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Justice minister’s law firm bungled lottery corruption probe | News24



  • Three forensic reviews into National Lotteries Commission funding have discovered no proof of corruption.
  • The seven-month probe cleared Phillemon Letwaba, who was accused of nepotism in reference to dodgy lotteries grants, of any wrongdoing.
  • But the reviews, by attorneys Ndobela Lamola Inc, are affected by cast paperwork.

Three forensic reviews compiled by a high-profile agency of attorneys commissioned by the National Lotteries Commission to analyze corruption with lottery funding are affected by cast paperwork.

Justice Minister Ronald Lamola was a director within the agency, Ndobela Lamola Inc (NL Inc), when two of the reviews had been submitted.

GroundUp reported late in 2018 how a hijacked NPO, Denzhe Primary Care, was used to use for tens of millions of rand in lottery grants to construct a drug rehabilitation centre close to Pretoria. It was by no means completed and at the least R20 million of the R27.5 million given to Denzhe is unaccounted for

The story additionally revealed how the brother of the lotteries fee’s COO, Phillemon Letwaba, headed up a building firm that acquired the contract to construct the centre.

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NL Inc was subsequently commissioned by the lotteries fee to analyze and “to ascertain the veracity of allegations made” in newspaper reviews relating to Denzhe.

The reviews submitted to 2 successive ministers of commerce and trade included cast affidavits and proof of fee receipts, a bogus annual monetary assertion, and cast resolutions supposedly handed by Denzhe Primary Care.

These embrace a decision claiming Denzhe’s founding administrators had resigned and appointing three new administrators, who had been behind its hijacking. One of the resolutions additionally gave the three “new” administrators signing powers on the corporate’s checking account.

The paperwork are included in annexures to the three reviews, dated 3 March 2019, 3 May 2019 and 30 September 2019. The reviews, which have by no means been made public, had been rejected out of hand by two ministers charged with oversight of the lotteries fee.

When two of the reviews had been submitted to the lotteries fee, Lamola was certainly one of two administrators of the agency, which nonetheless bears his identify.

His identify options as a director on NL Inc letterheads included within the first two reviews. At the time, the agency was small: it had two administrators, three associates and two candidate attorneys.

Lamola was appointed to Cyril Ramaphosa’s Cabinet on 30 May 2019; 27 days after NL Inc produced its second report. But he’s recorded as having resigned as a director of NL Inc a number of months later, on 2 September 2019, in keeping with Companies and Intellectual Properties Commission (CIPC) data.

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The NL Inc reviews, which run to nearly 700 pages, encompass voluminous annexures that embrace duplicate copies of paperwork, and quite a few photocopied images which are barely legible.

The reviews are superficial, poorly researched and edited, and are affected by spelling errors and poor grammar. In some instances, annexures referred to should not appended.

Dodgy paperwork

Many of the paperwork that NL Inc quoted and in addition used to succeed in its conclusions are forgeries.

Dodgy paperwork within the reviews embrace:

