Follow-up meeting on SIU investigation into allegations of maladministration and corruption at NLC; Introduction of NLC Chairperson and Board, with Minister

Meeting report

Opening Remarks
The Chairperson invited the Minister of Trade, Industry and Competition (dtic) to make opening remarks and to introduce the newly appointed National Lotteries Commission (NLC) board, after which the Special Investigating Unit (SIU) would make a presentation. The investigations into NLC activities were prompted by the Presidential Proclamation of 6 November 2020 for the period 1 January 2014 to 6 November 2020. The investigation was intended to establish whether there was maladministration of the National Lottery Distribution Trust Fund and allocation of money from the fund to people who were not entitled to it. That would be followed by further comments by the Minister and the dtic and, only after all presentations, would Members be invited to pose questions.

The Chairperson noted that the Portfolio Committee had previously agreed that once the SIU had submitted the Phase One report on the NLC to the Presidency, it would provide a further briefing on the report. The purpose of the day's meeting was to receive a status report from the SIU on its investigations into allegations of corruption at the NLC.

Opening remarks by the Minster of Trade, Industry, and Competition
Minister Patel said that he intended to present the work done to deal with some of the serious allegations that the Committee had been aware of involving the National Lotteries Commission. He introduced the DTIC team with him: led by the Acting DG, the members of the dtic team included the Chief Audit Executive, the persons responsible for the work in the branch dealing with the NLC, the Chief Operating Officer, Ms Nontombi Matomela and Adv Andy Mothibi, the Head of the SIU, and his team were also present.

Minister Patel stated that the current Committee meeting was the first for the new NLC board. The new chairperson of the board was Professor Barney (NB) Pityana. As chairperson of the board, he would address the Committee shortly. The Minister noted that he was one of three persons nominated by the Portfolio Committee to become chairperson of the NLC. Members of the board included persons well known to the Committee: Dr Cassius Lubisi, who previously served as the Secretary of Cabinet; Ms Precious Mvulane, a Chartered Accountant; Ms Beryl Ferguson, former Member of Parliament and currently serving on many boards; Mr Willie Hofmeyer, previously of the National Prosecution Authority and Head of the Asset Forfeiture Unit.

The Minister added that, following the resignation of the National Lotteries Commissioner and the Chief Operating Officer, Mr Lionel October, former DG of the dtic, had been appointed Acting Commissioner of the NLC while the post was being filled. The NLC Company Secretary, Ms Nompumelelo Nene, was also present.

Minister Patel explained that the reports would cover the journey that led to the SIU report and the work that the dtic had done, as well as the work that the Presidency had done, but the heart of the day's reports would be the findings in the SIU interim report and the work in progress. There would also be a report
on the action taken to date, action by the SIU as well as the action by the dtic and the new NLC board, and finally, action to be taken. He would conclude with ten further steps that would be taken. The reports would show, on the one hand, that the funds of the NLC meant for the most vulnerable communities and projects, such as old age homes, drug rehabilitation centres, and centres for young children in some of the most deprived communities, were cynically and brazenly stolen through an organized syndicate of persons. The reports would show that the institutions of the democracy were able, when they were brought into action, to collect the evidence of wrong wrongdoing, and ensure the implicated persons were identified and held to account.

Minister Patel said that the syndicates responsible for looting public funds were able to rely on a network of professional firms that enabled the monies to be redirected, and the syndicate used sophisticated methods to cover up their actions and deflect attention. Courageous individuals, ranging from whistleblowers to journalists to investigators from the SIU and the forensic firms had exposed the corruption. They were all essential to uncovering wrongdoing and showing clearly the channels through which money had flowed between the NLC and recipients, bypassing the intended community beneficiaries. As the SIU itself would indicate that work had not been concluded but he paid tribute to the many people who made it possible to get to the point at which the process was. The work done by Advocate Mothibi and his team had been exceptional and had provided the factual basis for many of the allegations made previously. Just by following the money, the SIU had been able to show South Africa what had been happening.

Minister Patel recognised the role of a small but dedicated group of journalists that had blown the whistle, and enabled whistleblowers themselves to bring allegations to the attention of the public. The leading journalist had been Raymond Joseph, and though he worked for a small media house, the persistence and the detail that he had been able to document, were enormously helpful. There were other journalists, such as Anton van Zyl and Nathan Geffen. They had also kept the spotlight on all of the work that the forensic investigators had done, particularly the SIU.

