Pro-active funding in the National Lotteries Commission: A jackpot to some, a (mis)fortune to others

Today the Organisation Undoing Tax Abuse (OUTA) lodged two criminal complaints with the SAPS over the National Lotteries Commission (NLC) use of funding.

OUTA has for two years investigated irregularities flowing from the NLC's so-called pro-active funding. Pro-active funding is founded on the Lotteries Amendment Act which allows the NLC to identify worthy causes that may be funded without a formal grant application.

Pro-active funding is at face value a noble cause, aimed to uplift and empower vulnerable members of society by providing much-needed funding to non-profit organisations to assist communities and related projects. Unfortunately, these funds do not all reach the vulnerable but are diverted once the funds reach the charities (which are either hijacked or disguise the beneficial ownership). An example is where a sum was paid by the NLC to a charity for the construction of a sporting facility. OUTA’s investigation suggested that this facility was never built.

The NLC not only enjoys unfettered discretion when deciding to fund a specific charity, but the absence of strict procurement principles and procedures diminishes transparency, which opens it up to abuse.

When charities apply for grant funding in terms of the pro-active funding model, certain criteria need to be met. These include that the charity applying should have the capacity to use the funding for the purpose it applied for and should have been in existence for at least two years. OUTA has found that some charities either did not exist prior to applying for funding, had no track record of doing any charitable work, or in many cases simply shared business addresses with other established entities. This type of practice is often described as fronting.

Vulnerable members of society who should receive help are losing out. The only “winners” are the real beneficial owners of the charities – in most cases, the directors of these charities.

OUTA has previously engaged with the NLC on its responsibility to ensure that the grant funding is utilised for its intended purpose. The NLC assured OUTA that all necessary checks and balances are in place. The fact that looting continues under the auspices of pro-active funding is a serious concern.

We were informed that the NLC has launched an internal probe into allegations of maladministration and corruption, however, to date such probe has yielded little to no results.

 As a result of the NLC’s failure to take action, we have now lodged two criminal complaints with the SAPS.

These complaints highlight the methods used by two organisations, Zibsifusion and I Am Made for God’s Glory. OUTA believes that there is prima facie evidence to investigate both those responsible for the organisations as well as NLC officials. OUTA is also concerned that senior officials should have known about these activities but failed to report them to the relevant law enforcement agencies, which in itself might also constitute a criminal offence.

The complaints are about the award to IAMFGG of R11.375 million in April 2018 and to Zibsifusion of R10 million in November 2018. The directors of both organisations were Liesl Moses, Tsietsi Joseph Tshabalala and Lesley Ramulifho.

The grant to Zibsifusion was signed by Zibsifusion’s Louisa Mangwagape and the NLC’s COO Philemon Letwaba. The Zibsifusion grant was supposedly to build toilets at various Limpopo schools. However, an OUTA investigation found that this work wasn’t completed.

The grant to IAMFGG was signed by its director Ramulifho and the NLC’s Letwaba. It was supposed to fund the construction of a sports complex but appears to have been used instead to buy an Ocean Basket restaurant franchise for Ramulifho.

OUTA urges its supporters to be aware that successful conviction rests upon the investigative capacity and determination of the SAPS and the zeal to prosecute by the National Prosecuting Authority (NPA). OUTA, as a civil action organisation, will encourage the relevant authorities to take action and assist where possible.

The Zibsifusion complaint is here.

The IAMFGG complaint is here.

See OUTA’s previous statement on this issue: OUTA exposes National Lotteries Commission’s Limpopo ablutions disaster, November 2019 is here.