A mansion on a privately owned estate, luxury homes in rural villages and in security estates, top-of-the-range vehicles, foreign currency purchases, exotic holidays — and even school fees.
All have this in common: a years-long investigation by news agency GroundUp and the Limpopo Mirror into the National Lotteries Commission (NLC) has revealed that all these items were paid for by multimillion-rand lottery grants meant to uplift the poor.
Much of this reporting has been corroborated by the Special Investigating Unit (SIU) that began to look into the corruption at the NLC in November 2020, after President Cyril Ramaphosa’s authorisation.
At the heart of the looting lie networks of corruption and money-laundering involving senior NLC staff, their families and cronies, politicians and assorted lottopreneurs. The networks use hijacked, dormant and noncompliant nonprofit organisations, and inexpensive shelf companies, to apply to the NLC for multimillion-rand grants.
The lottery has always been vulnerable to corruption and several incidents have been exposed over the years. In the past it mainly involved individual projects, and those involved were generally not employees of the NLC, but were sometimes helped by insiders.
All that changed in 2015 when an amendment to the Lotteries Act introduced a concept known as proactive funding.
Previously, all grants were application driven but, with proactive funding, "the NLC may, upon the request of the minister [for trade, industry & competition], or at its own initiative in consultation with the [NLC] board, conduct research on worthy causes".
The amendment meant that up to 10% of the average, annual R1.5bn the NLC received from Lottery ticket sales may be distributed to "good causes". This opened the floodgates for the looting.
Most proactively funded projects that have been exposed as suspicious have involved large infrastructure projects, where dodgy nonprofits with no experience of major construction were appointed. They, in turn, appointed service providers for the job.
Companies linked to NLC COO Phillemon Letwaba and his close family were involved in many of these projects as service providers.
The NLC has hidden behind the "privacy" of its grantees when asked for details. It said that it merely appoints an organisation to run a project and has no say in appointing service providers.
Among the first, beginning in 2017, were six old-age homes and four drug rehabilitation centres. Many are on tribal land in rural areas, each received grants totalling between R23m and R30m.
But not one has ever been completed. Many have been abandoned because the money was stolen. Often construction companies, including tradesmen and small local businesses, went unpaid.
In one instance, an R11.4m grant for a stadium in Limpopo was used to repair a few broken doors and windows at an existing stadium. Most of the money disappeared into the pockets of corrupt people and companies.
This month the SIU reported to parliament’s trade, industry & competition portfolio committee on its investigation, involving 12 grant-funded projects.
SIU head Andy Mothibi gave details of projects that had received millions that were laundered through trusts and companies to hide their source.
In several cases, SIU investigators identified projects, including some old-age homes and a drug rehabilitation centre, that had not been completed in spite of receiving tens of millions from the NLC.
With just 12 of 50 investigations completed, the SIU told MPs it had identified R300m in allegedly misappropriated lottery funds.
Mothibi laid bare a litany of fraud, money laundering and networks of corruption involving Letwaba and his family, and two former board members, former chair Alfred Nevhutanda and William Huma. He did not name them but it was clear to those in the know who he was talking about.
In Huma’s case, he told MPs how a R5m grant, intended to build an old-age home in the village of Marapyane in Mpumalanga, had been paid to an attorney acting in the sale of a luxury estate in North West. GroundUp has also revealed how millions from lottery grantees were paid into the bond account for his Pretoria home, while a R13m grant for a project to uplift women in Marikana paid for a poultry facility on a property owned by one of his companies.
Mothibi also told MPs about the purchase of a property — which, GroundUp found, is a lavish R27m private estate in Pretoria — by a company of which Nevhutanda is the sole director. Mothibi revealed how nonprofit organisations that had received millions in Lottery grants, directly and indirectly, helped pay for the property.
Tomorrow, April 1, the SIU will hand a report on the first 12 investigations to Ramaphosa. The R300m lost to corruption in these projects is expected to increase substantially.
"In total, the SIU will investigate approximately 50 allegations relating to irregular allocation of funds by the NLC to unqualified beneficiaries," Mothibi said.
Raymond Joseph is a freelance journalist. He has been investigating the Lottery for GroundUp since 2018
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