  • 2018 financial statement included as an annexure, which was allegedly signed off by Denzhe founder Takalani Tshikalange. (Tshikalange was unaware that the dormant NPO had been hijacked till she received SMS alerts of actions of enormous sums into and out of its account). The signature on the financial statement is totally different to the one on an affidavit that Tshikalange made to the police quickly after she found Denzhe had been hijacked. Tshikalange informed GroundUp she knew nothing in regards to the monetary assertion and the signature was a forgery, and never hers.
  • A fraudulent affidavit supposedly sworn by Tshikilange quickly after the GroundUp story beneath investigation by NL Inc was revealed. Tshikalange has categorically denied data of this affidavit and says the signature on it’s a forgery.
  • A fraudulent Denzhe board resolution appointing controversial Pretoria lawyer Lesley Ramulifho as chairperson, changing Tshikalange, after the organisation was hijacked. The decision additionally gave signing rights on Denzhe’s checking account to Ramulifho and Liezl Moses, certainly one of his workers, in addition to Themba Mabundza, an energetic director of over 50 corporations, and a director of a number of corporations linked to Philemon Letwaba. Tshikalange denied data of the decision and mentioned her signature on it was cast.
  • A fraudulent Denzhe decision “reappointing” Tshikalange as Denzhe’s chairperson. Tshikalange informed GroundUp that she had by no means resigned as chairperson and her “signature” on this doc was a forgery;
  • Fraudulent proof of financial institution funds offered by Ramulifho, that purport to show that Ramulifho repaid Lottery funds “borrowed” from Denzhe to purchase two Ocean Basket restaurant franchises for himself. GroundUp has laid a criminal complaint with police, in addition to lodged a criticism with the Gauteng Legal Practice Council (LPC), setting out proof of how Ramulifho used cast paperwork in a authorized matter he’s pursuing in opposition to them. The LPC dismissed the complaint. GroundUp has utilized for this determination to be reviewed within the Gauteng High Court, and the LPC has elected to not oppose. A criminal complaint of perjury has additionally been laid in opposition to Ramulifho with police. Two cast “proof of payment” receipts totalling R535 240.31 to Ocean Basket are paperwork in GroundUp’s case.
  • An email exchange by which Tshikalange seems to reply questions on Denzhe, and fully exonerates Ramulifho of wrongdoing. Rather than a duplicate of the e-mail, which might show its provenance, the questions and solutions are contained in a typed doc. Tshikalange has confirmed to GroundUp that she acquired the questions from NL Inc, however mentioned she had by no means responded. She additionally confirmed that she had sworn a brand new affidavit to an unbiased investigator appointed by Patel to probe Lottery corruption, by which she denies key information and identifies a number of of the cast paperwork.

There is not any proof NL Inc was conscious it was coping with cast paperwork.

“In conducting our investigation, we have assumed the legal capacity of all individuals, genuineness of all signatures, the authenticity of all documents submitted to us as originals and the conformity to authentic original documents of all documents submitted to us as certified,” it mentioned within the reviews.

But the truth that paperwork weren’t correctly scrutinised throughout a forensic investigation, in addition to different obtrusive omissions within the reviews, raises questions in regards to the high quality and thoroughness of the investigations.

After its seven month probe, NL Inc cleared Letwaba, who was accused of nepotism in reference to the dodgy Denzhe grants, of any wrongdoing. The agency additionally stopped wanting making suggestions on a number of key points, together with steps the lotteries fee ought to take to recuperate the Denzhe funds.

Proceed

Instead, it advisable the lotteries fee ought to look forward to the end result of a civil lawsuit earlier than deciding find out how to proceed. This is an nearly three-year-old civil case by which Denzhe is suing Ado Krige and his spouse, Alet, the proprietor of the property the place the drug rehab is located, for R17 million for building work Denzhe mentioned was finished.

“We were … unable to make any finding on issues that are currently before the court,” the report mentioned.

On “whether any funds could be recovered or frozen immediately”, NL Inc said: “This step will be triggered by the outcome of the court process.”

But the case in opposition to Krige and his spouse might take one other two to a few years to return to court docket, “if it ever does”, in keeping with Paul Goosen, the lawyer appearing for them.

NL Inc did discover due diligence had not been finished and Denzhe didn’t have any rights over the property. It advisable that beneficiaries of lottery cash ought to provide proof of possession, a signed provide to buy, or permission to occupy earlier than grants had been paid.

But NL Inc dismissed the GroundUp story and advised the lotteries fee ought to search a retraction. It additionally advised inner leaks on the lotteries fee ought to be investigated, because it discovered the GroundUp story was based mostly on leaks.

Key witness by no means interviewed

NL Inc mentioned it made a number of makes an attempt “telephonically” to fulfill Krige and to go to the rehab.

“Krige advised us that he is only prepared to meet with us only if we will be negotiating a settlement. In this regard, we were unable to visit the site and to obtain Mr Krige’s version of events.

“During our telephonic dialog with Mr Krige, he suggested us that he has already met with individuals from the DTI [Department of Trade and Industry] and subsequently sees no level in assembly us,” NL Inc said.

