SIU will ask Ramaphosa to extend lottery probe

The Special Investigating Unit (SIU), which has been investigating corruption involving lottery grants since 2020, is applying for its mandate to be extended to allow it to probe procurement by the National Lotteries Commission.

The SIU has come across several instances of potential fraud and corruption involving NLC procurement. The office of the Auditor-General (AG), Tsakani Maluleke, recently highlighted problems with procurement, and the NLC itself has received several tip-offs about allegedly questionable procurement, which is being investigated internally and by three audit firms.

Read: Concern in parliament over slow pace of prosecutions for lottery corruption

But until its mandate is extended, the SIU’s hands are tied, as the 2020 proclamation signed by President Cyril Ramaphosa only allows it to investigate corruption involving grants.

GroundUp understands that the application is currently being finalised by the government’s legal department and will be submitted to Ramaphosa “soon”. This was confirmed by four sources with knowledge of the application, who all asked to remain anonymous as they either did not want to disrupt the process by speaking publicly about it or were not authorised to speak to the media.

One source told GroundUp they believed procurement fraud could be “massive” and might implicate “a lot of National Lotteries Commission staff”.

In 2021, the AG’s audit of the NLC uncovered more than R23 million in irregular expenditure and R36 million in accounting errors made in previous years. Things were worse the next year, with the AG’s 2022 management report on the NLC revealing nearly R57 million in irregular expenditure as a result of the contravention of supply chain management legislation.

But GroundUp’s sources say procurement corruption may amount to far more than this, possibly even more than corruption in lottery grants. SIU head Advocate Andy Mothibi told Parliament’s Trade, Industry and Competition portfolio committee in September last year that his unit was investigating dodgy lottery grants of more than R1.4 billion.

Mogoboya Matsebatlela, the NLC’s senior manager: supply chain and facilities, is one of several senior NLC management members facing a disciplinary inquiry after he was suspended late last year.

NLC management to blame

The AG said 64% of the irregular expenditure identified during the audit had not been picked up by the NLC’s own monitoring processes, and blamed its leadership and management for failing to do so.

Among the procurement processes the AG found had breached rules:

• Eight awards valued at just over R5.2 million were procured “without inviting at least the minimum prescribed number of written price quotations from prospective suppliers”, even though it was possible to obtain the quotations;
• Four awards worth just over R13.2 million were procured without inviting competitive bids, although it was practical to invite competitive bids; and
• 15 contracts worth more than R31.2 million were awarded based on criteria that differed from the original specifications.

Spending on lawyers, information technology and media to be probed

The AG instructed the NLC’s management to address “important internal control deficiencies identified to improve procurement and contract management”.

Among the issues flagged in damning reports by the AG and by auditors appointed by the NLC are irregular expenditure on information technology and sky-high spending on lawyers.

GroundUp reported recently that the NLC was struggling to answer a written parliamentary question about expenditure on legal fees, as key files with details of multimillion-rand litigation expenditure have vanished.

Another area of concern is the tens of millions of rands in spending on media and communications, which will also come under the SIU’s spotlight if the unit’s application is approved by the president.

Now read: Strict new measures to combat lottery corruption

© 2023 GroundUp. This article was first published here.