The Minister said that the reports would also show that the level of the misappropriation of monies that had been uncovered to date was very, very substantial. And that the sheer weight of evidence that the SIU was collecting was so compelling that there was no question of having the basis for piercing the veils that many had hidden behind to ensure that they were not held to account.

The NLC had a new board that had moved with enormous speed, particularly in the recent period since the appointment of the board and the board chairperson, and the wrongdoing in the NLC was being brought to an end. South Africans could look forward to knowing that the institutions of democracy were working.

Presentation by the SIU
Adv Andy Mothibi, Head, SIU, made the presentation. He introduced Leonard Lekgetho, Investigator of the NLC, who assisted with the presentation.

Adv Mothibi explained that the focus of the investigation was to investigate the maladministration in the affairs of the NLC concerning the Investments of funds in the National Distribution Trust Fund, contrary to the provisions of the Act; and the allocation of money in the Fund to beneficiaries who were not entitled thereto, including the causes of the maladministration.

Adv Mothibi and Mr Lekgetho referred to the corruption uncovered in precise detail in 119 slides, showing the movement of the money, although some individuals were not named. The list of people involved included attorneys and conveyancers. The SIU made extensive reference to "the NLC hijacking kingpins” and close family members who were involved in siphoning money from supposed NGOs. Some of the money went into purchasing property, including a R27 million house for the former board chairperson and a house for the former Commissioner. The former chairperson also purchased a Rolls Royce costing R6.3 million.

The SIU identified misuse of the proactive funding provision in the NLC Act using various means:
-Inadequate project management;
-Lack of monitoring and evaluation;
-Collusion between NLC officials and NPO (non-profit organisations) and NPCs (non-profit companies);
-Collusion between some board members and NPO and NPCs;
-Abuse of NPO and NPCs;
-Hijacking of NPO and NPCs;
-Ineffective auditing of projects;
-Maladministration in the approval of grants;
-Use of Trusts and family members to defraud the systems.

A civil litigation process was underway to review and set aside the grant funding contracts of all the NPOs / NPCs that had contributed towards the sale of the property purchased for the benefit of Mr Nevhutanda, the former chairperson, and, in addition to the R27 million property belonging to Mr Nevhutanda, a further eight properties had been identified for preservation; the process of preserving them was at an advanced stage.

Recommendations to the NLC for systemic improvements included a committee to deal with new proactive funded matters to eliminate the risk of individuals initiating proactive funding projects and ultimately awarding grant funding projects to family members and friends. All current proactive funded projects should be captured in the grant management system/ Fusion system. Adv Mothibi noted that the system was designed in such a manner that it was unable to detect different applications for grant funding made by one individual using NPOs/NPCs. The SIU recommended that the NLC procure an integrated system that was able to detect such abnormalities.

Further recommendations included:
-The NLC system should be linked to that of the Department of Social Development to identify hijacked NPOs and confirm original members of the NPOs.
-Project Management, including monitoring and evaluation, to be done for all funded projects.
-The NLC should adhere to the policy of transferring money to the NPOs / NPCs in tranches as opposed to transferring the grant amount in one tranche prior to receiving progress reports.
-Lifestyle audits to be conducted for all NLC officials and board members.
-There should be a segregation of duties.
-Public benefit tracking against funds granted.

The total value under investigation in Phase 1 was R279.7 million; in Phase 2, R246.6 million and in Phase 3, R901.9 million. The total amount at present was R1.4 billion. Adv Mothibi was convinced the investigation would stand up to any scrutiny.

(See presentation)

The Committee took a break before the next presentation.

Presentation by the dtic
The Minister presented the journey taken to get to the investigation by the SIU. He provided extensive detail on laws, proclamations, and other administrative detail, as well as examples of corruption initially uncovered that had led to the full investigation by the SIU. He also provided details of court cases where the NLC had challenged the Minister and the Department at every step of the way. He made various references to the corrupt and illicit behaviour of the NLC in attempting to evade allegations of corruption: “The NLC commissioned its own investigation into the Denzhe matter, and the outcome thereof was that the NLC had "absolved" itself from any responsibility in the matter of Denzhe and House Generation.”

The Minister spoke of governance and presented the names of the former and the new NLC board. The corrupt activities were reported to the Auditor-General, whose subsequent audit identified serious shortcomings in adherence to proper financial policies; the audit report was qualified. The previous Commissioner had resigned, and the Board was in the process of appointing a new Commissioner. In the interim, an Acting Commissioner had been appointed. The COO resigned following the decision to commence disciplinary action against him. There was compelling evidence available that could result in criminal charges and the recovery of money. Resignations did not absolve an implicated party from civil and criminal prosecution. An anti-corruption/forensic unit would be implemented by the dtic.

