The National Lotteries Commission (NLC) board has approved a reparation process that will include apologies and financial compensation for former employees who were victimised or fired for exposing corruption. This is a significant step towards addressing past wrongdoings and ensuring transparency. The NLC’s reparation model is inspired by the South African Revenue Services (SARS), which previously offered apologies and compensation to staff affected by corruption during Jacob Zuma’s administration. In a recent interview with GroundUp, the new NLC Commissioner, Jodi Scholtz, spoke candidly about the importance of these actions.
Scholtz emphasised the importance of carrying out the reparation process legally and authentically, in accordance with the Public Finance Management Act (PFMA). She acknowledged that the NLC has a responsibility to sincerely apologise to both staff and communities affected by corruption. Scholtz also emphasised the NLC’s intention to work with the Industrial Development Corporation to assess abandoned or unfinished projects with the goal of repurposing them for the benefit of the communities where these facilities are located.
The NLC has undergone a thorough cleaning over the last year, resulting in the replacement of the entire board and a significant portion of the senior executive team. Thabang Mampane, the former Commissioner, and Phillemon Letwaba, the former Chief Operating Officer, both resigned, and several other senior staff members are currently suspended pending disciplinary investigations.
Scholtz announced plans to implement lifestyle audits and integrity testing for all NLC employees, beginning with top management, including herself and the executive team. She also mentioned the possibility of funding reparation awards by selling seized luxury homes and vehicles purchased with embezzled lottery funds. She used the sale of Terry Pheto’s house, which was purchased with a grant intended for an initiation project, as an example.
The Special Tribunal has already issued preservation orders on properties and assets worth hundreds of millions of rands, involving a wide range of individuals, businesses, and non-profit organisations. A Pretoria mansion owned by former NLC board chairperson Alfred Nevhutanda and a luxury home on a golf estate owned by a trust connected to former Commissioner Mampane and her family are among the seized properties. Scholtz believes the system was purposefully designed to facilitate corruption and theft, saying, “It was as if people sat around a boardroom table and planned how to corrupt and steal.”
As part of the organization-wide cleanup, Scholtz has been actively engaging with NLC staff and labour unions. She has emphasised a zero-tolerance policy for fraud and corruption, promising to manage the consequences of any wrongdoing. Furthermore, she has met with former employees who were fired for attempting to expose corruption. Scholtz expressed deep empathy for their plight, recounting a heartbreaking encounter with an unnamed whistleblower whose daughter considered suicide as a result of the events.
In addition to dealing with internal issues, Scholtz has met with communities affected by public funds misappropriation and representatives of organisations whose identities were used to apply for lottery funding. She acknowledged the existence of dedicated NLC members who wanted to do the right thing but were disempowered and afraid. Scholtz has begun an examination of job descriptions, standard operating procedures, and actual work practises, revealing numerous discrepancies and deficiencies.
The NLC’s working conditions have also come under scrutiny, revealing a disregard for basic necessities. Scholtz observed broken chairs and malfunctioning toilet locks, demonstrating a misplaced focus on personal gain rather than employee well-being. She recognised the staff’s vulnerable state and their fear-based reluctance to speak up.
According to Scholtz, some employees were paid to remain silent and display incompetence, exacerbating the organization’s problems. The NLC’s information technology systems were discovered to be in disarray, with key documents missing or intentionally withheld, including those related to funding, board decisions, and legal briefs. Independent investigators who investigated NLC corruption found evidence of tampering and unauthorised additions to files, as well as the absence of requested documents. They also discovered a flaw in the grant system that prevented staff from identifying multiple grant applications or recipients using their identity numbers, facilitating corruption and concealing fraudulent activities.
To address these issues, the NLC has allocated nearly R200 million to the development of a new system, despite staff members reporting numerous issues with its functionality. Scholtz emphasised the system’s limitations by emphasising the inability to track grant applications associated with individuals involved in multiple nonprofit organisations. While efforts have been made since April to correct this flaw by capturing ID numbers in grant applications, the NLC is considering completely rebuilding the system.
The NLC temporarily suspended its grants system in late 2018, restricting access to information about proactive projects to only a few high-ranking staff members. Furthermore, citing a provision in the Lotteries Act, the NLC ceased publishing the names of grant recipients. However, public pressure from the Minister of Trade, Industry, and Competition, as well as some members of parliament and the media, caused the NLC to reverse its decision.
Scholtz stated her intention to follow the SARS model of reparation, drawing insights from their experiences. Discussions with SARS have taken place, allowing the NLC to learn from their recommendations and put them into action. The SARS process included apologising and compensating current and former employees who had been affected by corruption, including those who had been unfairly targeted by the “rogue unit” allegations.
A NLC board subcommittee has been formed to assist Commissioner Scholtz in developing and implementing the reparation policy. The NLC intends to implement integrity testing in accordance with the recommendations of former board member Willie Hofmeyr, a renowned former head of the National Prosecuting Authority’s Asset Forfeiture Unit (AFU). Hofmeyr explained that in the past, integrity testing, which analyses a person’s voice for signs of deception, has been effective. The NLC has begun the process of selecting service providers for integrity testing, with the goal of launching it by the end of July.
Following discussions with NLC staff and labour unions, lifestyle audits will be implemented as well. The NLC’s newly appointed chief audit executive, Vincent Jones, will oversee the integrity testing and lifestyle audit procedures. Scholtz emphasised the importance of these measures, given the large sums at stake, and promised to make her own audit results public without hesitation.
Under Commissioner Scholtz’s leadership, the NLC is determined to right past wrongs, root out corruption, and restore public trust in the organisation. The NLC hopes to pave the way for a more transparent and accountable future by implementing a reparation process, conducting lifestyle audits, and introducing integrity testing.