NLB welcomes probe into "alleged irregularities"

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Pretoria, 13 February 2012 – Reports in the weekend media “confirm” that the Office of the Public Protector will be “probe alleged irregularities” at the National Lotteries Board (NLB). The Chairperson of the NLB, Professor Alfred Nevhutanda, said that even though there has been no official notification of the intended probe, based on a complaint lodged in October, the Board welcomes the investigation by the Public Protector.

In recent years, several allegations against the NLB have been made by stakeholders and political parties but without any substantiation. The NLB believes that an independent investigation of this nature will therefore be useful.

Prof Nevhutanda confirmed that, “at a joint meeting of the Board and the Distributing Agencies on 8 February 2012, a decision was taken for an independent lifestyle audit of all Board and Distributing Agency members to be carried out. The NLB Management team has also volunteered to undergo a lifestyle audit.” At the same meeting, it was agreed to consider requests from the public to attend adjudication sessions in order to better understand the processes and to see how decisions on applications are taken.

The Board takes allegations of irregular conduct very seriously. The Board last year received three whistleblowing cases alleging irregular conduct by some employees and members of Distributing Agencies. The matters are being investigated and have also been referred to the police for further specialised investigation. The public will soon be able to report any cases of irregular behaviour through the NLB Whistleblowing Hotline.

The recent memorandum to the NLB by a group of NGOs was responded to immediately and the NLB has since had no further communication from the organisers. There are also claims that 450 NGOs signed the memorandum. The NLB has yet to receive the signatures.

Much of the recent outcry is as a result of the reduction in the size of grants. Larger and more urbanised NGOs have become used to receiving large grants from the National Lottery Distribution Trust Fund (NLDTF) year after year. Regulations promulgated in 2010 clearly state that 50% of the funds in the NLDTF should go to projects based in rural areas. “Rural communities are often forgotten because they do not have the capacity to engage the services of professional fundraisers and therefore have difficulty complying with requirements. We must learn to share”, said Nevhutanda.

Starting in 2010, the NLB engaged on a national roadshow, regional workshops, provincial consultative workshops and a national indaba, where stakeholders from all areas were given the opportunity to express their views on NLDTF processes. As a result, the NLB has engaged in a process of addressing those issues that do not require legislative changes as a matter of urgency. As the process unfolds, the NLB is also looking at other ways to improve communication with stakeholders.

Following the national roadshow and regional workshops, the number of applications has increased to 12 500 applications all trying to access the R1,8 billion the NLDTF has available for 2011/2012 financial year.

As a result of this influx in the number of applications and the smaller NLDTF budget, the number of grants will increase while the value of the grants will have to be reduced to meet this greater demand. Taking this into consideration, the Board as interim Distributing Agency for Charities and Arts and Culture, decided to withdraw some of the larger grants already made in order to share the funds available to as many deserving NGOs as possible. Decisions to withdraw grants were also linked to the NLB’s compliance site visits that raised questions about some of the line items being funded. It has always been the opinion of the Board that, as Trustee of the NLDTF and in the spirit of the Lotteries Act and Regulations, the Board has to ensure all allocations are made in line with the Lotteries Act and Regulations.

One of the organisations whose grant was withdrawn decided to challenge the withdrawal and recently served papers on the NLB. “The Board considered the papers served on it and decided that even though the amount was substantial in these times of financial distress, the nature of the project was worthy and the grant should therefore be re-instated,” said Prof Nevhutanda.

Following media reports of this case, NGOs have contacted the NLB questioning why such a large grant was made to a single organisation when many welfare organisations were getting significantly smaller grants. The NLB is against the use of NLDTF funds for commission to fundraisers as well as management fees that NGOs are now budgeting for. “Each NGO should have the necessary capacity to carry out the projects they apply for. There are too many consultants out there that are soliciting applications in order to further their businesses,” said Prof Nevhutanda.

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