An investigation by a forensic investigations firm recommended that the National Lotteries Commission (NLC) claim back hundreds of thousands of rands it paid to a company that advised it on ethics.<\/p>\n
ProEthics is one of several entities named by TSU Investigations Services in an October 2023 report into procurement irregularities of hundreds of millions of rands.<\/p>\n
As reported by GroundUp on Tuesday, ProEthics attempted to block us from running this article. <\/p>\n
The report, Irregular Expenditure: Truth Revealed<\/em>, uncovered fraud, corruption, and extensive circumvention of \u201cprocurement processes\u201d. It was commissioned by the NLC and used in the disciplinary inquiries of several staff members.<\/p>\n TSU found that ProEthics charged the NLC for management fees it was not entitled to, and over-invoiced by thousands of rands for a third-party payment on behalf of the NLC and then retained the balance. ProEthics was also unable to produce receipts for an advance payment for corporate gifts.<\/p>\n The NLC was on the verge of taking legal action against ProEthics and other entities named in the report. But just as litigation was about to begin, President Cyril Ramaphosa signed an amendment to his 2020 Presidential Proclamation, which finally allowed the Special Investigating Unit (SIU) to investigate procurement issues at the NLC.<\/p>\n The TSU investigation had been initiated by the NLC because the original proclamation only allowed the SIU to investigate dodgy grant funding and not procurement.<\/p>\n The amended proclamation is not open-ended and only authorises the SIU to investigate 21 specific cases, including ProEthics. Most, if not all, were a focus of TSU\u2019s investigation.<\/p>\n ADVERTISEMENT<\/p>\n CONTINUE READING BELOW<\/p>\n<\/div>\n<\/div>\n Lesedi Bohang, NLC\u2019s executive legal manager, told GroundUp: \u201cJust when our legal team was [about] to commence with legal proceedings against ProEthics and all [the others] involved in the matter, we learnt of the extended proclamations. We were forced to stop our legal team with those legal proceedings as the proclamation takes precedence.\u201d<\/p>\n ProEthics features prominently in the 1 424-page TSU report. The report will play an important role in the SIU\u2019s procurement investigation.<\/p>\n ProEthics was appointed to the NLC\u2019s Corporate Governance Advisors panel from 13 November 2019 until 12 November 2022, when the NLC was facing a crisis because of ongoing reporting of rampant corruption involving lottery grant funding.<\/p>\n The panel\u2019s expenditure, according to TLC, was not supposed to exceed R7 million over three years.<\/p>\n But payments to ProEthics alone between February 2019 and August 2022 totalled almost R28.5 million.<\/p>\n A significant portion of this amount, over R10 million, was made up of money that the NLC instructed ProEthics to pay to third-party service providers. These service providers were chosen by the then NLC company secretary, Nompumalelo Nene, or her subordinates, without a competitive process, according to one of the disciplinary charges she faced.<\/p>\n ProEthics paid (or was supposed to pay) over R8.45 million between December 2020 and November 2021 to these NLC service providers. It is unclear whether ProEthics made any additional payments to third parties on behalf of the NLC before or after this period.<\/p>\n In a previous report, GroundUp described this relationship between the NLC, ProEthics and the third-party providers as payment laundering. ProEthics complained about this to the press ombudsman. The ombud ruled against the use of the term \u201claundering payments\u201d, but was satisfied with our describing the relationship as \u201ccircumventing procurement processes\u201d (see correction regarding ProEthics).<\/p>\n ADVERTISEMENT:<\/p>\n CONTINUE READING BELOW<\/p>\n<\/div>\n<\/div>\n The TSU report was used to bring disciplinary charges against Nene, including for her involvement in issues related to ProEthics. Nene, who faced 143 charges, resigned last year after earning almost R6 million while on suspension for two years.<\/p>\n Of these charges, 44 involved the NLC\u2019s dealings with ProEthics. They were included in Nene\u2019s charges sheet under the heading \u201cgross misconduct in the appointment of ProEthics for specific projects to perform various services and irregular payments to third-party service providers.\u201d<\/p>\n TSU recommended that the NLC recover some of the money paid to ProEthics, including:<\/p>\n TSU also said ProEthics should provide proof that it credited the NLC for R64,000 paid in advance for corporate gifts. \u201cThe amount should be recovered if proof cannot be provided,\u201d TSU said. \u201cProEthics director Dr Janette Minnaar informed the NLC that it had \u201calready paid them R64,000 for corporate gifts and that they will give them a credit when they invoice\u201d<\/p>\n TSU also highlighted a payment of R594 000 by ProEthics to Ethics Monitor for \u201cEthics Risk Assessment\u201d. It recommended that any management fee for the assessment should be recovered from ProEthics. \u201cWhile a specific amount for this management fee was not stated, the entire amount of R594 000 (including Vat) paid to Ethics Monitor (the actual service provider) can be deemed irregular, \u201d TSU said.<\/p>\n \u201cProEthics was involved in facilitating payments to third parties for this assessment, creating the impression that ProEthics rendered the services. The NLC should refrain from requesting\/allowing service providers to make third-party payments on behalf of the NLC.\u201d<\/p>\n The report also recommended that other \u201cevents and campaigns\u201d paid for via ProEthics should be investigated to calculate any other administration fees that were not allowed that could be recovered.<\/p>\n ADVERTISEMENT:<\/p>\n CONTINUE READING BELOW<\/p>\n<\/p><\/div>\n<\/div>\n These included items listed as \u201cConflict of Interest Vetting\u201d, \u201cHosting of virtual conference in Sandton\u201d, \u201cMedia monitoring\u201d and \u201cMental Health Day Conference.\u201d<\/p>\n ProEthics was also involved in an International Fraud Awareness conference in 2021, where it acted as a conduit to pay participants on behalf of the NLC.<\/p>\n Janette Minaar, a director of ProEthics, was also a member of a panel at the conference. ProEthics invoiced the NLC for almost R90,000 for \u201cpresentation at International Fraud Awareness Week and panel discussion\u201d. The company was also paid over R51 000 for the \u201cdevelopment of a tailor-made NLC ethics communication content\u201d.<\/p>\n Other participants paid by ProEthics included African Governance Solutions, the company of former deputy public protector Kevin Malunga. It received R360 000 for Malunga\u2019s participation in the conference.<\/p>\n Also paid by ProEthics were Aldrin Sampear\u2019s company, Unorthodox Media, for \u201cfacilitating and moderating\u201d (R100 000) and Mosilo Mothebu. Mothebu was paid R165 000 as a speaker at the event, R105 000 for copies of her book, Captured<\/em>, and another R60 000 for \u201ctime signing\u201d them.<\/p>\n We gave ProEthics ample time to respond to questions for this article. Its side of the story could have been recorded here. Instead, the company warned us not to publish and then proceeded with an urgent court application to prevent us from publishing this article.<\/p>\n \u00a9 2026 GroundUp. This article was first published here.<\/p>\n Follow Moneyweb\u2019s in-depth finance and business news on WhatsApp here.<\/em><\/p>\n<\/p><\/div>\nCorporate governance<\/span><\/h2>\n
Pay back the money<\/span><\/h2>\n
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Fraud Awareness Week<\/span><\/h2>\n
ProEthics fails to respond to our questions<\/span><\/h2>\n