NLC did nothing to stop 4,000 “delinquents” from getting grant funding

The NLC appeared before the Standing Committee on Public Accounts on Tuesday. Illustration: Lisa Nelson

• The National Lotteries Commission (NLC) told Parliament on Tuesday that its efforts to curb corruption have caused underspending.
• While systems have been upgraded to prevent corrupt grants, the NLC underspent its budget by R1-billion in 2023/24.
• The previous administration’s system was “enabled for corruption” and ID numbers of grant applicants were not recorded. This is among the issues that are now being fixed.

In 2023, a new administration took over at the corruption-riddled National Lotteries Commission (NLC) and discovered a “delinquency” list of more than 4,000 people who had contravened the grant application process. But it appears that nothing was done to ensure entities they were involved with did not receive any further funding.

“[The list] was put on some Excel spreadsheet which no one was even looking at,” Precious Mvulane, the chairperson of the NLC’s audit and risk committee, told the Parliament’s Standing Committee on Public Accounts (SCOPA) on Tuesday.

There was no system in place to track people on the list, Mvulane said. The list has now been handed over to the NLC’s internal forensic unit.

Mvulane said that under the previous administration, ID numbers were not being captured by the NLC’s grant system, meaning that people involved in different non-profit organisations could make numerous applications.

Earlier this month, the Special Investigations Unit (SIU) presented its findings on NLC corruption to SCOPA. Mashudu Netshikwera, who heads up the SIU’s lottery corruption investigations team, told MPs that the NLC used two different systems to administer grant funding, “but they could not see each other”. This meant that a single person could submit several applications and get grants for all of them.

Scholtz previously told GroundUp in a 2023 interview how the failure to record ID numbers had enabled the looting of the lottery.

“The system was enabled for corruption. It was as if people sat around a boardroom table and planned how to steal,” she said.

“We are not able to track grant applications … via ID numbers, where one person is involved with multiple NPOs, not necessarily as a director, but who handles the application. The system cannot detect this,” Scholtz said.

But the system has now been fixed to capture ID numbers for all new grant applications.

Fixing corruption causes underspend

In the 2023/24 financial year, the NLC received a qualified audit from the Auditor General after having underspent its budget by nearly R1-billion. This included R720-million meant for grants to fund good causes.

Parliamentarians pressed the NLC for answers on the reasons for the underspending.

NLC Commissioner Jodi Scholtz explained that the backlog in grant funding is due to a lack of capacity. GroundUp previously reported that the distribution agency responsible for assessing and approving grant applications only had three members, but was supposed to have twelve.

A minimum of nine members are needed, Scholtz said. She said Minister of Trade and Industry Parks Tau is in the process of appointing new members.

The NLC received 5,303 funding applications in the 2023/2024 financial year, but the distribution agency only had capacity to adjudicate 12 applications a day.

Site inspections for grant applicants have also been introduced, but this is taking significant resources. The Department of Labour was approached to help with site visits but refused. So unemployed graduates were employed and trained.

The ‘proactive funding’ model has also been halted. This model allowed the NLC’s board to allocate funding to organisations without an application process in emergency situations. But it was instead used to loot funds intended for good causes.

It has now been replaced by the “research funding” model, which allows emergency grants to be awarded to pre-vetted organisations for flooding and other disasters.

The NLC had set a target for 2024 of adjudicating grant funding applications within 150 days, but it had to drop this target because of the backlog.

Barney Pityana, the chairperson of the NLC Board, acknowledged that there had been issues with getting the NLC back on track, especially when they still have to deal with historic issues under the previous administration. “It’s like trying to fix the tyre of a plane when it’s flying,” he said.

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