Global Courant
Photo: talking retail
The Board of the National Lotteries Commission (NLC) has approved a remedial process that includes apologies and financial compensation for former employees who were victims of or were fired for exposing corruption. This is an important step towards addressing past wrongdoing and ensuring transparency. The NLC’s recovery model is inspired by the South African Revenue Service (SARS), which previously offered apologies and compensation to staff affected by corruption during Jacob Zuma’s government. In a recent interview with GroundUp, the new NLC commissioner, Jodi Scholtz, spoke candidly about the importance of these actions.
Scholtz emphasized the importance of conducting the recovery process legally and authentically, in accordance with the Public Finance Management Act (PFMA). She acknowledged that the NLC has a responsibility to offer sincere apologies to both staff and communities affected by corruption. Scholtz also emphasized the NLC’s intention to work with the Industrial Development Corporation to assess abandoned or unfinished projects with the goal of repurposing them for the benefit of the communities where these facilities are located.
The NLC has undergone a thorough clean-up over the past year, with the entire board and a significant portion of the senior executive team replaced. Thabang Mampane, the former Commissioner, and Phillemon Letwaba, the former Chief Operating Officer, have both resigned, and several other senior staff members are currently suspended pending disciplinary investigations.
Scholtz announced plans to implement lifestyle audits and integrity testing for all NLC employees, starting with top management, including herself and the executive team. She also mentioned the possibility of funding reparations by selling repossessed luxury homes and vehicles purchased with embezzled lottery funds. As an example, she used the sale of Terry Pheto’s house, which was purchased with a grant intended for a home improvement project.
The Special Tribunal has already issued preservation orders for properties and assets worth hundreds of millions of rands, involving a wide range of individuals, companies and non-profit organizations. A Pretoria mansion owned by former NLC board chairman Alfred Nevhutanda and a luxury home on a golf estate owned by a trust linked to former Commissioner Mampane and her family are among the properties seized. Scholtz believes the system was purposefully designed to facilitate corruption and theft, saying, “It was like people sitting around an executive table planning how to corrupt and steal.”
As part of the organization-wide cleanup, Scholtz has been actively engaging with NLC staff and unions. She has emphasized a zero-tolerance policy for fraud and corruption and pledged to manage the consequences of any misconduct. She has also met with former employees who have been fired for wanting to expose corruption. Showing deep empathy for their plight, Scholtz recounted a heartbreaking encounter with an unnamed whistleblower whose daughter contemplated suicide as a result of the events.
In addition to addressing internal issues, Scholtz has met with communities affected by misappropriation of public funds and representatives of organizations whose identities were used to apply for lottery funding. She acknowledged the existence of dedicated NLC members who wanted to do the right thing, but were powerless and afraid. Scholtz began an examination of job descriptions, standard operating procedures and actual work practices, which revealed numerous discrepancies and shortcomings.
The NLC’s working conditions have also come under scrutiny, revealing a disregard for basic necessities. Scholtz observed broken seats and malfunctioning toilet locks, demonstrating a misguided focus on personal gain rather than employee well-being. She recognized the vulnerable state of the staff and their fear-based reluctance to speak up.
According to Scholtz, some employees were paid to remain silent and display incompetence, exacerbating the organization’s problems. It was discovered that the NLC’s information technology systems were in disarray, with important documents missing or deliberately withheld, including documents related to funding, board resolutions, and legal instructions. Independent investigators investigating NLC corruption found evidence of tampering and unauthorized additions to files, as well as the lack of requested documents. They also discovered a flaw in the grant system that prevented employees from identifying multiple grant applications or recipients by their ID numbers, which fostered corruption and concealed fraudulent activity.
To address these issues, the NLC has earmarked nearly R200 million for the development of a new system, despite staff reporting numerous issues with its functionality. Scholtz highlighted the system’s limitations by emphasizing its inability to track grant applications associated with individuals involved in multiple nonprofits. While efforts have been made since April to correct this error by capturing ID numbers in grant applications, the NLC is considering completely rebuilding the system.
The NLC temporarily suspended its grant system in late 2018, limiting access to information about proactive projects to only a few senior employees. In addition, citing a provision in the Lottery Act, the NLC stopped publishing the names of grant recipients. However, public pressure from the Minister of Trade, Industry and Competition, as well as some MPs and the media, caused the NLC to reverse its decision.
Scholtz stated that she intended to follow the SARS model of recovery and draw insights from their experiences. Discussions with SARS have taken place, allowing the NLC to learn from their recommendations and put them into practice. The SARS process involved apologizing and compensating current and former employees affected by corruption, including those who were unfairly targeted by the “rogue unit” allegations.
A subcommittee of the NLC board has been formed to assist Commissioner Scholtz in developing and implementing the recovery policy. The NLC plans to conduct integrity testing in accordance with the recommendations of former board member Willie Hofmeyr, a renowned former head of the National Prosecuting Authority’s Asset Forfeiture Unit (AFU). Hofmeyr explained that integrity tests, which analyze a person’s voice for signs of deception, have been effective in the past. The NLC has begun selecting service providers for integrity testing, aiming to launch by the end of July.
After consultation with NLC employees and trade unions, lifestyle audits will also be carried out. The NLC’s newly appointed chief audit executive, Vincent Jones, will oversee the integrity testing and lifestyle audit procedures. Scholtz stressed the importance of these measures given the large sums at stake and promised to make her own audit results public without hesitation.
Under the leadership of Commissioner Scholtz, the NLC is committed to righting past wrongs, eradicating corruption and restoring public confidence in the organization. The NLC hopes to pave the way for a more transparent and accountable future by implementing a recovery process, conducting lifestyle audits and introducing integrity testing.