(See presentation)

NLC Board Input
Prof Pityana addressed the Committee, indicating some of the avenues that the board would be taking, but mostly reassuring the Committee of the commitment of board members to clean governance and the fact that they were not going to allow guilty parties to go free. Some of the actions the board was considering included integrity measures involving staff, recipients and board members; a review of the pro-active funding programme; a wider investigation beyond the pro-active funding projects, to include all contracts by the NLC and all channels through which payments were made; investigations into the activities of the regions of the NLC and a review of all previous forensic and internal reports.

The board would offer support for whistle-blowers who were threatened or dismissed, and it would address the position of communities or NGOs who were deprived of the support for which the NLC funding was designed.

Discussion
Mr M Cuthbert (DA) congratulated the SIU on an outstanding job uncovering the industrial-scale looting at the NLC, but it would be a travesty of justice if the National Prosecution Authority did not follow through and ensure criminal prosecutions as a result. The Committee had heard from the Minister and his colleagues in the African National Congress (ANC) praise the work of the SIU and the journalists, such as Raymond Joseph and Anton van Zyl for uncovering the rot, but the fact was that the ANC was the root cause of the corruption that had taken place at the entity. Those were the same individuals who had shielded former board members from scrutiny; the same individuals who chastised the opposition and the media for exposing corruption and maladministration and it was members of the ANC who had allegedly used the NLC as a personal piggy bank at the expense of the most vulnerable in society. The grotesque use of funding, which was intended for old age homes, drug rehabilitation centres, and youth upliftment centres, on luxury cars and homes just showed how twisted these individuals were. His message to members of the public is that the next time the ANC said it was pro-poor, they should not believe them.

Mr Cuthbert asked the SIU how much it had managed to recover through civil litigation to date. Secondly, had the NPA responded to the evidence provided to it, and what was the response? Thirdly, were any individuals implicated in alleged corruption or maladministration still in employment at the NLC? And if so, which matters were they implicated in?  He saw that no recommendation had been made to scrap Proactive Funding. However, that was one of the key mechanisms used to extract funds from the entity itself together with hijacked non-profit organisations (NPOs). Surely serious consideration should be given to the scrapping of Proactive Funding, considering the fact that it had been open to such large-scale abuse.

Mr Cuthbert asked the Minister whether he agreed or disagreed with the recommendation by the SIU that all board members and officials should undergo a lifestyle audit and if so, when did he plan for the process to begin? When did he believe it would be finalised? Mr Cuthbert addressed the “level of disingenuousness on the part of the Minister” who said there had been complete transparency. If it were not for the DA obtaining several legal opinions, pressing criminal charges, and applying public pressure on the Department in respect of the NLC, the matter would not be where it was. It was, therefore, disingenuous to claim credit for that. Could the Minister inform the Committee how much the Department and the NLC spent on legal action against one another? Had the Minister informed other companies, including the serious financial companies, with the same former board members on their boards, of the allegations they faced? Had appropriate action been taken to inform those boards so that they could make a considered decision?

He welcomed the NLC board chairperson to the Committee and the new board. They had the DA’s support, contingent on the fact that they did the right thing. Had the board obtained an independent legal opinion to ensure that the decision to extend the lottery license was not open to legal challenge? Could the board chairperson provide the rationale behind pursuing a state lottery considering government's track record of managing funds? One candidate for board chairperson, who was not successful and who was later implicated in corruption, had been very keen on a state lottery and so he suspected an ulterior motive behind that proposed lottery.

Mr W Thring (ACDP) thanked the SIU, the Minister, and the National Lotteries Commission, for the transparency which outlined the magnitude of corruption at the NLC. It showed the brazenness of the perpetrators of corruption and fraud at the NLC to the tune of some R1.4 billion, which almost equalled the annual budget of the NLC and was quite alarming and shocking.

He disagreed with the Minister in some respects. While appreciating the transparency and the openness, that was not democracy working. It was a failure of internal good governance processes because it should never have happened in the first place if democracy and good governance principles had been applied.

What was the total number of officials, board and executive members involved in the corruption? The Committee had heard of ‘board member one’ and ‘executive members one’ and two and so on, but what was the total number of officials, board, and executive members implicated in the looting at the NLC? And how many of them had had criminal, civil and/or internal disciplinary charges laid against them, despite resignations? He worried that when people resigned from government institutions, everything seemed to go quiet and disappear.