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Krige told GroundUp he had previously met Mampane and former lotteries commission board chairperson Professor Alfred Nevhutanda and reported his concerns about Ramulifho and possible corruption. He had also met with representatives of the DTI and the lotteries commission.

“Why would I see so many various individuals after which refuse to see them [NL Inc]? They should show that I mentioned I’d solely see them if they might negotiate a settlement. It’s nonsense and it isn’t true.”

Keeping it in the family

Denzhe signed a contract with Upbrand Properties on 25 November 2016 to construct the rehab centre, according to an annexure to the third NL Inc report.

Johannes Letwaba, the brother of lotteries commission COO Phillemon Letwaba, was registered with the CIPC as a director of Upbrand.

Upbrand was only registered in January 2016; the same year it landed the contract to build the rehab centre.

Phillemon Letwaba was placed on special depart whereas being paid more than R265 000 per month in March 2020, after the lotteries commission board appointed audit firm Sekela Xabiso to investigate alleged lottery grant corruption.

Johannes Letwaba subsequently resigned from Upbrand on 1 March 2017, according to CIPC records.

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During the period that he was still a director, and according to bank statements, Upbrand received at least four payments totaling R3 588 700: R123 500 on 21 October 2016, for “first part building”; R61 200 on 10 November, for “second part building”; R3 350 000, on 23 November, for “third part building” and R54 000 on the same day for “labour building”.

In January 2018, after Johannes Letwaba’s resignation, there were further payments to Upbrand Properties of R900 000 and R100 000.

After his resignation on 1 March 2017, he was replaced on the same day as Upbrand’s sole director by Keneilwe Maboa, the wife of his first cousin, Karabo Sithole, who happened to be the treasurer of Denzhe at the time.

She subsequently resigned on 31 October 2018 and was replaced, again on the same day, by Kenneth Sithole, another first cousin of the Letwaba brothers. Sithole resigned on 21 July 2020 and was replaced by Jim S’Thembiso Skosane, who is now Upbrand’s sole director.

Yet, NL Inc reported:

In our interview with Mr Johannes Letwaba, he informed us that he does not know Kenneth Sithole.

Despite this denial, Kenneth Sithole and Johannes Letwaba are co-trustees, with Phillemon Letwaba’s wife, Daisy, of the Upbrand Properties Trust.

However NL Inc did find Johannes Letwaba was the sole director of Upbrand Properties when it signed the contract to construct the rehab.

Yet, it cleared Phillemon Letwaba of any breaches of the lotteries commission’s policy on conflict of interest involving the awarding of the Denzhe construction contract to Upbrand Properties.

The report did find the lotteries commission’s conditions in the grant agreement were “too relaxed relating to the appointment of contractors”.

It recommended that the lotteries commission impose a condition in the grant agreement that “beneficiaries should report on the procurement of contractors and supply proof that an open and aggressive course of was adopted within the appointment of service suppliers”.

But NL Inc found Tshikalange had stated in the [forged] affidavit that Upbrand was “appointed by means of a aggressive course of, as required by the grant settlement. Further, Ms Tshikalange states that Denzhe had no prior data of those corporations nor had any relationship with its administrators”.

“… in any respect materials instances, the CEO [Letwaba] was not conscious of any battle scenario that existed. Accordingly, we discover that there was no battle of curiosity or perceived battle of curiosity on the a part of the COO in relation to the Denzhe undertaking.”

Ministers unhappy

It is clear from their responses that neither former trade and industry minister Rob Davies, who received the first report, nor his successor, Ebrahim Patel, who was the recipient of the second and third reports, were satisfied with the quality and thoroughness of the investigations.

After the first report, dated 3 March 2019, was submitted to Davies, the minister replied, pointing out serious omissions. He listed 13 issues the NL Inc report had failed to deal with.

These included:

  • A failure to “interview officers talked about within the report”.
  • A failure to supply a breakdown or cost analysis of how the R27.5 million in lottery funding allocated to Denzhe was spent, besides the mere  R535 240 paid for two Ocean Basket franchises.
  • The report was “silent” on Letwaba’s role in the approval process of Denzhe’s application;
  • No evidence was produced of a site visit to the rehab.
  • There were problems with an affidavit supposedly sworn by Tshikilange, the founder of Denzhe.
  • Annexures were referred to, but not included in the report.

