New Lottery boss promises huge clean-up | Business

New Lottery boss promises huge clean-up | Business

New Lottery boss promises huge clean-up | Business

  • New commissioner of the National Lotteries Commission (NLC), Jodi Scholtz, says the Lottery “has wronged communities and we need to say sorry”.
  • She says the proceeds of sales of seized properties and other assets could fund reparation payments to communities and people affected by corruption.
  • The NLC will use the SARS reparation model as a guide.
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The board of the National Lotteries Commission (NLC) has
approved a reparation process that will lead to apologies and, in some cases,
financial reparation, to former staff who were punished or driven out of their jobs
for blowing the whistle on corruption.

The NLC will use a reparation model similar to the one used
by the South African Revenue Services (SARS) which apologised and paid
reparation to staff who were forced out during the capture and hollowing-out of
the organisation during Jacob Zuma’s administration.

“We’re doing it because the NLC has wronged communities
and we need to say sorry,” the new Commissioner, Jodi Scholtz, told
GroundUp in a candid interview.

“It needs to be lawful and authentic. We need to make
amends within the PFMA (Public Finance Management Act). The idea is to say
sorry in a way that is meaningful and for everyone. My original proposal was
for staff only. But communities have also been affected. They have been hurt.
We cannot just say it is business as usual.

With regard to projects that collapsed when grants were
looted, she said the NLC had asked the Industrial Development Corporation to
provide engineers to investigate abandoned or unfinished projects “to see
what could be done to make them useful for the communities where these
facilities are situated”.

Since last year a clean-up at the NLC has led to the
replacement of the entire NLC board and much of the senior executive, and the
resignation both of the previous Commissioner, Thabang Mampane, and the former
chief operating officer, Phillemon Letwaba. Several other senior staff are
currently on suspension pending disciplinary inquiries.

Scholtz also confirmed that the NLC plans to introduce
lifestyle audits and integrity testing for all staff “starting from the
top … me, the executive and the NLC board”.

One idea being considered was to fund reparation awards from
money raised by selling off assets such as seized luxury houses and properties
and cars bought with looted lottery funds, Scholtz said.

One example, she says, is the R3.9-million that was raised
from the sale of Tsotsi star Terry Pheto’s house, which was paid for from a
grant intended to fund an initiation project.

The Special Tribunal has already issued preservation orders
running into hundreds of millions of rands on properties and other assets,
involving multiple individuals, companies and non-profit companies.

Among the other luxury properties paid from lottery funds
that the Special Investigating Unit (SIU) has seized are a Pretoria mansion
belonging to former NLC board chairperson Alfred Nevhutanda, and a luxury home
on a golf estate belonging to a trust in which former Commissioner Mampane and
her family are beneficiaries.

READ | Man behind failed Soweto sports centre has fingers in several Lottery pies

The system was enabled for corruption. It was as if people sat around a boardroom table and planned how to corrupt and steal.

“The system was enabled for corruption. It was as if
people sat around a boardroom table and planned how to corrupt and steal,”
said Scholtz.

She added: “With my tongue firmly in my cheek, I can
say that the one thing we were good at is paying out. Some grants were
adjudicated one day and paid out the next day,” she said. “But others
who needed it were kept waiting.”

Zero tolerance

Scholtz has been meeting staff and labour unions as part of
an organisation-wide clean-up.

She said she has made it clear to staff that the NLC will
have “zero tolerance” for fraud and corruption and that there will be
consequence management. I have told them that everyone is obliged to report
corruption if they encounter it.”

She has also held meetings with former staff who were driven
out after they tried to blow the whistle on corruption.

Among those she has met with are Sello Qhino and Mzukise
Makatse. Both have paid a heavy personal price after being hounded out of the

She said at times the meetings had been heartbreaking. She
had met an unnamed whistleblower who told her that his daughter had been so
affected that she contemplated suicide, said Scholtz.

“I am a parent. How can I not be affected by this?”

She has also met communities where tens of millions of rands
of public money was spent on facilities that were not needed, and
representatives of organisations whose credentials were “borrowed” or
hijacked and then used to apply for Lottery funding.

“I found a legacy of good people [at the NLC] who
wanted to do the right thing,” Scholtz said. “But they were very
disempowered and scared of doing their work. Records and functions were in odd
places and there were problems with record management.”

“We brought in consultants to compare job descriptions,
standard operating procedures and what people actually did. There were lots of
disconnections and things that didn’t fit.”

