Journeys in a looted land

William Saunderson-Meyer writes on the plundering of the National Lotteries Commission


This week the Special Investigating Unit reported to Parliament that it had so far identified over R1.4bn in fraudulent charitable grants made by the National Lotteries Commission.

The public reaction was revealing and depressing. South Africa yawned. Legalbrief Today, the authoritative roundup for the legal sector of key developments, placed the SIU briefing at the 14th position from the top, on their media menu. 

Been there, seen that. Let’s move along.

Admittedly, South Africans have a lot on their plates at the moment. A moribund economy, growing unemployment, extensive water shortages and power outages, and a remorseless increase in violent crime. And it’s all happening under the stewardship of an ineffectual president who jumps at his own shadow.

To be fair, at times this country feels like a jumbled jigsaw. One is so overwhelmed by all the distracting detail that the brain cannot comprehend the full picture.

In any case, it is only through historic hindsight that the totality will be discerned. So much of our time is spent futilely threading together pieces that don’t actually belong together, while ignoring what we realise later was glaringly obvious.  ___STEADY_PAYWALL___

The money stolen from the NLC is just a drop in the ocean compared to the R1.4 trillion that the African National Congress government concedes was looted under its previous president. But corruption is not just about the Rands involved.

The NLC story pulls together several strands of how corruption operates. The poor and struggling are its biggest victims. The already wealthy and influential are its biggest beneficiaries. Most importantly, it shows its scale and pervasiveness. 

In sophisticated democracies, there’s a multitude of actors trying to counteract threats to society. In a developing democracy like ours, many of the formal actors — public service, mainstream media, enforcement and judicial institutions, and organised business — are often too depleted, discouraged or intimidated to play the supportive roles necessary.

Much of the corruption roiling South Africa would not happen were it not for the fifth column it has recruited. Corruption thrives because of the complicity, both tacit and overt, of many people, including the supposed guardians of honest administration in the accounting, legal and banking professions. 

Firstly, the matter of scale. 

The SIU investigation covers only the six years from 2015 to 2021. The R1.4bn stolen involves only five dozen grants. Potentially the losses are far greater, for each year the NLC dispenses more than R1.2bn to around 3,600 charities and do-gooding not-for-profits. 

As the Democratic Alliance’s shadow Minister of Trade and Industry, Mat Cuthbert, who played a key role in uncovering the rot, tells me in an interview, “We will never know the full scale of the looting at the NLC. Take that R1.4bn and double it or triple it.”

Secondly the matter of pervasiveness.

Corruption is now deeply and perhaps inextricably embedded in both government and corporate structures. They are two hands washing one another.

The government peddles the fiction that state corruption is a regrettable anomaly, a feature largely of the nine years, 2009 to 2018, that Jacob Zuma was president. The reality is that at least from 1999, the ANC has colluded in the looting at its highest levels. That continues to this day, under self-described anti-corruption crusader President Cyril Ramaphosa. 

Equally threadbare is the fairy tale of morality and social responsibility spun by Big Business.

Many of the corporate world’s most historically august institutions — Bain & Co and KPMG are obvious examples — not only participated in, enabled or ignored state sector looting but they’ve long been doing the same in the private sector. Think Deloitte at Tongaat Hulett (at least R3.5bn fraud at board level) and again at Steinhoff (the evaporation of about R180bn of inflated assets). 

The DA and many experts in the charity sector warned in 2013 already that a proposed legislative change empowering the NLC to make “proactive” grants — which allowed the NLC to give grants without requiring an application for funding — would lead to corruption. They were lambasted by ANC politicians for their lack of empathy for the needy. 

In 2015, the amendment was passed. This week, parliamentarians were briefed that it was the proactive grant mechanism that opened the door to what has been described as “industrial-scale looting”.

