Latest news with #NationalLotteriesCommission
Mail & Guardian
6 days ago
- Business
- Mail & Guardian
SIU investigation into lottery corruption hamstrung by red tape
Narrow terms of the original proclamation authorising the Special Investigating Unit (SIU) to investigate dodgy procurement at the National Lotteries Commission has hamstrung its investigations, despite the SIU having applied for an amendment to the terms 15 months ago. Photo: Steve Kretzmann Almost 15 months after the The original October 2020 proclamation allowed the SIU to only investigate grants made by the Since then, several independent audits commissioned by the NLC have also uncovered fraud, corruption and extensive circumvention of 'procurement processes' running into hundreds of millions of rand. But the narrow terms of the original proclamation have left the SIU hamstrung and unable to investigate the NLC procurement and appointments of service providers. The NLC is also unable to investigate potentially fraudulent or corrupt grants that fall outside the window of the 2020 proclamation. A backlog of applications for SIU proclamations built up during the tenure of former justice and constitutional development minister A flurry of new proclamations has been granted this year after the appointment of her replacement, But the SIU's National Lotteries Commission application, submitted in April last year, has been gathering dust. Red tape An Institute for Security Studies (ISS) report on the future of the SIU, released last week, found that the proclamation process is mired in red tape. The resulting delays at the justice department 'have sometimes amounted to several years', according to the ISS. 'This has frustrated the recovery of funds, which can be hidden or dissipate quickly,' the ISS says. 'In turn, this might delay the referral of cases to the NPA [National Prosecuting Authority], resulting in the loss of evidence and slow down disciplinary processes for state employees'. The ISS has recommended that SIU motivations for presidential proclamations should rather be handled by the Presidency. Terrence Manase, spokesperson for the justice ministry, said last week that the SIU's amendment application has not yet reached the minister's office. 'The ministry acknowledges the seriousness of the matter and remains committed to ensuring that all allegations of corruption are addressed appropriately, within the confines of the law,' he said. GroundUp reported in 2023 that the SIU was planning to ask for an extension of its mandate. It was submitted in April 2024. Mashudu Netshikwera, who heads up the SIU's team investigating the NLC, told parliament in May that the application for an extension was submitted almost a year earlier in April 2024. Justice department spokesperson Kgalalelo Masibi said 'the department is currently attending the request for an amendment'. She said the department had 'raised certain concerns with the SIU, which the SIU has since addressed. The department has completed its assessment of the request and will be advising the minister and the Presidency in due course.' Millions in dodgy procurement deals The findings of the independent investigations commissioned by the NLC's new board and executive were key in formulating disciplinary charges against implicated staff, including National Lotteries Commission chief operating officer Phillemon Letwaba and former NLC company secretary Nompumelelo Nene. Among the issues flagged in damning reports by the auditor general and the independent auditors were irregular expenditure on information technology and sky-high spending on lawyers. The NLC struggled to answer a written parliamentary question about its expenditure on legal fees, as key files with details of multimillion-rand litigation expenditure have vanished. Another area of concern is the tens of millions of rand in spending on media and communications, with a disproportionate amount paid to the Sunday World newspaper. Millions of rand in dodgy payments were also made to NLC service providers, including a nearly R500,000 payment to service provider Neo Consulting to investigate a computer hack that never happened. ProEthics, which advised the NLC on ethics when the organisation was overwhelmed by rampant corruption, was used to circumvent procurement processes. The NLC paid ProEthics more than R28.4 million. The company, in turn, said it paid other service providers, which it had no part in appointing, on the NLC's instructions. Bureaucracy not required by SIU Act The Institute for Security Studies report says the SIU is 'unnecessarily hampered' by delays in the administrative processing of presidential proclamations. First, the SIU had to assess complaints it received 'against the requirements of the SIU Act to determine whether it had jurisdiction'. If the complaint met these criteria, the SIU must then 'submit a motivation for a proclamation to the president via the justice department. A directorate in the [department] again assesses the motivation to see whether it meets jurisdictional requirements and is feasible,' the ISS report found. 