Mr Thring asked what charges, if any, would be laid against the NPOs and NPCs (non-profit companies) and the individuals or accounting officers who had a fiduciary responsibility at those NPOs and NPCs. What charges would be levelled against the conveyancing attorneys and law firms that had been implicated in the looting and had resigned, from being employed in other government departments, i.e., eliminating the revolving door? Could the amount which had been recovered and possibly recovered by the Asset Forfeiture Unit of the NPA be quantified in terms of the R1.4 billion looted over the years? He requested a comparison between what was expected to be recovered versus what had been looted.

Lastly, he noted that internal good governance measures were crucial and had to be put in place to prevent what was known as ‘the hyenas’ who had no moral integrity, or respect for the poor, the unemployed or the aged.

Mr Z Burns-Ncamashe (ANC) welcomed the report of the SIU which resonated well with the trust of the renewal programme led by the African National Congress which was aimed at approaching every seat of corruption in public institutions.

However, Mr Burns-Ncamashe had heard the opportunistic comments by Mr Cuthbert in bringing the ANC into the equation when not a single finding in the presentation had made mention of the ANC. It was part of its obsession that, even when the DA had its own failures, it would use that. That was the extent to which the DA would never accept that the ANC would do anything that resonated with them. There was a historical reason that the DA saw things differently. If one looked into the meticulous methodology so clinically articulated by Adv Mothibi, it confirmed the tenacity of state instruments in the resolve to leave no stone unturned. That was what the President of the country, President Cyril, had promised and was doing. So South Africans would not be misled. They were very clear and could see exactly what was happening. Members of the Committee were not there for grandstanding. The action demonstrated the ANC-led government institutions at work to root out every threat of corruption, malfeasance, and corruption to achieve a better life for all our people and advance the National Democratic Revolution.

Mr Burns-Ncamashe agreed that the report was indeed devastating, but it showed exactly what the government intended to achieve. He thanked the President for his steadfast resolve to show zero tolerance for the cancer of corruption. The presentation left everyone numb and flabbergasted because it undermined the ability of the state to intervene in improving the quality of life of its people and government would not be deterred by the DA with its challenges of malfeasance.

Mr Burns-Ncamashe said that before he came to Parliament, his kingdom had sought and was awarded a very small amount of money from the Lottery Funds, part of which was to repatriate the artefacts of his kingdom that were lying on the shelves of the British Museum. He was disgusted that money had gone to buy a Rolls Royce instead of to valuable projects like that one. The collaboration by several firms of attorneys was shocking and he encouraged the SIU to follow every step necessary to dislodge the chains of graft and corruption.

Mr Burns-Ncamashe affirmed his unequivocal support to the newly appointed board led by a very capable man of integrity because the NLC was the biggest hope that the people had, which could alleviate the plight of the poor. The DA was saying that proactive funding had to be scrapped but proactive funding showed the strategic trust and intent of the ANC to serve its people who, unfortunately, were not the DA's constituency. It was necessary to strengthen checks and balances, including the ability of the governance structure of the accounting authority in its oversight, leadership, and fiduciary responsibility.

Dr M Tshwaku (EFF) asked when the SIU was going to submit the report to the President. Was the report available? Why did Members of the Committee not have the report? He would have liked to dive into the specifics, not just receive a presentation. When was the report going to be issued and submitted to the President? Why were the same matters being investigated over and over with the resources that were supposed to be allocated to good causes? How much money had already been paid to the investigators to date?

He noted that the chairperson of the board was talking about an Acting Commissioner who had been appointed. He believed that the person in question had been a DG and, after his contract had expired, he was moved to the Industrial Development Corporation (IDC) to take care of some projects. If the NLC was to be fair, could the chairperson explain how he just ended up at the NLC? What processes and what rationale had been followed for him to be appointed? Was it true that he had fought with the former chairman of the NLC because he had wanted a Cape Town-based company to be awarded the lottery licence?

Dr Tshwaku said that the current NLC board had been appointed through a telephone call by the Minister. Had the board members been vetted and were they fit and proper? Was there a proper process of vetting them with due diligence, and checking that they were fit and proper to execute that duty? One of the board members seemed to have done consulting work for the NLC. Had he declared that benefit? He had to if they were preaching ethical transparency. Was there any conflict of interest there?

