Lottery’s multimillion-rand litigation files have vanished

Trade, Industry & Competition minister suspects collaboration between former National Lotteries Commission’s executive and lawyers

Legal files from the National Lotteries Commission (NLC), including litigation papers running into tens of millions of rand are missing.

This is according to trade, industry & competition minister Ebrahim Patel, who oversees the national lottery.

Attempts to get them from the lawyers involved “has not proved successful”, Patel told parliament’s trade portfolio committee last week.

“What it points me to is that we are onto something here, we need to probe harder,” Patel said, adding there may well have been collaboration between previous Lottery management and board members with law firms to deprive the society of “resources that the NLC should make available to poor communities, and to frustrate and undermine the efforts of the ministry to introduce good governance”.

Patel was replying to a question from DA’S Mat Cuthbert.

Included in the information Patel asked the Lottery for 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 ... [it] used public money, enormous quantities of public money, to fight oversight by this ministry over its affairs,” Patel told Cuthbert. “So I am even more interested than you in getting to the bottom of the legal costs.”

And when the Lottery reported to the trade portfolio committee on its most recent financial results last week, Scholtz told MPS all contracts with lawyers were cancelled because they were irregular.

“This has compounded the difficulties and we have to look at other options to get this info. We promised the minister we will get the info to him by March 31, but it is a challenge as we do not have access to any of this information,” she said.

Scholtz said the problem was compounded by “challenges” in the Lottery’s legal department with only one admin staff member since the head of the unit had resigned, and two people are on extended sick leave.

Though it had its own legal department with eight staff, the Lottery’s legal costs rocketed under the previous regime as the organisation used costly legal threats and litigation to silence critics and ward off attempts to hold it to account.

Soon after his three-month contract began last year, thenacting Lottery commissioner Lionel October instructed management to stop briefing lawyers on new or continuing matters because the AG had declared payments to the Lottery’s legal panel to be “irregular expenditure”.

Shortly before, the AG noted in a confidential management report to the Lottery on its findings for the 2021/2022 financial

year, 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 Auditor-general said.

Based on a sample of legal fees paid by the Lottery, the Auditorgeneral 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 between 2016 and 2021, the Lottery spent R8m in litigation against former staff, including R5.7m in matters involving whistle-blower Mzukise Makatse.