The pillage was not uncovered recently. From late 2017 onwards, two feisty journalists — Raymond Joseph of GroundUp and Anton van Zyl of the Limpopo Mirror — wrote over 100 substantive articles detailing the criminality and mismanagement by NLC officials and board members. 

They were steadfastly ignored by the NLC board and jeered by ANC politicians. Their lives and those of their families were threatened. They were smeared on social media and investigated by the State Security Agency.

GroundUp, with few financial resources, was harried with cripplingly expensive court actions, some by grant recipients and others paid for out of NLC coffers, designed to stall their revelations and stop their reporting. At one stage, Joseph increased his home bond, in order to shake loose the money needed for daily living, so that he could continue working on his investigation.

The law firm of which the now Minister of Justice, Ronald Lamola, was then a director, earned R20m doing questionable legal work for the NLC. They were paid millions for what Joseph describes as a “very dodgy” three-part report exculpating the NLC of corruption, as well as almost R6m to act against an NLC whistleblower. 

Statutory regulatory oversight was theoretically in place but useless. Those charged in law with carrying out monitoring of the NLC were either ignorant or comatose.

The Auditor-General gave the NLC five successive clean audits because, as it explained when challenged by GroundUp, its audits did not ever involve examining whether the grants were going to legitimate entities. 

Doris Dondur, who sits on various boards of the financial-services company, Professional Provident Society, was one of the NLC’s “independent” non-executive directors since 2017. As a chartered accountant — and head of the NLC audit and risk committee, as well as of its regulatory compliance and legal committee — she carried a particularly heavy ethical responsibility.

But if Dondur had any concerns, they certainly weren’t stridently or effectively articulated. She joins an ever-growing line of South African CAs — including the NLC’s former Chief Operating Officer, Philemon Letwaba, who recently resigned after being the subject of three thwarted disciplinary inquiries for money laundering and abuse of his position – who are a disgrace to what used to be an admired profession.

The sums in play at the NLC were massive and difficult not to notice. At one stage, more than R6m was spent on buying a Rolls-Royce for the chairperson of the NLC. 

In the 2017/18 financial year alone, the NLC fraudulently paid out over R250m in proactive funding to construct six old age homes and four drug rehabilitation centres. Not a single home or rehab has been completed or is operational. Several have been abandoned to rot because the money allocated was stolen.

In 2019, another R13m was paid by the NLC for a project to “uplift women in Marikana”.  Instead, millions from the grant were used to build a state-of-the-art chicken farm on a property owned by a company of which former NLC board member William Human, an advocate, is the sole director. Money given to other non-profits was paid into his private bond for his Pretoria home. 

In the same period, money from other Lottery recipients and NLC service providers paid for a R27-m mansion and furniture for Nevhutanda, an ordained pastor. Millions from a grant meant to build a school in Limpopo helped pay for a home on a golf estate for former NLC Commissioner Thabang Mampane.

This week, the newly appointed NLC chair, Professor Barney Pityana, was “non-committal” when asked by Joseph during a media briefing whether the SIU investigation included politicians, like Transport Minister Fikile Mbalula and Basic Education Minister Angie Motshekga, both stalwart supporters of Ramaphosa in his divided Cabinet. 

Mbalula, then Minister of Sports, Arts and Culture, and his wife made a R5.6m cash offer on a house in Bryanston but dropped out when journalists started asking questions on the origin of the funds. In the end, the house was bought, on identical terms, by a company linked to the NLC's former COO, with a known associate of Mbalula acting as the middleman.

Pityana was equally vague when asked about millions in Lottery grants given to non-profits linked to Motshekga and her husband. Motshekga’s husband is a former ANC chief whip and during Ramaphosa’s absence overseas, Motshekga has stood in as acting president.

Joseph agrees with Cuthbert that while the SIU is conducting a “remarkable” investigation, the full scale of the NLC scandal will never be known.

“Getting to the bottom of it is like journeying in an unknown land with no map,” he tells me. “You have no idea of its extent or where the cities are.”

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