He asked how the Committee could listen to many allegations that had not been verified because Members did not yet have a report. When they received a report, maybe the story would have changed which was why Members needed verification. What was the Committee’s interest in listening to the allegations, with people named before the report was complete and implicated parties had not yet responded or reviewed the report? To ensure justice, that should have been done first. Why was the Committee putting the cart before the horse? People were wasting money everywhere. The SIU should finish the report and give all those implicated a chance to explain themselves before the matter is made public. The matter ought to be concluded before the Committee could reflect on the issue.

The Chairperson thanked Dr Tshwaku but noted that the handover from the previous Member of his party was incomplete. The SIU was reporting at the Committee’s request for an update on the investigation.

Mr D Macpherson (DA) commented that it was a truly horrific account of what had occurred at the NLC. But none of that should be surprising or shocking to the Minister or to any of the Members who were in the meeting. Mr Thring hit the nail on the head in saying that the sort of congratulatory feelings among some in the meeting, were entirely misplaced because there was nothing to celebrate when people were stealing money from the poor to buy a Rolls Royce. The problem that he had with the conversation and that was repeatedly experienced in the Committee, was that when issues were raised, points made, or concerns brought to people's attention, whether it be the Minister or the Committee, words like grandstanding, point-scoring and posturing were thrown around to de-legitimise the concerns, points made and genuine feelings about how things were being done to protect people's interests or political agendas. And when those things crystallised over the years, people did not want to be reminded of that. That was not point scoring; that was not grandstanding; that was making the point that if people listened to the points of view and concerns of others when they arose, they would not be sitting in that position. And they would not be patting themselves on the back, thinking what a great job they had done, or even worse, trying to articulate that it was some expression of democracy.

Mr Macpherson thought that it was opportune to take a moment to reflect on how things had reached the point they had, and how many issues had been missed or ignored as the SIU was an investigating agency and so would not be able to make reflections on the actions or inactions of some political parties. The entire debacle started in 2015 when the then Department of Trade and Industry (dti) and the Minster's predecessor introduced proactive funding, which became the platform for grand-scale corruption and theft. At the time, the DA had warned Minister Davies and warned the Committee that the NLC was opening itself up to looting on a grand scale. DA Members were called racists, told that they did not want to empower black communities and the usual thing that the ANC trotted out, and the DA was ignored. Within less than two years, the first signs of corruption were seen when the allegations about Denzhe Primary Care started to emerge, thanks to the incredible work of investigative journalists to bring that to the attention of the public. That was important to the Parliamentary Committee and the first questions and the first requests for investigations were put before the Committee. And it was the ANC’s unwillingness and inaction at that time that aided and abetted the looters within the NLC because they knew from that point, when the ANC refused to be on the side of transparency and refused to be on the side of good governance, that they had a protectionist regime within Parliament that would shield them from any accountability.

He recalled that, at the same time, it was the ANC that had bulldozed the re-appointment of Mr Nevhutanda. The DA and other political parties had said at that time that Mr Nevhutanda was entirely inappropriate to be re-appointed as the chairperson of the NLC. In opposing the appointment, the DA Members were called racists, various other names, and everything the ANC normally came up with. When the NLC came up with the crazy idea of not releasing details of public beneficiaries, the ANC in the Portfolio Committee attempted to defend that position in 2019 and 2020 and took the side of the board that refused to make those names known. The then Chairperson of the Committee, went so far as to try and obfuscate and obtain a legal opinion in an attempt to stall the public release of those names. Again, Members of the ANC in the Parliamentary Committee called DA Members racists who did not trust black NGOs. The ANC sought to protect the nonsense going on in the Committee in 2018.

Mr Macpherson added that Members of the ANC had refused, absolutely refused, to investigate what was going on in the NLC. In fact, they became so emotional, so angry, there was almost a scuffle in the Parliamentary Committee in a meeting held at the Townhouse Hotel. And again, the DA Members were called racists, and all sorts of names. He did not understand the inaction over all of this. The Minister knew in 2020 that things were going south as the board was fighting him, they refused to make information available, they were taking the Minister to court, and they were burning money at an extraordinary rate between corruption and lawyers' fees to keep the status quo for as long as possible. And yet the Minister placed no one on suspension and never sought to dissolve the board.

Mr Macpherson noted that Mr Burns-Ncamashe talked about the dereliction of state institutions and some fiduciary boards, but he did not talk about the dereliction of Parliament, the dereliction of the previous Minister, and the dereliction of duty by the current Minister. He did not talk about the dereliction of ANC MPs that stood by and watched all it happen.

