DA writes again to Trade & Industry Minister calling for independent inquiry into Lotto

Following several claims made by charities that the National Lotteries Board (NLB) is declaring unpaid funds as having been paid out - in addition to a recent scathing performance audit by the Auditor-General into grant management by the NLB - the DA has for the third time written to the Minister of Trade and Industry [text of letter included below] asking him to initiate an independent enquiry into the Lotto.  

We will continue to write to him as we accumulate evidence until it becomes impossible for him not to act. The NLB and the Minister have no right to treat the charities who work so hard to care for South Africa's marginalized citizens with such contempt, or to refuse to account to the public about how Lotto money is spent.

The Auditor-General's performance audit shows an organization in a state of collapse. Among a number of other problems, distributing agencies were shown to be subject to no policies and procedures regarding the management of documents, the distribution of funds, or the evaluation of applicants for funding.

Distributing agencies are also bound by no requirement regarding the meetings that need to be held in order to decide on beneficiaries, with the result that few such meetings are held, and many of these are adjourned due to lack of a quorum. This situation is compounded by there being far too few staff members to cope with the work.

Given the situation exposed by the Auditor-General, it is little wonder that charities - which flooded the DA with complaints earlier this year - find it impossible to get answers on whether their applications have even been received, let alone approved or paid out. It is also little wonder the amount of money paid out and the number of claims processed declined steadily over the period covered by the Auditor-General (2004/05 and 2005/06).

More recently, a further worrying problem has come to light. The Thohoyandou Victim Empowerment Trust released a statement last week stating that an amount that was said to have been paid to the Trust by the Lotto in its 2007 annual report had in fact never been paid. Despite persistent attempts, the Trust has been unable to obtain any information from the Lotto in this regard. This mirrors a similar complaint laid with the DA by another NGO earlier this month.

Text of letter:

Dear Mr Mpahlwa,

The Auditor-General recently tabled a scathing report on the performance of the National Lotteries Fund over the 2004/05 and 2005/06 financial years. Amongst his findings were that few controls were exercised over the evaluation of funding applications and that meetings that should have been held to evaluate applications were often not held at all, or had had to be cancelled because of a lack of a quorum. The result was long delays in approval of applications and a steady decline over the period investigated in the number of applications approved.

Given the flood of complaints the DA received earlier this year from charities about the service they have received from the Lotto (which we have raised concerns about in previous letters to you) it appears that there has been no substantial improvement since 2004/05 in the process of evaluating applications and making payouts.

A further problem was identified last week by the Thohoyandou Victim Empowerment Trust, which asserted in a media statement that an amount the Lotto claimed it had paid out to it in its 2007 Annual Report had never in fact been paid to it. A similar claim was made directly to the DA by another organisation a short while ago.

Given these further indications of problems with the national Lottery, we would like to renew our call for an independent enquiry into the Lottery, so that we can make a start towards resolving these problems.

I look forward to your response.

Regards,

Janet Semple, MP 
Democratic Alliance Spokesperson on Social Development

Statement issued by the Democratic Alliance August 10 2008