The National Lotteries Commission (NLC) has noted the presentation by the Special Investigating Unit (SIU) into the allegations of maladministration, corruption, and fraud, it said in a statement on Tuesday after the SIU presented its findings to the portfolio committee on trade, industry and competition earlier in the day.
The unit found that the NLC leadership allegedly plundered about R300-million meant for community upliftment projects across the country.
“The SIU investigation has uncovered a web of corruption related to NLC funding and flow of funds to NLC officials, board members, and their family members. The SIU is pursuing all individuals involved in the siphoning of NLC money,” said the SIU in a statement.
SIU chief national investigations officer Leonard Lekgetho described how in one instance a former board member of the NLC allegedly “hijacked” a non-profit organisation (NPO) that was granted at least R23-million in funding to build an old-age home in Mpumalanga.
Lekgetho said the project was started and not completed because “individuals connected to the NLC” siphoned the funds.
“The investigation has revealed that R5-million of the R23-million received from the bank account [of the NPO] was transferred to one attorney of [a group of companies] belonging to the former board member for the transfer of luxurious immovable property in favour of their client,” Lekgetho said.
Lekgetho disclosed that the investigation into the same former board member found that an NPO transferred about R3.3-million into the bank account of a company linked to a senior NLC official a day after receiving R7.5-million funding for the construction for a rehabilitation centre in Gauteng.
According to Lekgetho, R1-million was subsequently transferred into the board member’s account by the same company. The same approach was implemented for the construction of a rehabilitation centre in Mpumalanga.
“[Furthermore], the SIU investigation has revealed that during the period March to May 2018, the former board member received a total amount of R5.47-million into his personal bond account from various NPOs. The bond was for his primary residence in Gauteng.”
He added that an investigation into a second former board member found that they had received, either directly or indirectly, at least R10-million from an NPO that was in part used as a deposit for a R27-million house and a deposit for a luxury vehicle.
Trusts
Lekgetho told the committee that a senior official at the NLC was allegedly involved in the establishment of trusts to act as conduits for money-laundering.
“[A] senior official was involved in a number of business activities with individuals and entities that are directly or indirectly benefitting from NLC grants. We have identified the key individuals involved. During 2015, the senior official and one known individual registered two trusts,” he said.
According to Lekgetho, the trust received at least R14-million in transfers from a non-profit company and private companies which received monies from these NPOs.
“After the trust received funds from the NLC [beneficiaries], the funds were further redistributed to senior NLC officials’ personal accounts and other family businesses.”
The SIU investigation also found that a company owned by the brother of a senior NLC official received at least R34-million in payments from NPOs that were granted funding by the commission.
“So what happened is that NPOs transferred money to the trust account then from the trust account, the money is transferred to the company … then from the company, the money is transferred to the benefit of the NLC official.
“During the period 3 March 2016 to 11 July 2018, the company … paid a total of R5.6-million to the benefit of the senior NLC official and entities linked to his family members.”
Borehole drilling funding
Lekgetho told the committee that during the investigation, the SIU found how an NPO was granted R55.4-million in funding to drill at least 200 boreholes in five provinces, but the bulk of the funds ended up in the pockets of individuals and companies.
He said upon transfer:
- about R10-million was transferred to a company “for services which were never rendered”
- at least R750 000 was used for the purchase of two vehicles
- about R2.6-million was directed to the purchase of a house
- R1-million was transferred to the call account of the entity
- R2.2-million found its way to the account of another entity
- about R340 000 was used to purchase a vehicle
Lekgetho added that the boreholes were drilled in the provinces by two companies with one entity receiving at least R10-million for doing no work. As the SIU gave its presentation, the NLC reiterated its commitment to cooperate with the investigation, since its inception in 2020.
“The commission is confident of its internal processes to ensure fair and equitable funding, and this has been evidenced by the outcomes of external audits conducted in recent years.
“The commission has also noted with concern several inconsistencies in the SIU presentation and the tone of their social media reporting, which unfortunately serves to frame adverse conclusions in the minds of the public while investigations are yet to be concluded. A final report is yet to be presented to the president in terms of the proclamation,” said NLC spokesperson, Ndivhuho Mafela.
Mafela added that the commission would not publicly address these “inconsistencies” as the investigation had not been concluded.
“The commission remains committed to applying the principles of openness and transparency in the exercise of its mandate and functions. The NLC respects all processes of institutions of state as welcome checks and balances in the process of regulating lotteries and changing the lives of the disadvantaged South Africans.”
Additional information – SAnews.gov.za
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