Lottery officials fibbed about clean audits
NLC received a qualified audit for the 2017/18 financial year
The National Lotteries Commission has been forced in Parliament to retract its regularly-stated claim that it has received several years of clean audits from the Auditor-General.
Its latest claim of six years of clean audits â known as unqualified opinion â was made in Parliament this week when the Commission appeared before the Portfolio Committee on Trade and Industry on Tuesday.
The high-level delegation, which included the NLCâs Commissioner, chairman of its board, Chief Financial Officer, and head of legal, were left scrambling after DA committee member Mat Cuthbert challenged them on the claim.
Posing a question, Cuthbert said: âJust for clarification ⌠you spoke of six clean audits. But if we look at the years 2014/15 to 2018/2019 ⌠2014/2015 was âfinancially unqualifiedâ followed by a clean audit, another clean audit, a qualified audit, and a clean audit.â
âSo I think we should be accurate about what we say in this house. I donât think we should report six clean audits if this is not the case,â he added.
The NLCâs audit for 2017/18 was, in fact, qualified.
The NLC delegation hastily conferred amongst themselves before CFO Xolile Ntuli backpedaled and said, âThe six refer to us to achieving 100 percent of targets.â
The NLC has consistently bragged about an unbroken record of clean audits.
Besides this weekâs incorrect claim, NLC board chairman Alfred Nevutanda misled Parliament in November last year when he claimed the organisation had received a clean audit five years in a row.
A year earlier, NLC Chief Operating Officer Phillemon Letwaba claimed four years of clean audits in this tweet and again at the beginning of this video when he was interviewed on eNCA about allegations of corruption at the NLC. This falsehood was repeated in a media statement challenging GroundUp reports of alleged nepotism involving Letwaba in Lottery-funded projects in Kuruman.
âThe NLC has adequate controls in its grant-making processes. This is evidenced by the achievement of a clean audit for the past four years,â the NLC statement said. âThe clean audit covers the grants specifically and it is important to note that the NLC has achieved 100% performance on all its targets.â
This was in spite of the fact that the NLCâs financial statements for the year ending 31 March 2018 was qualified. On 20 August 2018 the Auditor-General issued a report to Parliament in which he raised issues about the NLCâs financial reporting.
He reported that the NLC leadership did not exercise oversight responsibility on financial reporting and âmanagement did not ensure that the applicable reporting framework ⌠was correctly applied in terms of consolidation of the annual financial statement of the groupâ.
In January this year, the NLC suddenly switched tack on its claim of clean audits in a media release about GroundUp reporting. Instead, it now claimed that it was in fact the National Lotteries Distribution Trust Fund (NLDTF) which had received clean audits. The NLDTF is merely a âpurseâ into which the licenced Lottery operator â currently Ithuba â each week pays in the NLCâs share of tickets sold for distribution to âgood causesâ. It has no direct relationship with grantees, other than paying out grants as instructed by the NLC.
âThe NLC would like to assure all stakeholders, beneficiaries and members of the public of the integrity of our processes and systems around regulation of lotteries and grant funding,â the NLC said in its statement. âThe clean audit opinion on the National Lottery Distribution Trust Fund from the Auditor General of South Africa for four consecutive years bears testament to this.â
But this did not stop the NLC claiming in Parliament this week that it had received six years of clean audits, before being forced to backtrack.
GROUNDVIEW: A clean audit doesnât mean youâre clean
The NLC has mostly received clean audits over the past few years â 2017/18 being the exception. Donât read much into that. As a plethora of stories show, the NLC is beset with corruption and incompetence. And based on the many tip-offs weâve received and our increasing backlog of investigations, weâre becoming increasingly convinced weâve only uncovered a tiny fraction of dodgy Lottery shenanigans.
The Auditor-General has not as a matter of course been checking that Lottery recipients are spending their money honestly or that they have no conflicts of interest with NLC staff. (Or if it has, it has obviously not done so properly.) That job appears to have been left to journalists.
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