Conmen, bogus charities take the Lotto for a ride

Fraudsters are using sophisticated tactics to dupe the National Lotteries Board into giving money to bogus charities.

And some of the genuine recipients of Lotto funds are using the grants to buy luxury cars instead of for the projects cited in their funding applications.

These startling revelations were made by National Lotteries Board CEO Vevek Ram during the presentation of the board's annual report in parliament yesterday.

Ram said the board, which distributed R3-billion to charities and others in the 2010-2011 financial year, had detected numerous fraudulent applications for funding.

"You will find a person who has 10 IDs, with 10 different names and 16 places where he lives and maybe he will make 16 different applications for different projects. That happens a lot," he said.

Ram did not disclose how much money was lost to fraud during the year under review.

He said the lotteries board had found that some legitimate charities had become reliant on the lottery and was neglecting fundraising.

He said there were many instances in which funds meant for charitable projects were redirected for personal benefit.

"We find that you give somebody money to [establish a food garden] but then they buy a Land Rover."

Ram said the board was dealing with many instances of conflict of interest - some grant recipients were using Lotto money to fund projects managed by their own companies.

"After giving the money, we find that there is somebody on the governing body [who] is also owning a construction company that will get a contract to build the clinic or whatever it is [we are funding]."

The board has slammed the "dependency syndrome" of large organisations, saying many had become entirely dependent on lotto funding and had stopped raising funds from other sources.

"If you take Child Welfare nationally, they probably receive between R80-million and R100-million from us. Now they believe we should continue funding them. They have stopped completely all their other fundraising," he said.

Ram said new regulations adopted by the Department of Trade and Industry would help the board fight conflicts of interest.

In terms of the new regulations, distributing committees with conflicted individuals will not be allowed to decide on a grant application if any of their members are connected to it, even if the conflicted person is not in the room when the decision to award the grant is made.

"You cannot now purely recuse yourself and go outside while your friends adjudicate.

"That committee cannot adjudicate and that application has to go to an ombudsman or some other adjudication body," he said.

According to the annual report, R77-million was paid to organisations with links to either members of the lotteries board or to distributing agencies.