Network of corruption exposed in Lottery probe
SIU says it has already identified R300 million in misappropriated grants
By Raymond Joseph
3 March 2022
A litany of fraud, money laundering and networks of corruption involving a senior member of the National Lotteries Commission (NLC), his family and two former board members, and hijacked non-profits and shelf companies were laid bare by the Special Investigation Unit (SIU) in a presentation to Parliament on Wednesday.
The SIU was reporting to Parliament’s Trade and Industry Portfolio Committee on its investigation which began in November 2020, after President Cyril Ramaphosa signed a proclamation empowering it to probe alleged corruption involving the NLC. The presentation was virtual.
“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 syphoning of NLC money,” the SIU tweeted during the presentation.
The SIU report did not name any of the people, companies or non-profits involved in the looting in its report. But GroundUp can reveal that among the people it implicates are NLC chief operating officer, Phillemon Letwaba, former board chairperson Alfred Nevhutanda, and William Huma, who resigned from the board when he was confronted with evidence uncovered by the SIU.
The report described a series of projects that received millions of rands which were then laundered through layers of trusts and companies to hide their source.
In several cases, SIU investigators found old age homes and a drug rehabilitation centre that have never been completed in spite of receiving tens of millions of rands in grants from the NLC.
Instead, the money was syphoned off and used to pay for among other things, cars, luxury homes and properties, and things not related to the funded projects.
With just 12 of 50 investigations almost completed, the SIU has already identified R300-million in Lottery funds that have allegedly been misappropriated, SIU head Advocate Andy Mothibi told MPs.
The SIU will complete the first phase of its probe by the end of March and will hand a report on its findings to President Ramaphosa in April, he said. Dossiers of the evidence gathered by the SIU would also be handed to the National Prosecuting Authority so that the people involved can be prosecuted, he added.
GroundUp has reported on many of the projects identified in the SIU report, as part of its ongoing, years-long investigation into corruption involving the NLC.
The SIU was in receipt of 23 “new allegations” and these investigations will begin from 1 March and would be concluded by November, he said. “In total, the SIU will investigate approximately 50 allegations relating to irregular allocation of funds by the NLC to unqualified beneficiaries,” Mothibi said.
“The SIU will further investigate maladministration in relation to the investment of funds in the National Lottery Distribution Trust Fund [which distributes grants] contrary to the provisions of the Lotteries Act,” he said.
Mothibi said the key findings of the investigation so far were:
- identifying the modus operandi used to syphon money from the NLC through various non-profit organisations and non-profit companies;
- “collusion” between NLC officials and non-profit companies;
- “collusion” between some board members and non-profit companies;
- abuse of non-profit companies, including the hijacking of dormant ones;
- ineffective auditing of projects;
- maladministration in the approval of grants; and
- abuse of the NLC’s proactive funding process, which the SIU believed should be reviewed.
In response to questions from MPs about professionals including lawyers, whose trust accounts were used to funnel Lottery funds, Mothibi said evidence the SIU had collected would be handed to professional bodies to take action. Some might also be prosecuted.
In a statement, the NLC said it had “noted” the SIU presentation to Parliament.
But despite the overwhelming evidence in the SIU report, the NLC said it was “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, and a final report is yet to be presented to the President in terms of the proclamation.
“The Commission will however not be engaging these publicly but will raise them in the course of engagement and cooperation with this process as the SIU has not completed investigations on any of the profiled projects.”
DA shadow minister for trade and industry Mat Cuthbert said in a statement after the briefing: “With only 12 of the 50 cases finalised so far, it is clear that by the time the investigation is concluded, the funds allegedly misappropriated and stolen will far exceed this R300-million.
“We now urge both the Hawks and the National Prosecuting Authority to act swiftly and decisively against these shameless individuals who have stolen money meant to uplift the most marginalised in our society.”
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