Davies asked the lotteries commission to extend the terms of reference for its investigation to include “misappropriation of funds” for the rebuilding of Vhafamadi High School in Limpopo, which was destroyed during a protest.

GroundUp reported the new school experienced serious structural issues less than two years after it was built with a R28.3 million lottery grant.

Davies also asked the lotteries commission to probe “alleged fraudulent actions” involving a R6 million grant for a music festival in East London.

The lotteries commission then extended NL Inc’s mandate.

A new report, dated 3 May 2019, was handed to it and a final report in September 2019. In neither was there anything to suggest the firm had investigated Vhafamadi, as Davies had requested.

Month

When Patel, the new trade and industry minister, who had been appointed less than a month earlier, received the second report he was far from satisfied with it.

Patel wrote to then-lotteries commission board chairperson Professor Alfred Nevhutanda recommending criminal charges be laid and steps taken to recover the money given to Denzhe.

“In view of the 2 forensic investigation reviews out of your unbiased investigators, and in gentle of the investigation final result, it’s evident that the proactive funding allotted to Denzhe was not used for its supposed goal,” Patel wrote. “… I thus suggest restoration of the funds paid to Denzhe and the pursuit of a prison case beneath the Public Finance Management Act.”

The lotteries commission has never laid any charges, despite the minister’s request.

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After receiving the third report, Patel lastly misplaced persistence with the investigation and commissioned his own independent inquiry into corruption at the lotteries commission.

In September last year, Lionel October, the director-General of the trade and industry department, briefed Parliament on the independent investigation and confirmed a dossier was handed to the Hawks to investigate further.

The docket details investigations into multimillion-rand grants to four NPOs, which are linked to Phillemon Letwaba or members of his family, and to Ramulifho.

The lotteries commission subsequently made good on its menace to sue Patel. Judgment in this case has been reserved.

Numerous problems

The reports are littered with further problems.

For example, NL Inc failed to check with the Department of Social Development on who the official directors of Denzhe were. Had they done so, they would have discovered Ramulifho is not, and has never been, a director of Denzhe.

Department records for Denzhe supplied to GroundUp in May 2021 also revealed it was both dormant and non-compliant and had not met statutory reporting requirements since 2013.

Another example of poor fact-checking by NL Inc is evident in one of the questions despatched by it to Tshikalange.

It refers to a fraudulent affidavit by which she appears to say she is the applicant in a civil lawsuit against Krige, his wife and their organisation. NL Inc included a copy of the summons in its reports.

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Had it checked the document in its possession, it would have seen the plaintiff in this case was Denzhe, not Tshikalange, who was not mentioned anywhere in it.

And then there are the financial statements that do not add up.

The Lotteries Act specifies that recipients of large grants – R10 million or more – must submit audited financial statements.

But the only copies of Denzhe’s annual financial statements in the reports are for 2018 and are unsigned. There is no indication NL Inc questioned the lack of annual financial statements for previous years.

Contrary to what the Lotteries Act requires, these financial statements are not audited and were merely “reviewed by a consulting firm, Dalia Consulting. The statements should not signed by an auditor and there’s no observe quantity.

Dated 25 April 2019, the monetary statements have apparent inconsistencies, and lift questions as to whether or not they had been correctly scrutinised.

The monetary assertion signifies Denzhe owns property price R13.27 million. This, nonetheless, just isn’t potential, as NL Inc’s personal reviews determine issues with the transaction between House Regeneration – the place the drug rehab centre is located – and Denzhe.

Even if Denzhe’s administrators did plan to purchase the property, the sale by no means materialised and the property by no means belonged to it.

Non-current belongings are omitted from the monetary statements, leaving a “missing” steadiness of R4.48 million.

An quantity of R1.58 million is listed as a legal responsibility, which within the notes part is attributed to Value Added Tax (VAT) payable. But Denzhe has by no means been registered for VAT. And even when it had been, it might have been close to not possible for it to “owe” SARS R1.58 million in VAT.

