National Lotteries Commission qualified audit three times

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For the third time in as many years, the National Lotteries Commission has received a qualified opinion from the Auditor-General. Archive photo: Ashraf Hendricks/GroundUp


The National Lottery Corporation (NLC) has been awarded a qualified opinion for the third time in as many years, mainly due to a lack of records involving proactive funding, which was at the heart of the looting at the Lottery. The NLC received a qualified audit opinion in 2021 and 2022, which was untrue as it had already received a qualified audit in 2018. GroundUp reported concerns over the AG's awarding clean audits despite extensive evidence of rampant corruption involving Lottery grants and payments to service providers.

Minister of Trade, Industry and Competition Ebrahim Patel, Members of Parliament, and the media have all raised concerns with governance at the scandal-ridden NLC. Barney Pityana, the NLC board chairperson, strongly criticised the AG and called for those responsible for giving the NLC clean audits to be held accountable. NLC Commissioner Jodi Scholtz told GroundUp that the qualified opinion from the AG for the 2021/22 and 2020/21 financial years "arose due to the completeness of irregular expenditure". This was due to non-compliance with public procurement regulations.

The new leadership team reviews all policies and processes to ensure compliance with legislation, reconciling all proactive funding projects in the books and conducting site visits on all open projects to ensure validity. GroundUp previously reported how all records of aggressive funding, running into hundreds of millions of rands, were removed from the grants system in December 2018 and is now focusing on a modernisation project that will eliminate manual record-keeping.

The National Lotteries Commission (NLC) in South Africa has been accused of corruption and mismanagement, according to an abridged version published in the 2022/2023 annual report. The auditor found material misstatements in the annual performance report submitted for auditing, particularly in the reported performance information of the Grant Making programme. The Special Investigating Unit (SIU) is currently investigating over 700 grants to non-profits worth over R2 billion, many involving proactive funding. SAPS and the Hawks are probing at least 30 lottery-related matters handed to them for investigation by the National Prosecuting Authority, which has been criticised for failing to prosecute people and companies implicated in looting the Lottery.

The AG issued a qualified opinion for 2023 for the National Lotteries Distribution Trust Fund, whose role is to safeguard money, invest it wisely, and ensure it is put to the best possible use to benefit good causes. The new board was appointed in March 2022, and it was soon discovered that the NLC's records under the previous administration were in disarray. Former members of the NLC board and its top management have been implicated in corruption by both the Special Investigating Unit (SIU) and a series of independent investigations.

NLC staff investigating procurement and tenders running into hundreds of millions of rands have found that, in many cases, key documents are missing. The SIU has seconded its staff members to the NLC to assist with these investigations. Audit firm SkX Protiviti, commissioned by the NLC to investigate corruption, said in a 2020 report that when it had requested documents from the NLC, there would be delays in providing these, whether by design or caused by systematic bottlenecks.

A leaked, damning copy of the AG 2021 management report found evidence of R23-million in irregular expenditure and R36-million in accounting errors. The AG again awarded the NLC a qualified opinion the following year, highlighting a series of issues, including a "lack of consequence management," "collusion at a high level," and a failure to follow legislation that required the NLC to obtain three written quotes before awarding multi-million rand contracts to service providers.
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