Files of Lottery’s multimillion-rand litigation have vanished, Patel says
Legal files from the National Lotteries Commission, including documents from litigation running into tens of millions of rand are missing, says trade, industry & competition minister Ebrahim Patel, who oversees the National Lottery.
Attempts to get them from the lawyers involved had not proved successful, the minister told parliament’s trade portfolio committee.
“What it points me to is that we are onto something that we need to probe harder.”
Patel said there might well have been collaboration between previous lottery management, including board members, with law firms to deprive the society of “resources that the NLC [National Lotteries Commission] should make available to poor communities, and to frustrate and undermine the efforts of the ministry to introduce good governance”.
He was responding to a question from the DA’s Mat Cuthbert, who was following up on an earlier response by the minister about the lottery’s spending on legal fees.
Late last year, Patel said he was unhappy with its response to parliamentary questions and asked for further information.
Included in the information Patel asked the lottery to supply are details of expenses incurred for litigation or legal advice involving himself and his department, any politician, media house or journalist, and the SA National Editors’ Forum (Sanef). Litigation against Patel included a failed attempt by the lottery to have a corruption investigation he initiated declared illegal, and litigation to force him to appoint a new lottery board.
“The NLC used lawfare against the ministry ... [it] used public money, enormous quantities of public money, to fight oversight by this ministry over their affairs,” Patel told Cuthbert.
“So, I am even more interested than you would be in getting to the bottom of the legal costs, which lawyers were used, what are the briefs that were given to them, were those briefs legitimate and were those expenditures properly authorised, [and] were any of those expenditures properly authorised? Were those expenditures for a proper public purpose, or were they in defence of corruption? My interest in this is enormous,” he said.
Quoting correspondence from February between himself and new lottery commissioner Jodi Scholtz, Patel said she had told him that the organisation was “experiencing challenges” in supplying the information he had requested.
“We are attempting to contact the relevant law firms, but this has not proved successful in obtaining the relevant information,” Scholtz told Patel.
When the lottery reported to the trade portfolio committee on its most recent financial results last week, Scholtz told MPs that all the contracts with legal service providers were cancelled because they were irregular.
“This has compounded the difficulties and we have to look at other options in order to get this info [relating to litigation and briefs.] We have promised the minister that we will get the info to him by March 31, but it is a challenge right now as we do not have access to any of this information,” she said.
Scholtz added that the problem was compounded by “challenges” within the lottery’s legal department because there was only one administrative staff member since the head of the unit had resigned, and two people are on extended sick leave.
Even though it had its own legal department with eight staff, the lottery’s legal costs rocketed under the previous executive and board as the organisation used costly legal threats and litigation to silence critics and to ward off attempts by Patel and his department to hold it to account.
Soon after he was appointed on a three-month contract last year, then-acting lottery commissioner Lionel October issued a memo instructing management to stop briefing the panel of lawyers on new or continuing matters. The reason, he said, was that the auditor-general had declared payments to the lottery’s legal panel to be “irregular expenditure”.
Shortly before, the auditorgeneral had noted in a confidential management report to the lottery on its findings for the 2021/2022 financial year, that “as per the analysis of the financial expenditure for the NLC, we noted that legal fees increased by R37m, which represents a 91% increase from the prior year”.
Legal fees had amounted to R78m, which accounted for 31% of all goods and services that were procured, the auditorgeneral said.
Based on a sample of legal fees paid by the lottery, the auditor-general found that 37% was for disciplinary hearings and cases at the Commission for Conciliation, Mediation and Arbitration.
The next highest category, 30%, was for “legal opinion on corporate governance and review of regulation”.
GroundUp reported that from 2016 to 2021, the lottery spent R8m in litigation against former staff, including R5.7m in matters involving whistleblower Mzukisi Makatse.
WHAT IT POINTS ME TO IS THAT WE ARE ONTO SOMETHING THAT WE NEED TO PROBE HARDER Ebrahim Patel Government minister