The Standing Committee on Public Accounts (Scopa) demands answers from the National Lotteries Commission (NLC) and the Minister of Trade, Industry and Competition, Parks Tau following two concerning briefings from the Auditor-General (AG) and the Special Investigating Unit (SIU) that revealed weak financial management, maladministration and corruption amounting to over R2 billion.
This comes a week after AG had issued the NLC, a qualified audit opinion for 2023/24, pointing out that the commission’s internal controls were not up to standard and also mentioned that the organisation had not spent grant funds close to R1 billion.
Scopa chairperson Songezo Zibi said the standing committee will write a letter to Tau to explain the criteria used for selecting board members and the selection process at the NLC.
“Scopa has much to discuss with the Minister and the National Lotteries Commission when they appear before the committee. The important thing is that we see a system put in place that will minimise or eliminate what the SIU has been telling us here,” Zibi said.
Last week, the AG briefed Scopa on the NLC’s 2023/24 audit outcomes and financial performance.
During the briefing, the AG cited systematic failures in governance, weak financial controls and lack of service delivery, warning that the NLC has undermined its mandate by failing to ensure funds reach the intended beneficiaries.
The AG pointed out that the NC had allocated grants to unqualified applicants with no supporting documentation, including overfunding of projects which lacked feasibility studies or proper plans as well as underspending of R957 million on grants from a R1.52 billion budget.
Zibi mentioned that Scopa would want to work with the office of the AG to assess, mid-financial year, whether the interventions to assist government departments and entities achieve ideal audit outcomes are working.
“Scopa is always looking for ways to improve its impact and would like to work with the office of the Auditor-General to assess, mid-year, whether the underlying interventions are taking place or not,” he said.
He said that the SIU had also briefed the standing committee on its investigations regarding the NLC.
Zibi said that the Chief Operation Officer at the SIU, Adv Leonard Lekgetho told the standing committee that investigations mandated by Proclamation R32 of 2020, for the period January 2014 to November 2020 had uncovered a corruption network involving senior NLC officials, board members, professional enables and hijacked non-profit entities.
The standing committee also stated that Lekgetho had informed Scopa that over R2 billion is under investigation and only R9.5 million recovered to date, and that stated 15 criminal referrals were made to the National Prosecuting Authority, where implicated individuals including the former CEO of the NLC, Philemon Letwaba and former Board Chair Prof Alfred Nevhutanda were mentioned.
“In our letter to the Minister following this update, we will be very specific about the questions the Minister must answer to the committee about the criteria for selecting board members, and who gets to choose who those board members are, and who from the department’s perspective oversees the ongoing performance of those board members. Because it is also possible that within the department itself, we also have people who cannot oversee what these boards, which manage billions and billions of rands contributed by South Africans, are doing, to make sure they can meet their mandate,” said Zibi.
On Wednesday, the NLC stated that it has acknowledged the AG’s 2023/24 audit outcomes.
The commission stated that it had acknowledged key findings, which were noted by the AG, such as grant allocations where contractual conditions were unmet, an omitted performance indicator, legislative noncompliance, and weaknesses in the internal control environment.
The commission stated that corrective actions are underway, and pointed out that the NLC has implemented stricter pre-payment documentation checks, as the organisation has also updated its accounting policies in line with standards of generally recognised accounting practice (GRAP), including strengthening its asset management controls.
The NLC also stated that it is collaborating with AG as well as the Parliamentary Portfolio Committee on Trade, Industry & Competition and National Treasury to align remedial milestones and secure technical support.
“We confirm that the finance team has worked tirelessly to enhance governance, improve policies and processes to address the internal control deficiencies identified. The NLC board and senior management have made significant strides in closing off these matters and are confident that in the new financial year 2025/26, the outcome will improve”, said NLC Commissioner, Jodi Scholtz.