Another obtrusive inconsistency is within the income columns, which solely listing an R18 million grant from the lotteries fee. Yet, NL Inc had in its possession a abstract of tranches paid to Denzhe, totalling greater than R27.5 million.

There are not any opening balances, with no references to what had occurred in earlier years. The notes spell out how depreciation is calculated, however by no means present the calculation.

Apart from ludicrous bills of R2.166 million for employees for a rehab centre that’s unfinished and non-operational, there are not any “line items” comparable to financial institution prices, phone prices or stationery, which one would count on from an working centre. And with such a wage invoice one would count on liabilities comparable to PAYE and UIF, however none are listed.

The annual monetary assertion lists R9 million in fairness, describing it as “share capital”. It is unclear why anybody would make investments R9 million in an NPO. This cash can be not mirrored within the financial institution steadiness.

The government director of Dalia, Valentine Zinhumwe, mentioned he knew Ramulifho however had not heard of Denzhe or Upbrand Properties when initially contacted. Later, he referred to Ramulifho as a shopper and mentioned he couldn’t talk about his shopper’s monetary affairs.

“You are free to write what you feel is true but I can’t comment further than this,” he mentioned.

It just isn’t recognized how a lot NL Inc was paid for the three-part investigation, which was carried out over the course of 2019.

But in a written answer to a query posed by Mat Cuthbert, the DA spokesperson on commerce and trade, lotteries commissioner Thabang Mamopane mentioned NL Inc had earned greater than R19 million in charges for work finished for the lotteries fee between 2016 and 2020.

This reply to Parliament reveals NL Inc booked extra enterprise with the lotteries fee than every other legislation agency between 2016 and 2020. It accounts for 25% of the R75.69 million paid to 37 legislation companies over the four-year interval.

Faceless informants

Finally, NL Inc dismissed the GroundUp story out of hand.

The story was based mostly on leaked and public paperwork, public data and different data within the public area, in addition to first-hand data based mostly on a go to by GroundUp to the rehab, and interviews with a number of key individuals who had been all recognized by identify.

But NL Inc advised the lotteries fee ought to search an apology and retraction of the article. Weighing up “the evidence of two affidavits” (each forgeries) in opposition to “the article with faceless informants”, NL Inc discovered no substance within the allegations made by GroundUp.

Right of reply

Questions had been despatched to Lamola through electronic mail to his spokesperson, Chrispin Phiri. When a reminder was despatched to Phiri that the seven-day lengthy deadline was about to run out, he responded: “Thanks sir, please note the law firm will be dealing with the enquiries.”

Pressed additional, Phiri mentioned: “The work was done not in his personal capacity. It was done under the auspices of the client through the firm. So, the firm can best explain its process and which director did what, etc.

“None of those processes pertain to the person Ronald Lamola. You must separate the 2.”

He added the lotteries fee “did not contract with Lamola, but a separate entity in the form of Ndobela Lamola Inc”.

Detailed questions had been additionally despatched to Rhulani Ndobela, now the only real director of NL Inc.

He initially responded, saying he was “not at liberty to respond” resulting from a shopper confidentiality settlement with the lotteries fee.

But the next day, Ndobela despatched a second response, by which he described the questions despatched to NL Inc as being “littered with [a] complicated set of logical incongruity”.

He confirmed Lamola “has indeed resigned”, saying: “The details and extent of our involvement are covered by attorney and client confidentiality, and thus, you are most welcome to address your questions on this matter directly with our client.”

“We have no further statements in so far as the rest of the allegations made against our firm.”

We despatched the lotteries fee detailed questions.

Its attorneys responded with a short letter stating the issues referred to had been beneath investigation by the Hawks and SIU.

“We have subsequently advised our client not to respond to your questions until the above investigations have been concluded.”

Both Lesley Ramulifho and Phillemon Letwaba did not reply detailed questions despatched to them.

Ramulifho was despatched the questions through WhatsApp and two electronic mail addresses he makes use of. Letwaba was despatched questions through a WhatsApp quantity on which GroundUp has beforehand communicated with him.



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