'If so, the directorate sends it to the director general of the [department], who may escalate it to the deputy minister, the minister, and ultimately the president for approval.' These delays 'frustrate the purpose of the SIU Act, which is to provide for the swift recovery of state funds. The process of approvals by different justice department officials has evolved through a series of executive decisions and is not required by the SIU Act.' SIU owed R1 billion Since 2001, 300 presidential proclamations have been issued, the ISS said. 'Of these, 164 (55%) have been issued since 2018, during President Cyril Ramaphosa's administration. In the 2024-25 financial year alone, 49 proclamations were issued. Five proclamations have been reported to date in the current year.' The SIU gets its funding from two sources: a budget from the justice department, and it can also bill the institutions it investigates for the services provided and retain these funds. But many of its clients, which are all state institutions, were not paying for the SIU's services, as they are required to do. As of March 2024, the SIU had a debt book exceeding R1 billion owed by 272 state institutions, the ISS found. This led to the SIU launching Project Khokela in October 2024, with letters of demand being issued to these institutions for prompt debt settlement. 'Given the high number of new proclamations, the SIU is likely to face financial strain over the next 24 months. If unresolved, its financial reserves could be depleted in the foreseeable future.' This story was first published by
The Citizen
24-06-2025
- Business
- The Citizen
Lottery corruption: SIU granted order against pension of former NLC official
A former National Lotteries Commission COO is linked to a R6 million payment for a sports facility that was never built. A court has granted a Special Investigating Unit (SIU) request to prevent a senior National Lotteries Commission official from accessing their pension. The order resulted from the SIU's investigation into a R6 million payment made to a sports foundation based in Soweto. This matter is part of a larger SIU investigation into potentially irregular NLC payments exceeding R1 billion. R6 million wasted Former NLC COO Sanele Dlamini was dismissed in November after being linked to an irregular lotto grant payment. The order granted to the SIU prevents Dlamini from accessing his pension as a way of recovering a portion of the payment made to the sports foundation. Motheo Sports and Entertainment Foundation received millions from the NLC for a sports facility that was never built. '[The order] limits the risk of a hollow judgment if funds were released, noting concerns that Mr Dlamini may lack sufficient assets to satisfy future claims,' stated the SIU. Motheo was given R6 million towards the failed facility, and Dlamini's retirement fund has been given 60 days to disclose the value of his pension. 'This preservation is intended to ensure that funds remain available for potential recovery should the SIU succeed in its claim,' the entity concluded. SIU recovery efforts The order against Dlamini is just one facet of a larger investigation that is set to conclude by the end of the year. As of May 2025, R9.5 million had been recovered by the SIU, but phase three of the investigation will target matters worth a combined R900 million. Phase one of the NLC investigation scrutinised payments totalling roughly R279 million, while phase two had an estimated payment value of R246 million. The NLC is in the midst of a period of transition as parties vie for the licence to operate the nation's lottery processes. The NLC awarded the lottery licence to a new service provider at the end of May, but also granted the existing operators a 12-month temporary licence to facilitate a smooth transition. NOW READ: Lotto: Retailers complain as Ithuba claims 'seamless transition'
Daily Maverick
20-06-2025
- Business
- Daily Maverick
Government plans national lottery: A shift toward state control amid concerns of corruption
Since its inception, a private company has been responsible for operating the lottery and selling tickets. That is set to change in 2034. The government plans to introduce a state-run national lottery instead of using a private operator, as has been the case since the Lotto was launched 25 years ago. Details of the intention to effectively nationalise the lottery were revealed in a Request for Proposals (RFP) for the latest operator licence, which has been awarded to the Sizekhaya Consortium. If a state lottery were to be implemented, it would only happen in 2034, when Sizekhaya's eight-year licence, which commences on 1 June 2026, expires. The concept of a state-run lottery was first introduced in a 2013 amendment to the Lotteries Act but was never implemented. National Lotteries Commission commissioner Jodi Scholtz told GroundUp that the provision for a state-run national lottery in the amendment 'was in part a response to the disruption experienced in 2007, when the country found itself without an active lottery operator for several months' due to litigation. 