He said that he fully supported the current board, noting that, ironically, it was exactly what his comrades had said of the previous board. In hindsight, and knowing what everyone knows, and the long history of the NLC, did the Minister believe that the ANC and MPs had failed in their duty to hold the NLC accountable? Concerning the re-appointment of Mr Nevhutanda, knowing what people knew then, and knowing what he knew now, did the Minister regret some of his own inaction around the conduct of the NLC? If the answer to all of those questions was No, then the same thing was going to happen all over again. But if the answer was Yes, then hopefully, the Minister and his comrades would learn a lesson and people would start to listen to other views and other warnings. None of it came out of the dark. It was written about for three years before anything serious took place. Raymond Joseph had been vilified; his life was threatened, and ANC Members of the Committee had insulted him in Committee meetings; they tried to have him removed from Committee meetings. His was a lone voice; he stood up and blew the whistle loudly but was not taken seriously, except by Members of the DA and other political parties that sought to drag the issue into Parliament. All of that could have been avoided if people had listened and done their job properly, and not found themselves in dereliction of duty.

Mr C Malematja (ANC) emphasised that Members were not fools; they were clever enough to see what was true and what was not. He appreciated the Minister's work and his support for the President during the request for the establishment of the SIU. That was implemented in governance as per the mandate given by the State President. It was correct that when things were happening, people wanted to get glory out of things to which they never contributed, so they were just attacking. It was astonishing that the DA sought to attack the ministry and try to play narrow politics instead of recognizing the success. It was an example of a dedicated ANC-led administration operating within the law and, bit by bit, putting the screws on corrupt individuals until they had nowhere to run. But did the DA take any steps to uncover the corruption? The answer was no, except for making many press statements. No, it was the Minister who asked the internal audit team to visit the Denzhe Primary Care project physically. The DA did not appoint the forensic investigators that initiated the uncovering of the wrongdoing. In fact, the Minister requested that an independent foreign investigator be appointed. The DA never laid any criminal charges against the NLC. The Minister requested that a charge be laid as soon as the details of corruption were uncovered. The DA never challenged the old NLC board in court. The Minister had defended the state against a range of attacks. The DA was just critical of Ministers. In many cases, it was not the public that was misled when cheap political experts came up with misinformation and thought that people were listening to them, but the people were not listening.

Mr Malematja also asked some questions. How many employees, excluding the board members, had been implicated in wrongdoing at the Commission to date, and what measures had been employed to hold them accountable? He understood the board was strengthening internal control weaknesses and asked what that entailed and how effectively and efficiently it would prevent or mitigate corrupt acts in the future, not only by board members but by the entire organization. He welcomed the newly appointed chairperson for his vision, and his eagerness to transform the country and thanked the Minister for appointing a wealth of valuable persons.

Ms N Motaung (ANC) stated that the matter should not be politicised, and Mr Macpherson should not grandstand in Committee meetings. It was malicious and misleading to the public. Nowhere in the findings of the SIU was the ANC implicated. The ANC president had sanctioned the investigation.

Ms Motaung asked if the NLC had a monitoring and evaluation mechanism in place to ensure that the funding allocated to NPOs went where it was intended to go and had the intended social impact. She asked when the board was planning to fill the executive vacancies in the NLC and when the SIU would submit its report to the President. Those who were guilty had to be charged.

Responses
The Chairperson noted that the time was after 1 pm and that the House would be sitting shortly. She could only give each respondent eight minutes to respond.

Adv Mothibi replied that when findings were made where the board members should be declared delinquent, other boards were informed of that by the SIU. Regarding officials that the evidence had pointed to, he explained that the SIU had not yet made findings on all those possibly implicated. There were officials that the evidence had pointed to, but the Unit had not made findings as the investigators were still looking. However, Mr Lekgetho would provide the number they were looking at. As the investigation continued, there was a possibility that there would be additional names.  

Concerning the number acted upon despite their resignation, he pointed out that resignation only terminated the employer-employee relationship, but the SIU was pursuing them via civil litigation, and criminal charges by the NPA. All of the SIU evidence was referred to the NPA. Some of that evidence is related to the NPOs. So, wherever evidence pointed to NPOs that had committed a criminal offence, the SIU referred them to the NPA. In the presentation, the SIU had indicated the number of referrals to date.

