Looted Lottery: How NLC became a playground for the corrupt

WHAT was once a beacon of hope for communities across South Africa became a multi-billion-rand gravy train for a corrupt elite who exploited the very system meant to uplift the poor.

The National Lotteries Commission (NLC), established to distribute funds for sports, arts, culture, and charitable causes, has been exposed as one of the most brazen examples of institutional rot in the country’s recent history.

This week, the Special Investigating Unit (SIU) delivered a devastating briefing to Parliament’s Standing Committee on Public Accounts (Scopa), revealing how senior NLC officials and board members orchestrated a sophisticated scheme that siphoned hundreds of millions of rand through fictitious non-profit organisations, fake trusts, and complicit professionals.

At the heart of the scandal is what SIU chief forensic investigator Mashudu Netshikweta described as a “grand scheme” involving collusion between NLC executives and external enablers. He said: “It wasn’t just transfer fees. The full purchase price of houses was paid with illicit funds… These funds were transferred shortly after receipt, often through attorneys or companies.”

The corruption began no later than 2014, when Philemon Letwaba, then chief operations officer, allegedly started hijacking legitimate NPOs and NPCs to create shell entities that would apply for grants under false pretences. According to the SIU, these applications were approved by NLC board members like Professor Alfred Nevhutanda — a man who styled himself as an academic but whose honorary title came from a questionable international energy academy.

According to the SIU, one person could use four or five different NPOs to submit applications, and these applications would be approved… Neither system captured the ID numbers of the applicants, only the names of the NPOs or NPCs. This gaping loophole allowed individuals to apply multiple times under different names and receive repeated funding without detection.

Since President Cyril Ramaphosa authorised the SIU to investigate the NLC in November 2020, three phases of inquiry have been launched. Phase Three is ongoing, expected to conclude by December 31. Together, the total value of mismanaged and potentially stolen funds amounts to more than R1.4 billion, with contracts under scrutiny valued at R2bn. Yet, only R9.5 million has been recovered so far.

Preservation orders have frozen R78.2m via the Asset Forfeiture Unit and R37.3m through the Special Tribunal. Pension freezes have also stopped R6.3m from being accessed by implicated officials.

But for every asset preserved, there are countless more lost. “We are following the money trail,” Netshikweta said. “But this takes time… requesting even a single bank statement can take up to four weeks.”

And while the SIU works tirelessly, the scale of the looting continues to grow. “The R2bn figure refers to the cumulative value of current investigations,” he warned. “New allegations keep coming in.”

In one of the most shocking revelations, investigators found that entire properties had been purchased using lottery funds. Homes worth millions were traced back to NLC officials, their families, and associates. In some cases, attorneys facilitated the transfers.

“All properties identified as having been purchased with funds originating from the NLC, particularly those linked to NLC officials, have been preserved,” Netshikweta said.

Even more disturbingly, professional service providers — auditors, lawyers, and accountants — played a critical role in enabling the fraud. They helped falsify documents, forge financial statements, and assist in laundering proceeds. “These audit firms and lawyers must be held accountable,” Netshikweta said. “Wherever we find irregularities, we refer them for blacklisting.”

Yet, despite calls to flag these firms in state records and professional bodies, many continue to operate freely — raising serious questions about the integrity of oversight institutions.

Proactive funding — designed to allow the NLC to fast-track urgent projects — became the mechanism through which much of the loot was extracted. Without proper oversight, board members and executives used it to approve projects without due diligence.

“Proactive funding should not be removed,” Netshikweta said. “But the previous administration abused it because there were no checks and balances. Individuals could initiate projects and misappropriate funds without any oversight. There was no proactive funding committee, no separation of duties, nothing.”

Projects like the Motheo Sports Complex in Soweto and the eDumbe Old Age Home in KwaZulu-Natal were cited as textbook examples of how the system was abused. Millions were paid out, yet little or no work was ever completed. “Only R6m was used to kickstart the eDumbe project,” Netshikweta revealed.

While the culprits lived lavishly, the consequences for ordinary South Africans were devastating. Funds earmarked for victims of gender-based violence, elderly care, and community development were instead funnelled into private accounts, luxury homes, and exotic vehicles.

“People stole from society’s most vulnerable, elderly people, victims of gender-based violence, and children who go without food,” said Action SA MP Andrew Beesley during the hearing. “It is absolutely shocking that such actions have been allowed to happen.”

The ANC’s Helen Neale-May echoed the sentiment: “This is a betrayal of public trust on an overwhelming scale… The funds were meant to uplift communities, support non-profits, and drive social development. Instead, they ended up in the pockets of those tasked with overseeing their distribution.”

Despite the overwhelming evidence, not a single individual has been jailed. More than 15 suspects have been referred to the National Prosecuting Authority (NPA). “Charges are expected soon,” Netshikweta said, explaining that a new prosecutor had recently been assigned to the case.

However, the ANC’s Farhat Essack expressed frustration: “Why have none of the implicated individuals ended up in orange overalls? It’s disgusting that people have stolen money from the poorest of the poor and still walk free.”

The MK Party’s Khulekani Madlala voiced similar concerns: “If they haven’t been arrested, we’re indirectly enabling corruption ourselves.”

The SIU also highlighted glaring deficiencies in the legal framework governing the NLC. Investigators lack the power to subpoena bank statements directly from financial institutions, forcing them to rely on potentially fraudulent documents submitted by applicants.

“MNEs (monitoring and evaluation officers) have no way of verifying whether the bank statements are genuine,” Netshikweta said. “They lack the legal powers to subpoena actual bank statements.”

He called for legislative reform: “Parliament should amend the NLC Act to give MNEs subpoena powers. Otherwise, their oversight function is compromised.”

The SIU has also submitted proposed amendments to the Department of Justice regarding its investigative powers under the SIU Act, urging lawmakers to expedite reforms. “Investigations can only begin after a proclamation is issued,” Netshikweta said. “That can take a year — and by then, money may already be gone.”

What makes the NLC scandal particularly damning is the profile of those involved. Far from being ignorant opportunists, many were highly educated, professionally qualified, and deeply embedded in the system.

Letwaba, who allegedly masterminded the fraud, holds a BCom in Accounting and Finance and studied at Wits Business School. Nevhutanda claimed to be a professor, though his credentials were based on an honorary degree. “These people are not uneducated,” MK Party’s David Skosana said. “They are graduates with impressive credentials, but shameless.”

The ANC’s Thalente Kubheka put it bluntly: “They used their knowledge and experience to orchestrate large-scale corruption. This is a perfect case illustrating such conduct.”

As the SIU prepares to wrap up its third phase of investigation, the question remains: will South Africa finally see justice served? “The fight against corruption is ongoing,” Lekgetho said. “Some of those implicated are actively fighting back, but we have taken considerable steps to trace the funds and freeze properties bought with illicit money.”

But unless the political will exists to overhaul the system, prosecute the guilty, and hold oversight bodies accountable, the cycle of corruption will continue.

Scopa chairperson, Songezo Zibi, concluded with a warning: “We cannot allow this to become another chapter where we talk endlessly and do nothing. We need results. We need accountability. We need justice.”

Until then, the legacy of the NLC will remain not as a symbol of national unity and development — but as a monument to greed, incompetence, and betrayal.