'This legislative provision was intended to ensure continuity of the lottery and protect public interest and revenue streams designated for good causes, should similar challenges arise in the future,' she said. The issue of a state-run lottery was hotly debated by the trade and industry portfolio committee during the previous, sixth Parliament. There were disagreements among MPs about the wisdom of nationalising the lottery, with some arguing that in light of the corruption at state entities this could lead to further misappropriation of funds. Those who were for nationalisation said it would reduce profiteering by the licence holder. One of the champions for nationalisation was former National Lotteries Commission (NLC) board member Dr Muthuhadini Madzivhandila, who argued for a state-run lottery when he unsuccessfully applied for the post of NLC chairperson. Madzivhandi, who subsequently died, corruptly benefited from lottery grants. Since the amendment, several policy and legal review processes had been conducted 'to explore the practical implementation of this provision,' said Scholtz. Yamkela Fanisi, the spokesperson of trade, industry and competition minister Parks Tau, failed to respond to questions about the prospect of a state-run lottery and the reasons for the possible change. Transition to state lottery In terms of the Request For Proposals, bidders for the fourth lottery licence were 'required to commit to positioning the state to transition from privately operated National Lottery and National Sports Pool operations to a state-owned and operated National Lottery'. Applicants were informed that they had to 'demonstrate their ability to capacitate the state to prepare for and ultimately become the operator of the National Lottery and the National Sports Pool at the expiry of the Licence Period'. They were also required to provide a plan for how they would 'support the state in developing the necessary infrastructure, skills, and capacity to operate the National Lottery and Sports Pool' — a key part of the Request For Proposals deals with the transfer of rights to technology to operate the lottery. Responding to questions, Sizekhaya sent an unsigned written reply: 'Genlot [its Chinese tech partner] has assigned intellectual property rights for its lottery software to its 51% locally owned subsidiary, Genlot SA.' In terms of its agreement, Genlot SA is authorised to transfer this intellectual property (IP) to 'the South African state if it decides to operate the lottery in the future', Sizekhaya responded, declining to disclose details of the terms and conditions of such a rights transfer. Opening the door to corruption and waste The prospect of a state-run lottery opening the door to corruption and inefficiencies in light of what happened at many parastatals and government entities, where billions of rand were lost, was raised by some critics. The DA's Mat Cuthbert, who played a key role in Parliament in helping expose the endemic corruption that overwhelmed the National Lotteries Commission under its previous leadership, said: 'At the time, the National Lotteries Commission only had access to approximately 34% of all revenue generated by the National Lottery, housed under the NLDTF (National Lottery Distribution Trust Fund.) One can only imagine how much more public funding would have been stolen had they had access to the approximately R7-billion generated in ticket sales revenue per annum.' Professor Alex van den Heever of the Wits School of Governance was also sceptical of a state-run lottery. The wide discretion granted to the minister of Trade, Industry and Competition to appoint the board, commissioner and distributing agencies 'has been a recipe for corruption as a single person appoints all the strategic decision-makers', he said. The move to a proposed 'state-led approach failed to address the corporate governance flaws of the original configuration', Van den Heever said. 'Ministerial discretion, the likely driver of structural corruption to date, is retained at the same levels as before. There is therefore a high likelihood of ministerial overreach, exacerbated by a general absence of independent supervision, institutional safeguards, added to the uncertain capabilities of state structures. 'It is my expectation that this approach is designed to facilitate state capture and corruption of various forms — improper appointments, corruption in procurement and the selection of distributing agencies. The new provisions specify that certain accountability structures need to be implemented, which are inadequate, with their design and implementation vulnerable to the wide discretion of the minister. This discretion enables the minister to circumvent any implemented formal structures. 'When power is concentrated, circumvention is relatively straightforward. In my assessment, the same levels of corruption as before are likely to persist into the future. Nothing is cured by this change.' DM