Responding to the question of whether there was a database of employees deployed elsewhere, Adv Mothibi stated that it had been observed in various investigations that, when officials in state institutions were confronted with evidence of wrongdoing, they were quick to resign. Then they re-started in other state institutions. Firstly, the SIU froze their pensions. That made officials realise they could not commit wrongdoing, resign and leave. So, the SIU froze pensions as the first step of ensuring that they felt the pain. Secondly, the SIU was in contact with the Department of Public Service and Administration. That Department was able to check via their system where those officials had moved to, and then the SIU was able to follow them wherever they were. The SIU had various examples where it had done that.

About the amount to be recovered vis-à-vis the amount under investigation, he explained that various processes were preparing to institute civil litigation, but the SIU did not have the exact number yet. Once the quantification had been done, through the civil litigation process, forensic accountants would assist and the SIU could respond in writing to the Committee, indicating the amounts recovered to date versus the amounts under investigation. In terms of the firms of attorneys, the SIU would ensure that wherever evidence pointed to firms through which monies were channelled using their accounts and so on, the SIU would make those reports available to the Legal Practice Council and ensure that the Legal Practice Council activated its processes so that those attorneys were held to account and possibly removed from the roll of legal practitioners.

Adv Mothibi stated that he had indicated in his presentation that the interim report on Phase One would be submitted to the President on 31 October 2022 and the unit would submit a follow-up report on phase two and phase three, and ultimately consolidate all into a final report. However, the SIU continued to receive allegations and duty bound to investigate all allegations received but the Unit would stick to the timelines for presenting the reports. Once the report had been presented to the President, the Committee could request a copy of the report from the presidency.

Adv Mothibi explained that one NPO could be revisited once or twice, depending on the evidence that came up. For example, there could be a whistleblower with evidence and after a while, a second whistleblower came with other evidence pointing back to the same NPO. In such a case, the SIU was enjoined by law to investigate and re-investigate that NPO. Investigations were evidence-based, and the outcomes were supported by the allegations that had been made.

Regarding payment to investigators, he told Dr Tshwaku that the investigators were not paid, other than the salaries that they received. However, when the SIU investigated, it was legally provided that it charged fees. The SIU charged those fees as an institution, not by investigators. The NLC would be issued with invoices.

The Chairperson stated that the remaining questions to the SIU would have to be answered in writing.

Prof Pityana acknowledged that the points raised were very important and very crucial, but he was not sure that the board could do them justice in the time available. He requested Ms Ferguson and Ms Mulvane to respond to the questions from Mr Cuthbert about the lifestyle audits and whether the board had obtained an independent opinion on the extension of the license. There was a question about the Acting Commissioner's appointment, whether the new board members declared conflicts of interest, and whether there were mechanisms for monitoring and measuring the social impact of the projects and the funding of the NLC.

Ms Ferguson stated that the board required the completion of a series of integrity testing. The board had also proposed the introduction of a lifestyle audit, starting with the board because its members should be above scrutiny. However, the Minister might have a different view. About a legal opinion on the extension of the license, she stated that the board needed to look at the continuity and stability of the NLC, but certainly, it had obtained extensive legal opinion, and there had been a lot of back and forth. The Minister might want to also expand on that because it was really in his domain, in terms of the internal governance measures. Certainly, as management, the board was revisiting and re-looking at all the policies, processes, internal governance measures, and so on.

Regarding filling executive positions, Ms Ferguson said that the board was in the process of doing that and was hoping to make those appointments very soon because the NLC could not operate with the empty executive positions. It was critical to fill those positions with good people very, very soon. She could not say how many employees had been implicated but the board was looking at all the investigative reports and going through everything with the SIU; people were being identified as they spoke. Processes of suspension were unfolding daily. Some of it was not as straightforward and as easy as thought. There was monitoring and evaluation in place, however, it definitely needed to be strengthened. And as the NLC chairperson had said, and the Minister had alluded to, the board would be looking at all beneficiaries and ensuring that the money was being well used.

Ms Mvulane said that the legislation did allow the board, in consultation with the Minister, to extend the contract of the lottery company and they had taken a legal opinion. As for the appointment of staff, that would be completed within the next 60 days at the latest. Some applicants had already been shortlisted. Four other matters relating to initiatives were currently being looked at by the board, including the process of putting strong governance structures in place, which would allow proper independence of the board so that it could report adequately to the executive authority.

The Minister appreciated the comments made regarding the efforts to address the corruption. On the questions that had come up on the lifestyle audits, he believed it was a sensible approach to have lifestyle audits in the NLC. That had come up in the last meeting he had had with the board, which had indicated to him its approach and workflow on legal costs. That had not yet been quantified but once all the work had been completed, and was available, the ministry would take legal advice on that.

