Staff memo rocks Lotto

2012-02-05 16:00

Thanduxolo Jika and Jeanne van der Merwe, City Press

Johannesburg - A memo by National Lotteries Board senior staff claims that former chief executive Vevek Ram received pay from a lottery beneficiary with the full knowledge of the board and worked as CEO for 12 years without an employment contract.

The memo from a key national lottery funding committee lifts the lid on new allegations of corruption, incompetence and illegality in the organisation that controls about R3bn in payouts annually.

Ram suddenly resigned two weeks ago.

The memo charges that 10 staff members were fired after they raised questions about his lack of a contract and his management.

The lack of a performance contract is considered a serious breach of corporate governance.

The memo to Trade and Industry Minister Rob Davies, a copy of which is in the possession of City Press, was written by five members of the lottery’s arts and culture distributing agency, the body in charge of awarding hundreds of millions of rands each year to organisations and charities that apply.

Auditor General

The ministry and National Lotteries Board hit back, challenging the memo’s claims. They said Ram had cleared his association with the lottery beneficiary.

Ram denied the claims, but could not explain why his alleged lack of a contract had been raised by the Auditor General.

Lottery critics say the claims in the memo add to the burgeoning controversy over the activities of the organisation.

The document exposes “rivalry and animosity” between the board and the distribution agency, and suggests that there are serious irregularities in the awarding of lottery grants to beneficiaries.

The board is facing increasing pressure, including public protests by non-governmental organisations, over its funding practices and claims that maladministration and corruption are rife.

The memo, written in July 2011, just before the expiry of that distributing agency’s term, emerged after City Press revealed that Lotteries Board chairperson Alfred Nevhutanda’s daughter was employed by a company that received R41m in funding.

Further allegations raised in the letter include:

» That there were “inexplicable” discrepancies from month to month in the amounts available for payout and the number of pending funding applications, suggesting “incompetence and mismanagement” of both the funds and the applications;

»That the board illegally took control of deciding lottery grants for the arts distributing agency even though the law separates these powers;

» That the board illegally appointed an appeal and review committee for lottery grants, a situation that is not provided for in law.

The distribution agencies - there are three - report directly to the minister and decide which applicants will get funds.

Decisions are supposed to be independent and can only be reversed by the minister if there are discrepancies or queries.

The memo suggests that the board was eager to get rid of the distribution agency’s members by advertising for replacements behind their backs before their term ended.

They claimed agency members traditionally served two terms of five years.

In the letter, agency members begged Davies to extend their term so that they could finish adjudicating the pending applications.

Illegal

Instead, Davies had authorised the board itself to take over the functions of the agency, even though this was illegal under the Lotteries Act, they claimed.

Of the letter’s five signatories, only one, Professor Dorcas Jafta, was reappointed to the agency in November.

One source who has knowledge of the memo said the minister had not acknowledged receiving the memo and had not intervened decisively, which resulted in delays in the distribution of funds to beneficiaries.

“There were a lot of things that were being done illegally in the lottery and the minister seemed to turn a blind eye, even though these issues were raised with him,” said one insider with knowledge of the memo.

Jafta said she didn’t want to comment on the merits of the memo, but was happy that there was restructuring taking place within the board.