IOL News
18-06-2025
- Business
- IOL News
Pension freeze for former NLC official amid serious fraud allegations
The pension fund of former National Lotteries Commission senior manager Sanele Dlamini was frozen. Image: File Former National Lotteries Commission (NLC) official, Sanele Dlamini, has been interdicted from cashing in on his pension, pending the outcome of the Special Investigating Unit's (SIU) investigation into allegations that he improperly authorised the payment of R3 million towards a project which never materialised. The SIU turned to the Special Tribunal to freeze Dlamini's retirement fund, which is due to be paid to him. Dlamini is a former senior manager of the grant operations of the NLC. The SIU is litigating on behalf of the commission to recover losses that it suffered as a result of irregular and unlawful practices. The SIU said it believes that Dlamini may be 'a man of straw', and if its investigations reveal any wrongdoing on his part, they will at least be able to recover the NLC money from his pension fund. The NLC had awarded the Motheo Sports Foundation a grant of R9 million for the construction of a sports complex. The first payment made was nearly R3.6 million. The SIU investigation revealed that this amount was not used for the funded project but was instead shared among several people and/or entities as an undue gratification. It was alleged that Dlamini authorised the payment of the money based on falsified progress reports, despite no work being done on the funded project. Investigations revealed that the land was used as a dumping site. A disciplinary inquiry subsequently found Dlamini guilty of gross negligence and misconduct, and he was dismissed. The SIU now seeks to preserve Dlamini's pension fund at Liberty Life Insurance, pending the outcome of a review application to recover the funds. Dlamini, in opposing the application, said it is clear that the sports foundation received the funds and not him. He was not part of any fraud or scheme to siphon off money from the NLC. He was not present when the project was approved. At that stage, he was the provincial manager for the KwaZulu-Natal office of the NLC. He asserted that he unfairly attracted blame for this entire saga for simply approving a payment of R3 million to the Motheo Foundation. He argued that the money must be recovered from the principal debtors, being the persons and entities who received the NLC money. Therefore, he should not be held liable. Dlamini said he based his approval of the progress report, the financial report, and visuals showing the site and work in progress. He stated that he was the victim of the fraud, as also the NLC.
TimesLIVE
05-06-2025
- Business
- TimesLIVE
Should the national lottery be run by government?
Newly appointed national lottery operator Sizekhaya Holdings is set to be the last private company to run the multibillion-rand national lottery as South Africa is preparing itself for it to be run by the government. The national lottery is considered the country's biggest tender as it's estimated to make R180bn over an eight-year period. Provisions of the Lotteries Amendment Act of 2013 empower the state to be able to run the national lottery. National Lotteries Commission (NLC) commissioner Jodi Scholtz said the provision for a state-run lottery was to prevent a lottery blackout like the one in 2007 by the then losing bidder Uthingo. 'We can confirm that the inclusion of the provision for a state-run national lottery in the 2013 amendment was in part a response to the disruption experienced in 2007, when the country found itself without an active lottery operator for several months due to delays in the licensing process,' Scholtz said. However, she said a state-run lottery would require significant institutional planning and operational readiness, budget allocation and Treasury approval. The national lottery has been embroiled in several controversies including corruption, mismanagement and licensing disputes such as the delays and court battles to award Sizekhaya Holdings the licence. On Wednesday, Sowetan reported the Special Investigating Unit secured an order to freeze a multimillion property in Midstream, registered under Southern African Youth Movement director Alfred Muzwakhe Sigudhla, which was allegedly bought with some of the R36m lottery grants meant for community projects. Last week, the Sunday Times reported Sizekhaya board chairperson Moses Tembe was open to handing over the intellectual property of its lottery system design and innovation to the government to help create capacity for a state-run lottery. 'The government will own the lottery, and it may choose to say: Sizekhaya or Genlot help us manage it to ensure that the technology works, because government is not in that business ... but as a property it will not be our property,' Tembe said.