On the matters raised by Dr Tshwaku, the Minister assured him that the process in the Act in respect of appointments had been followed, including the question of the Acting Commissioner and the board members. He also indicated that there had been a narrative by implicated persons who sought to discredit all those taking steps to protect the institution and the monies meant for ordinary South Africans. He was not aware of any of those allegations made against the Acting Commissioner.

On the issue of congratulatory feelings being misplaced, as raised by Mr Macpherson, he would certainly agree that no one should be saying that they were celebrating the problems of the NLC, but it was necessary to say that democratic institutions do work and that the SIU would go after the implicated persons, and they would be held to account. They could hide, shred the documents and even burn the documents, but the SIU was following the money, and the investigations had laid out the extent of the problems while the courts had upheld the right of the executive authority to hold the board to account.

Minister Patel noted that Mr Macpherson had raised issues with the benefit of hindsight. The Minister had spent a lot of time with the lawyers in 2020, looking at what options were legally available and the risks, and he had acted on the basis of independent legal advice. That advice had been effective in that it provided a sufficient basis of evidence, as the court ruling itself found, for the Minister to have a basis to act. And that basis had been established by the information that had come out of the various investigations.

The Minister urged Mr Macpherson to again carefully look at the detail. He understood his enthusiasm to act immediately, to shoot from the hip, but if he had wanted to avoid successful court action, see the decisions of the Executive overturned. The Executive was ultimately being left at the mercy of the board and the decisions that the staff at the Commission could take; he would have shot from the hip. He had not done so. He had acted carefully and on legal advice and the extent of the evidence available at present was testimony to following due process.

The Minister noted that Mr Macpherson had raised the question of Parliament's responsibility and the MPs and so on, but the hindsight question was quite a tough one for everybody. He pointed out that in 2017 when the Portfolio Committee considered members of the board, there were different points of view on the Committee. Some Committee Members had supported the person who became the chairperson, but Mr Macpherson will recall that he and Mr Hill-Lewis, representing the Democratic Alliance, had recommended Advocate Huma to serve as the chairperson of the Commission. What had subsequently become evident, was that the SIU had since uncovered evidence implicating Advocate Huma. So, everyone needed to take a very realistic view. What was the objective of grandstanding? And he knew Mr Macpherson did not like the phrase. However, Mr Macpherson made a fair point that everybody should listen to any advice given. He agreed fully with that. The ministry was not completely done with the matters involving the NLC and it would be better if the narrative that the Committee put forward was a unified narrative to strongly support the work that the board would be doing to hold people to account. The Minister advised that everyone should do a little bit less on all of the grandstanding, posturing, etc. He denied that he had been inactive and said he had, in the meeting, lifted a little bit of the veil on the steps taken by the Ministry and the Department in that entire period and the record spoke for itself, very loudly, that instead of inaction, they had taken action to ensure that the legal basis for acting against corruption was well established and the wrongdoers were at present in the sights of the law enforcement agencies.

He agreed with those Members who had said it would be important for the NPA and other law enforcement agencies to take the baton from the SIU. That was vital. Dr Tshwaku raised the question of waiting until all the reports were complete before taking any action, but there was a substantial body of information available at present and when that information was so compelling, it provided grounds for the board to act. And that was what the board had indicated it would do on the lotto licence. The NLC had obtained a legal opinion and the Department had two sets of attorneys who had enacted with NLC and provided him with advice on the extension of the lottery licence.

The Minister stated that all questions had been answered.  He noted that all were engaged in an important step in accountability. What had been uncovered was nasty and rough, but it showed what the law enforcement agencies could do. He added that, in a cruel irony, the NLC had set up a workshop with the OECD (Organisation for Economic Cooperation and Development) on dealing with the issue of corruption. That was a cruel irony. But the new board was taking every step to deal with the challenges laid before its members and he wished them well. He also wished the SIU well and looked forward to the next steps.

Closing Remarks
The Chairperson confirmed that the Committee would be looking at the NLC in its oversight capacity and was awaiting the next two phases of the investigation by the SIU.        

The Committee Secretary informed Members that the following meeting would be on Wednesday 28 September 2022: a briefing by the dtic and stakeholders on the implementation of the Masterplan for the South African Furniture Industry; consideration of the Committee’s 4th Quarter Programme; consideration of minutes.

The meeting was adjourned.