Prosecution of lotteries officials who scammed the poor is next step: SIU hands evidence to NPA

28 September 2022 - 07:55
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The SIU says a former board member purchased a R6.3m Rolls-Royce using funds from the National Lotteries Commission. File image.
The SIU says a former board member purchased a R6.3m Rolls-Royce using funds from the National Lotteries Commission. File image.
Image: Thulani Mbele

The Special Investigating Unit (SIU) has referred criminal cases to the National Prosecuting Authority (NPA) to bring to book those responsible for the looting spree at the National Lotteries Commission (NLC).

The SIU has “referred evidence pointing to the commission of criminal offences to the NPA for 13 individuals,” its head Andy Mothibi and top investigating officer Leonard Lekgetho disclosed.

They presented findings contained in their interim report to MPs on Tuesday.

This is the time to pierce the vein and make sure that those responsible are brought to book
SIU head Andy Mothibi

Mothibi said: “There is also widespread misrepresentation amounting to fraud which we have referred.

“This is the time to pierce the vein and make sure those responsible are brought to book.”

The parliamentary portfolio committee on trade and industry was on Tuesday told investigators have also launched civil cases in a bid to recover allegedly misappropriated money splurged on a R6m Rolls-Royce and mansions, among other luxury items, bought with NLC funds.

Mothibi said the interim report found law firms were misused to siphon the money. The firms, he said, will be reported to the Legal Practice Council for malpractice.

He told MPs in November 2020 President Cyril Ramaphosa gave the SIU the go-ahead to investigate matters relating to the NLC.

Mothibi said the investigation commenced with phase 1 into allegations emanating from the department through the Nexia SAB&T report.

“The amount involved in phase 1 investigations is R279m. The amount was corruptly siphoned out of the NLC with the assistance of executive and board members,” he said.

He said the investigation was “intense, massive and complex” in terms of tracing the money.

The SIU hopes to hand the report on phase 1 to Ramaphosa by the end of October.

The SIU has commenced with the second leg of the investigation with 24 matters.

Mothibi said the focus of the investigation was to look into:

  • maladministration at the NLC;
  • investments of the funds at the National Distribution Trust Fund; and
  • the allocation of money in the fund to beneficiaries who were not entitled to it.

“The investigation revealed NPOs contributed towards the purchase of immovable property" on behalf of a board member, he said.

Lekgetho told MPs in June the SIU obtained a preservation order to preserve the property registered under Vhutanda Investment (Pty) Ltd, where former board chair Prof Alfred Nevhutanda is sole director.

“Civil litigation process is underway to review and set aside the grant funding contracts of all the NPOs and NPCs that contributed towards the sale of the property purchased for the benefit of Prof Nevhutanda.”

The SIU identified that during August 2016, a former board member purchased a R6.3m Rolls-Royce using funds from the NLC.

Lekgetho said another senior official from the NLC was involved in business activities with individuals and entities that directly or indirectly benefited from NLC grants.

Pertaining to the second senior executive, the investigation revealed an NPO received R28m grant funding from the NLC for the construction of a secondary school in Limpopo.

Lekgetho said: “A disciplinary referral for the NLC senior executive was submitted to the NLC for receiving a kickback in the form of a property. The official resigned before the disciplinary hearing could take place.

“A disciplinary referral letter dated August 13 2021 was submitted to the minister of trade and industry for former board member one. Based on the strength of evidence against him, the former board member tendered his resignation before the disciplinary hearing.”

He said the SIU also submitted a disciplinary referral letter to the NLC in August 2021 against a senior NLC official and the hearing was in January this year.

“The senior official was acquitted on the initial charges. The SIU submitted further disciplinary referrals and he was subsequently charged but resigned before the hearing.”

There is a lack of monitoring and evaluation to ensure projects materialise for the intended purposes. There was also collusion [and] general abuse of NPOs and NPCs, including hijacking thereof
Andy Mothibi

In addition to the preservation order against Nevhutanda, the SIU said there are eight more properties identified and the process of preserving them is at an advanced state.

Mothibi said the SIU investigations showed the modus operandi used to siphon money out of the NLC included the misuse of its “proactive funding provision” in the NLC Act as well as inadequate project management.

“We have also identified there is a lack of monitoring and evaluation to ensure projects materialise for the intended purposes. There was also collusion between some NLC board members, officials and NPOs and NPCs. There is general abuse of NPOs and NPCs, including hijacking thereof.”

He said there was also ineffective auditing of projects and general maladministration in the approval of grants and the “use of trust and family members to defraud the systems”, and abuse of firms and attorneys.

The SIU has recommended the NLC establishes a committee to deal with new proactive funded matters to eliminate the risk of individuals initiating proactive funding projects and ultimately awarding grant funding projects to family members and friends.

“All current proactive funded projects should be captured in the grant management system or fusion system. The system is designed in a manner in which it is unable to detect different applications for grant funding made by one individual using NPOs and NPCs,” said Mothibi.

The SIU, he said, also recommended the NLC procure an integrated system that is able to detect such abnormalities.

He said the NLC system should be linked to that of the department of social development to identify hijacked NPOs and confirm original member NPOs.

“There should be project management, monitoring and evaluation for all funded projects. The NLC should adhere to the policy of transferring money to the NPOs and NPCs in tranches, as opposed to transferring the grant amount in one tranche prior to receiving progress reports.”

He said there should be lifestyle audits conducted on all NLC officials and board members as well as the separation of duties.

Trade and industry minister Ebrahim Patel said the SIU’s report showed the NLC funds, meant for the most vulnerable communities and projects including old-age homes, drug rehab centres and centres for young children, “were cynically and brazenly stolen by an organised syndicate of persons”.

“Institutions of democracy are able, when brought into action, to collect the evidence of wrongdoing and ensure implicated persons are identified and held to account,” he said.

Patel lauded the SIU and journalists who assisted to give whistleblowers a voice.

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