Its latest claim of six years of clean audits — known as unqualified opinion — was made in Parliament this week when the Commission appeared before the Portfolio Committee on Trade and Industry on Tuesday.
The high-level delegation, which included the NLC’s Commissioner, chairman of its board, Chief Financial Officer, and head of legal, were left scrambling after DA committee member Mat Cuthbert challenged them on the claim.
Posing a question, Cuthbert said: “Just for clarification … you spoke of six clean audits. But if we look at the years 2014/15 to 2018/2019 … 2014/2015 was ‘financially unqualified’ followed by a clean audit, another clean audit, a qualified audit, and a clean audit.”
“So I think we should be accurate about what we say in this house. I don’t think we should report six clean audits if this is not the case,” he added.
The NLC’s audit for 2017/18 was, in fact, qualified.
The NLC delegation hastily conferred among themselves before CFO Xolile Ntuli backpedaled and said, “The six refer to us to achieving 100 percent of targets.”
The NLC has consistently bragged about an unbroken record of clean audits.
Besides this week’s incorrect claim, NLC board chairman Alfred Nevutanda misled Parliament in November last year when he claimed the organisation had received a clean audit five years in a row.
A year earlier, NLC Chief Operating Officer Phillemon Letwaba claimed four years of clean audits in this tweet and again at the beginning of this video when he was interviewed on eNCA about allegations of corruption at the NLC. This falsehood was repeated in a media statement challenging GroundUp reports of alleged nepotism involving Letwaba in Lottery-funded projects in Kuruman.
“The NLC has adequate controls in its grant-making processes. This is evidenced by the achievement of a clean audit for the past four years,” the NLC statement said. “The clean audit covers the grants specifically and it is important to note that the NLC has achieved 100% performance on all its targets.”
This was in spite of the fact that the NLC’s financial statements for the year ending 31 March 2018 was qualified. On 20 August 2018 the Auditor-General issued a report to Parliament in which he raised issues about the NLC’s financial reporting.
He reported that the NLC leadership did not exercise oversight responsibility on financial reporting and “management did not ensure that the applicable reporting framework … was correctly applied in terms of consolidation of the annual financial statement of the group”.
In January this year, the NLC suddenly switched tack on its claim of clean audits in a media release about GroundUp reporting. Instead, it now claimed that it was in fact the National Lotteries Distribution Trust Fund (NLDTF) which had received clean audits. The NLDTF is merely a “purse” into which the licenced Lottery operator — currently Ithuba — each week pays in the NLC’s share of tickets sold for distribution to “good causes”. It has no direct relationship with grantees, other than paying out grants as instructed by the NLC.
“The NLC would like to assure all stakeholders, beneficiaries and members of the public of the integrity of our processes and systems around regulation of lotteries and grant funding,” the NLC said in its statement. “The clean audit opinion on the National Lottery Distribution Trust Fund from the Auditor General of South Africa for four consecutive years bears testament to this.”
But this did not stop the NLC claiming in Parliament this week that it had received six years of clean audits, before being forced to backtrack.