.

• Minister Parks Tau has revealed that the National Lotteries Commission (NLC) spent over R73-million on litigation and disciplinary inquiries involving past and current staff.
• Almost R13-million was spent on litigation involving whistleblowers.
• A cabinet minister’s former law firm earned millions acting for the NLC against whistleblowers.

The National Lotteries Commission spent over R73-million on lawyers to act in internal disciplinary inquiries and litigation against both current and former staff between the 2019/20 and 2023/24 financial years.

Of that, R13-million was for litigating against two former staff members – Mzukazi Makatse and Sello Qhino – who were first suspended and then fired, after they blew the whistle on Lottery corruption.

The legal fees were incurred by both the highly litigious former NLC administration, and the current board and executive.

The previous administration was led by Thabang Mampane, who resigned in August 2022, and the scandal-ridden former board chair Alfred Nevhutanda, whose tenure ended in November 2020.

A new NLC board under Reverend Barney Pityana, was appointed in late 2022, and current Commissioner Jodi Scholtz took over in February 2023.

The legal fees under Mampane, amounting to over R46-milion, were mostly related to general disciplinary matters and litigation by, or against staff.

Litigation of R27-million under the new administration is largely made up of disciplinary action against staff implicated in the maladministration or corruption that overwhelmed the NLC under Mampane and Nevhutanda.

The eye-watering legal fees were revealed in a written response by Trade, Industry and Competition Minister Parks Tau to questions posed by Democratic Alliance MP Toby Chance.

“The enormous expenditure on legal fees illustrates the lengths to which the NLC tried to cover up its corrupt dealings,” said Chance. “If it appears that Mr Makatse and other whistleblowers have suffered a miscarriage of justice, we will seek a judicial review and full compensation of their costs and rehabilitation if necessary.”

In Makatse’s matter, the lottery was billed nearly R9-million for litigation leading up to and after his dismissal. He had blown the whistle on a dodgy multimillion-rand grant to the organisers of East London’s Buyel’Ekhaya Pan African Music Festival in 2017.

The NLC was also billed R470k in connection with a disciplinary matter involving Zintle Rungqu, Makatse’s partner and mother of his three children.

Both Makatse and Qhino have been invited to participate in an NLC reparation process intended to recognise the harm some people suffered at the hands of the NLC. Apologies and, in some cases, financial compensation are expected.

“Some individuals were really affected very negatively by this … This is really painful,” NLC Commissioner Jodi Scholtz told the Daily Maverick recently.

“I met a couple of these individuals. It was just so heart-wrenching that their whole lives have been turned upside down,” said Scholtz.

Among those she met were Qhino and Makatse, who told her how the NLC’s actions had affected them and their families.

Trumped up charges

Both Makatse and Rungqu were employed in the NLC’s East London office. Rungqu was suspended on trumped-up charges, of which she was subsequently exonerated, soon after Makatse’s suspension. After her acquittal, Rungqu returned to work but Makatse struggled to find work and slumped into a deep depression.

After Makatse was charged, Rungqu was targeted at work and to relieve the pressure on her, Makatse moved out of home and into an office in an empty factory belonging to a friend near East London’s airport.

The NLC was represented in the matters involving Makatse, Rungqu and Qhino by Ndebele Lamola Inc (NLI). Ronald Lamola, currently foreign affairs minister, was a partner in the law firm before he joined Parliament as an ANC MP in May 2019.

Lamola was appointed justice minister in President Cyril Ramaphosa’s cabinet on 30 May 2019. He is recorded as having resigned as a director of NLI months later, on 2 September 2019, according to Companies and Intellectual Properties Commission (CIPC) records.

Makatse was suspended in August 2017 and dismissed in February 2018. After his dismissal he took the matter to the Supreme Court of Appeal in 2018, where he lost. Rungqu was suspended just before Christmas in 2018. Lamola was still a director of NLI at the time when these matters were first litigated.

Included in the legal costs disclosed by Tau are two payments totalling R5.4-million for an internal disciplinary hearing in which former NLC COO Phillemon Letwaba was accused of money laundering and abusing his position to enrich himself and his family.

A bungled earlier investigation by NLI controversially cleared Letwaba, who then returned to work after a 17-month leave of absence. This was despite the fact that an independent investigation by audit firm SkX, appointed by the NLC to probe allegations of “improper use of funds intended for good causes”, had not yet been completed.

When the new NLC administration came into office, it re-charged Letwaba, but he resigned before the hearing could begin. However, his pension, valued at R2.8-million, was frozen by the Special Tribunal soon afterwards.

Ronald Lamola has previously denied any personal involvement in the bungled investigation of Letwaba by his erstwhile law firm.

Rocketing legal bill

In 2022, after the NLC’s legal bill had skyrocketed, then acting-Commissioner Lionel October, who now serves on the NLC board, took steps to crack down on exorbitant legal expenses.

October’s instructions were outlined in a memo in which he wrote that since the Auditor-General had declared payments to the NLC’s legal panel to be “irregular expenditure”, management should stop briefing the panel of lawyers on new or continuing matters.

A new competitive bidding process for legal services, if still required, would be initiated, he said.

In March last year, Patel told the parliamentary trade and industry portfolio committee that legal files, including documents from litigation running into tens of millions of rands, had gone missing. He also said that attempts to get details about the litigation from the lawyers involved had been unsuccessful.

“What it points me to is that we are onto something here, that we need to probe harder,” Patel told MPs. He said there may well have been collaboration between old NLC management and board members with law firms to deprive society of “resources that the NLC should make available to poor communities, and to frustrate and undermine the efforts of the ministry to introduce good governance”.

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