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JEREMY MAGGS:  The GroundUp website reporting that only two out of 15 forensic reports into fraud and corruption commissioned by the previous board of the National Lotteries Commission (NLC) were ever fully implemented. According to the NLC commissioner, Jodi Scholtz, who’s with me now on the programme, one report was not implemented at all and 12 were only partially implemented. Jodi Scholtz, a very warm welcome to you. Maybe a good starting point is detailing the specific areas of fraud and corruption that the reports commissioned and were being investigated.

JODI SCHOLTZ: Good afternoon, Jeremy, and good afternoon to your listeners. Yes, a lot of the indications, the recommendations in the report related to a lack of understanding about the role of the … we used to have agents at the National Lotteries Commission, what they do versus what we do as the NLC, recommendations around reporting certain cases to the South African Police Service (Saps), reviewing our internal processes, our grant agreements, which is the contractual document between the National Lotteries Commission and our grantees, putting NPOs (non-profit organisations) and directors onto our delinquency process and following through with that. So there were a range of recommendations that we’ve looked at. We’ve obviously been able to unpack our processes and then beef up those processes and introduce a range of internal controls.

JEREMY MAGGS: I wonder what the main reasons were then behind the failure to implement or at least fully implement those recommendations.

JODI SCHOLTZ: This is my personal view …

I think people were hiding things and so didn’t want this to come to light and so just stalled and didn’t implement any of these.

JEREMY MAGGS: So it suggests, Jodi Scholtz, that there is a problem with organisational culture, or at least structural issues, that allowed all of this to lapse.

JODI SCHOLTZ: Yes. So what we’ve done is we’ve done integrity testing during last year. We’ve used that as a risk indication. The board has approved the lifestyle audit policy about two weeks ago, and we are moving forward to start conducting lifestyle audits. Obviously, looking at the governance structures, the board has put a range of structures in place, and we are working with a culture in terms of rolling out an anti-bribery and corruption programme, which is based on the ISO 37001 standard. So it’s having conversations about what is a corrupt practice, what is unethical behaviour, and having these conversations throughout the National Lotteries Commission at head office and at our provincial offices.

Read: NLC to lay criminal charges, civil litigation against former board members

JEREMY MAGGS: All well and good, but many would suggest far too late.

JODI SCHOLTZ: You know, I think that’s a very fair point, but we are where we are, and we are taking steps to address the fraud and corruption and the internal control deficiencies.

JEREMY MAGGS: Are you able to quantify for me the financial magnitude of the problem uncovered in these reports? What sort of numbers are we talking about?

JODI SCHOLTZ: So a lot of these dovetail with the SIU (Special Investigating Unit) report and the SIU has estimated the quantum is around R1.4 billion.

Read: NPA under pressure to bring lottery looters to court

JEREMY MAGGS: How should people who play the lottery be digesting this? It doesn’t fill one with much confidence, does it?

JODI SCHOLTZ: For those who are playing the national lottery, monies are going to good causes, and I think that’s why I’ve been tasked with this responsibility to make sure that our beneficiaries themselves, because the SIU has also implicated a range of NPOs that have been complicit in this corruption, so it’s having these conversations and indicating that the money is intended for good causes.

We’ve started on a process where we visit all the projects, we are looking at partnerships with a range of key stakeholders to ensure that money is going where it must go.

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JEREMY MAGGS: But you’ll concede the optics in that respect don’t look good.

JODI SCHOLTZ: Look, I think that’s a fair point, yes.

JEREMY MAGGS: So how are you going to change it?

JODI SCHOLTZ: What we’ve done is our process has been revised. So before, people weren’t capturing ID numbers, we are now able to capture ID numbers and our systems are linking these with the South African Fraud Prevention Services (SAFPS). We’ve got links with Home Affairs, CIPC (Companies and Intellectual Property Commission), to make sure that beneficiaries are who they say they are. We then follow up with an inspectorate visit. We also then, when we do monitoring and evaluation, it’s a further independent unit that also does that.

Read:
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So there’s a range of compliance measures and internal controls that we have put in place and we are starting to see the difference. This has, however, had an unintended consequence that our process is slightly delayed and so we are engaging with beneficiaries to see how we can assist and process faster.

JEREMY MAGGS: What about consequence here, given the investigations implicated board members and as you’ve said, top management, do we know at this point whether specific action has been taken against those named and implicated?

JODI SCHOLTZ: In terms of the SIU, they’ve handed over 26 files to the NPA (National Prosecuting Authority). We are part of a task team with the NPA and the SIU to make sure that we move on these cases because I agree with the sentiment out there that it’s taken too long and so we need to make sure that there are consequences meted out.

In terms of the internal staff, 10 people had been suspended, five have resigned. What we do is we move to recover funds from those individuals and there’s civil action that is taking place.

JEREMY MAGGS: Are you confident that you’re on the right track?

JODI SCHOLTZ: Yes, I am.

JEREMY MAGGS: All right, Jodi Scholtz, thank you very much indeed, commissioner at the National Lotteries Commission.

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