She also found “a lack of attention” to working

“Chairs are in a state of disrepair, and locks on
toilets are broken. The focus was not on how to help people, but rather on ‘how
can I loot?’”

“Staff are very fragile and scared to speak out,”
said Scholtz.

Broken systems

In some instances, “people were paid to be quiet and be
incompetent,” Scholtz told GroundUp.

The NLC’s IT systems were in disarray and key documents,
including some related to funding, board decisions and legal briefs, are

Independent investigators who probed NLC corruption have
reported how documents were often not supplied in spite of repeated requests.
They concluded that some key documents had been removed, or had never existed.
In some cases, they found that documents had been added to files without
following proper NLC protocols.

READ | GroundUp told to remove lottery article after fake copyright claim

A “flaw” in the NLC grants system meant that staff
meant to monitor projects could not search grant recipients by identity
numbers, making it impossible to find and weed out applications for – or
recipients of – multiple grants. It is widely believed by NLC staff that this
was intentional and designed to facilitate and hide corruption.

So far, close to R200-million has been spent on developing a
new system that began around 2016 or 2017. But staff say there are multiple
problems with it.

“We are not able to track grant applications via ID
numbers, where one person is involved with multiple NPOs, not necessarily as a
director, but who handles the application. The system cannot detect this,”
Scholtz said.

This facility has now been programmed into the system and
from April the NLC has been capturing ID numbers included in grant
applications. But the fix is not retrospective and the NLC is now considering
whether the best solution would be to rebuild the system from scratch rather
than fix what doesn’t work properly, GroundUp has learned.

In December 2018, the NLC shut down its grants system for
several days and when it came back online only a handful of staff at executive
and very senior levels were able to access information about proactively-funded

Around the same time, the NLC also stopped publishing the
names of grant recipients, claiming that this was because of a clause in the
Lotteries Act. The NLC eventually relented after pressure from the Minister of
Trade, Industry and Competition and some MPs, as well as media attention.

Everyone complains about the system. It is clear to me that
it was designed with corruption in mind.

Scholtz said the NLC’s risk management unit, whose job it is
to detect and stop fraud, “did not have access to the system that they
needed”. “Instead they were supplied with sanitised versions of

Monitoring and evaluation staff worked on a sampling basis
and “were not allowed to touch proactive projects”, which did go
through the NLC’s computer system, Scholtz said.

“Everyone complains about the system. It is clear to me
that it was designed with corruption in mind.”

“We are looking at the SARS model of reparation,”
said Scholtz. “We have had discussions with SARS and I am working on the
final details.

“They had the advantage of recommendations by the
Nugent Commission of Inquiry into Tax Administration and Governance by SARS to
guide them, but we can learn from what they did.”

The SARS process resulted in apologies and reparation
payments to current and former employees affected by the capture of SARS,
including people forced out by the witch hunt around the now-discredited claim
of a “rogue unit”.

SARS commissioner Edward Kieswetter issued an apology to
current employees in November 2022. This followed a similar apology to former
staff who had been hounded out.

A sub-committee of the NLC board has been elected to assist
Scholtz in formulating and implementing the reparations policy.

Integrity testing

Scholtz said following recommendations by former board
member Willie Hofmeyr, who is a former head of the National Prosecuting
Authority’s Asset Forfeiture Unit (AFU) voice-driven integrity testing would be

Hofmeyr told GroundUp that integrity testing has been
effectively used by the SIU for many years, before and during employment. He
said the system recorded and analysed a person’s voice as they replied to
questions. “When you lie it picks up any constriction in your throat.”

A senior SIU officer, who cannot be named as he is not
allowed to speak to the media, said members of the unit regularly undergo
integrity testing.

“I can tell you that it really works,” he said.
(The PISA Integrity Centre disputes the accuracy of voice integrity testing.)

A tender for service providers closed on 10 June with plans
to introduce integrity testing by the end of July, Scholtz said.

“Integrity testing has been through the courts and the
SIU uses it all the time, so it is tried and tested. You are able to get a good
sense of key dimensions using the voice box,” she said.

Scholtz has begun discussions with NLC staff and labour
unions about integrity testing and lifestyle audit policies. “This is one
of the Minister’s priorities,” she says. “We will start with
integrity testing and then move to lifestyle audits.”

The integrity testing and lifestyle audits will be overseen
by Vincent Jones, the NLC’s new chief audit executive.

“We are dealing with big money,” says Scholtz. “We
have budgeted for everyone to be tested and we will start with the board and
executive. I have no problem making my results public. “