Lotto sitting on valuable charity funds

In response to a parliamentary question posed by the Democratic Alliance (DA), the Department of Trade and Industry (DTI) has revealed that the National Lotteries Board (NLB) and National Lotteries Distribution Trust Fund have failed dismally in executing their duties.  In 2008/09 approved funding applications from charities to the value of R2.2 billion have not been paid out.

This is R1.2 billion more than funds that have "partially" been paid out. Furthermore, of the 5590 applications received for funding, nearly 10 percent (537) has not even been processed.

This figure is even worse for the 2007/08 financial year: of the 8375 applications sent, 5101 were not processed: in other words 60.9 percent of the applications were not even looked at! And R1.8 billion worth of approved funds were not paid to the applicants in that year.

So far from improving, the amount of unpaid approved funds is increasing: the increase for 2008/09 is 21.8 percent. The amount for approved allocations that has not been paid out over the past four years is the grand total of R6.9 billion.

The magnitude and scope of the incompetence of the Lotto Board in meeting one of its primary goals is staggering. What then is done with the money, or is the Lotto just another shell organisation for funding the ANC? For that matter, if the funds have been approved, then why can't it be paid out?  

The answer further reveals that:

• The number of applications received for funding in 2005/06 could not be provided because no record was kept - which means even less accountability, which clearly suits the Lotto Board just fine.

• No applications could be made in 2006/07 because of administrative delays - which effectively means that nothing was done.

• No information on the amounts that have been paid out in full has been provided

The Auditor General's 2008/09 annual report also revealed that the NLB:

• lacked effective, efficient and transparent systems and internal controls regarding performance management

• did not report on all predetermined objectives in its annual report

This explains why performance bonuses paid to NLB executives and staff amount to more than R2.3 million for 2008/09 - at least the officials are getting their money, despite the fact that they are not doing their jobs.

South Africans must know that the government body that was ostensibly created to facilitate funding to charity is failing to do its job. It would be fair to ask whether it serves any purpose besides giving jobs to government officials.

The next time someone buys a lotto ticket, they need to know that chances are that the money intended for charities is very likely going to end up in a vault somewhere in the Lotto offices. The DA will put further pressure on the DTI to resolve this as a matter of urgency.

Mr S J F Marais (DA) to ask the Minister of Trade and Industry:

How many (a) applications for funding have been received by the National Lotteries Distribution Trust Fund and the National Lotteries Board since the 2005-06 financial year, (b) of these applications (i) have been approved, (ii) have been rejected or (iii) were not completed by each financial year and (c) of the approved applications have (i) been paid out in full, (ii) been partly paid out and (iii) not been paid out in each of the financial years?

NW1330E

Response:

Number of applications received for funding

2005/6 - The National Lotteries Board (NLB) did not maintain the statistics for 2005/6. In this regard, the dti has already requested the NLB to do an audit of all applications since the inception of the National Lotteries Distribution Trust Fund (NLDTF).

2006/7 - In 2006/7, there was a delay in the appointment of Distributing Agencies.  Therefore, no calls for applications were made in 2006/7.
2007/8 - 8,375
2008/9 - 5,590

(b)(i) Number of funding applications approved

2005/6 - 2,039
2006/7 - 863 applications approved from previous call
2007/8 - 1,021
2008/9 - 870

(b)(ii) Number of funding applications rejected. The Board did not maintain the statistics for 2005/6. In this regard, the dti has already requested the NLB to do an audit of all applications rejected since the inception of the NLDTF.

2005/6 - refer (a) above
2006/7 - refer (a) above
2007/8 - 2,253
2008/9 - 4,183

(b)(iii) Number of funding applications carried over

2005/6 - refer (a) above
2006/7 - refer (a) above
2007/8 - 5,101
2008/9 - 537

(c)(i) Amount of allocated amount paid out in full

In view of present time constraints (c) (i) & (c) (ii) can only be responded to jointly, i.e. total payments.  Refer to the submission under (c) (ii).

With the conversion to the new system, the history of allocated amounts paid out in full by the NLDTF will take a lot of time to analyze. The NLB however, is prepared to do the analysis and furnish the information within 30 days if it is still required.

(c)(ii) Amount of allocated amount partially paid out (total submitted rather than partial)

2005/6 - R1, 012,029,000
2006/7 - R791,568,000
2007/8 - R633,636,000
2008/9 - R950,053,000

(c)(iii) Amount of allocated amount not paid out

2005/6 - R1, 494,318,000
2006/7 - R1, 484,768,000
2007/8 - R1, 773,871,000
2008/9 - R2, 160,273,000

Statement issued by Kobus Marais, MP, Democratic Alliance shadow minister of trade and industry, September 23 2009

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