The National Lotteries Commission Briefed Parliament on the Steps it is Taking to Review Procurement Procedures and Grant Funding

SOUTH AFRICA (September 25, 2023) — According to local media reports the National Lotteries Commission (NLC) has told Parliament it is taking extensive measures to stamp out illregularities associated with procurement, grant funding and fraud.

South African-based not-for-profit news agency Ground Up’s spokesperson Kaizer Kganyago said the Special Investigating Unit (SIU) is currently investigating more than 700 suspect projects involving over R2-billion.

The SIU had seconded two of its staff to the NLC to assist with investigations into procurement, bolster capacity in the forensic investigations unit, and assist with the lifestyle audits of staff.

During the last financial year the NLC uncovered 53 fraud matters during forensic audits and reported these to SAPS, and uncovered a further 27 cases in the current year (commencing 1 April 2023), NLC chief audit executive Vincent Jones told the trade, industry and competition portfolio committee earlier this week. This was during a report back to Parliament on the NLC’s first-quarter performance.

The NLC has formed a panel to review proactive funding, which was at the heart of the issue.

NLC Commissioner Jodi Scholtz told MPs that the NLC is working on an anti-corruption and fraud framework. The bulk of the risk, she said, is with grant funding. “We’ve introduced a risk-based model and the inspectorate goes out and inspects each and every project against that model. This is a complete departure from the past, where we didn’t do these pre-inspections, but now it is part and parcel of the entire process.”

In a significant step to enhance the transparency in its funding of non-profit organisations, the NLC began publishing a monthly list of awarded grants. It is also considering publishing location details of funded projects to make it easier for activists and journalists to monitor them.

This is a far cry from the previous administration, which under the pretence of safeguarding the privacy of grant beneficiaries, stopped publishing details of grants in 2019 as GroundUp exposed more and more corruption. The NLC eventually relented and started publishing grant details again after pressure from Parliament, the Department of Trade, Industry and Competition (DTIC), Minister Ebrahim Patel, and media exposure.

PROCUREMENT

Both the NLC and the SIU have identified problems with procurement that did not follow required Treasury processes, some of which were highlighted by the Auditor-General. In many cases, tenders were awarded to a single supplier rather than put to tender, as required by law.

Non-compliance with supply chain management (SCM) rules had resulted in numerous incidences of irregular expenditure in the organisation, NLC chief financial officer Tina Maharaj told MPs.

MINISTER’S PRIORITIES

NLC Commissioner Jodi Scholtz said Minister Patel, who has oversight of the Lottery, had given the NLC a list of priorities. These include

• a complete implementation of all SIU findings;
• finalising investigations of all transactions involving consultants over the past ten years, including law firms, IT services and public relations services;
• initiating a wider investigation beyond proactively-funded projects, to include all contracts by the NLC and all channels through which payments were made by or on behalf of the NLC;
• initiate investigations into the activities of all the regional NLC offices; and
• review all previous forensic and internal reports and consider recommendations for systemic changes to avoid opportunities for corruption.

SOURCE: Ground Up.