Lottery cracks down on sky-high spending on lawyers
Minister demands details of legal costs
Minister of Trade, Industry and Competition Ebrahim Patel says he has asked the National Lotteries Commission for details of legal expenditure. Archive photo: Ashraf Hendricks
- Minister Ebrahim Patel has asked the National Lotteries Commission for details of legal costs involving himself, media houses and journalists.
- Legal expenses last year skyrocketed to R78-million.
- âIrregularâ legal and information technology contracts are to be terminated.
- The Acting Commissioner has told staff not to brief any lawyers on its legal panel.
The National Lotteries Commission (NLC) has cracked down on fees running into tens of millions of rands paid to lawyers, including fees paid in matters involving the Minister of Trade, Industry and Competition, and the media.
The NLCâs legal fees in the 2021/2022 financial year skyrocketed to R78-million, nearly twice as much as the previous year, according to the Auditor-General.
The NLC has also cancelled âirregularâ Information and Communications Technology (ICT) contracts, new board chairman Barney Pityana told Parliamentâs Trade, Industry and Competition portfolio committee last month.
âAll irregular ICT and legal contracts were terminated on 16 September 2022,â Pityana told MPs.
And, responding last week to a written parliamentary question by Democratic Alliance MP Mat Cuthbert, Minister of Trade, Industry and Competition Ebrahim Patel said he had asked the NLC for details of expenses incurred for litigation or legal advice involving himself or any politician, media house or journalist, and the South African National Editorsâ Forum (SANEF).
The background to this, and the steps taken by the NLC to clamp down on exorbitant legal expenses, are outlined in a recent memo to the NLCâs management from acting Commissioner Lionel October. October wrote that since the Auditor-General had declared payments to the NLCâs legal panel to be âirregular expenditureâ, management should stop briefing the panel of lawyers on new or continuing matters. A new âcompetitive bidding processâ for legal services ⊠if still requiredâ would be initiated, he added.
Auditor-Generalâs damning report
The Auditor-General noted in a confidential management report to the NLC on its findings for the 2021/2022 financial year, that: âAs per the analysis of the financial expenditure for the NLC, we noted that legal fees increased by R37-million, which represents a 91 percent increase from the prior year,â. Legal fees had amounted to R78-million, which made up 31% of all goods and services that were procured, the Auditor-General said.
Based on a sample of legal fees paid out by the NLC, the Auditor-General found that 37% of these fees were for âdisciplinary hearingsâ and âCCMA cases.â The next highest category, 30%, was for âlegal opinion on corporate governance and review of regulationâ.
The Auditor-General also highlighted issues with the NLCâs information technology spending in its management report.
âThe status of information and communications technology (ICT) audit outcomes remain stagnant as they show no improvement in addressing the previous yearâs audit findings relating to user access management controls.
Expensive legal battles
GroundUp has previously reported on the NLCâs legal expenditure, including litigation against former staff. Included in this earlier expenditure was almost R1-million spent on unsuccessful legal attempts to stop the publication of information about recipients of Lottery grants, including how much they had received.
At least R720,000 was spent on a failed legal battle with Ebrahim Patel, the Minister of Trade, Industry and Competition. The NLC had sent the minister a letter of demand giving him a 24 hour deadline to hand over a dossier with details of an investigation commissioned by Patel. A judge dismissed an application to have the appointment of the investigators declared illegal.
The NLC also spent R5.7-million in a legal battle with a former employee, Mzukisi Makatse, who was suspended and then dismissed after he was accused of insubordination when he refused to sign off on a dodgy 2017 grant for a music festival in East London.
Ndobela Lamola, Justice Minister Ronald Lamolaâs former law firm, which acted against Makatse, earned R19-million over four years for legal work for the NLC.
Minister demands answers
In his answer to Cuthbertâs questions, Patel made it clear that he was not satisfied with the NLCâs response to his request for information, and said he had requested additional details about âspecific matters covered in legal briefs.â
He said he had asked the NLC to furnish details of âthe total legal and
consultancy costs of the various matters involving the Ministry, âincluding but not limited toâ
- litigation on the appointment of an acting chairperson;
- litigation on disclosure of information and appointment of forensic investigators;
- litigation on the appointment of an NLC board;
- legal or consultancy advice sought on the powers of Minister or the Department of Trade, Industry and Competition relating to the previous NLC board, including its removal;
- legal or consultancy advice sought on the disclosure of beneficiary information;
- legal or consultancy advice sought on the appointment of forensic firm Nexia SAB&T by the DTIC and the appointment of the SIU [Special Investigations Unit] by the President;
- media consultancy or lobbying costs involving matters relating to the Ministry or the DTIC;
- legal or consultancy costs in relation to disciplinary proceedings commenced by the Minister against members of the Board;
- legal and consultancy costs of the various matters involving any member of Parliament; and
- legal and consultancy costs of the various matters involving any journalist or media house or SANEF.
Patel said: âThe new board is currently reviewing the legal costs of the NLC. I will request the board to consider that the review should cover whether legal costs are justified; and to adjust future NLC budgets based on the outcome of the review.â
He said he would also ask for a review of work done by NLCâs legal unit, which has seven members of staff.
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