Company made millions advising corruption-riddled Lottery on ethics
“Ethics interventions” at NLC cost more than R6-million
- ProEthics was paid millions of rands by the National Lotteries Commission (NLC) for ethics-related interventions at a time that the NLC was overwhelmed with allegations of corruption.
- The NLC has since been instructed to suspend the company’s services and stop payments to it.
- The payments to ProEthics are to be investigated by a new forensic panel that the NLC is currently setting up.
- ProEthics says its services were provided “ethically and professionally”. It has also implied that it will take legal action against GroundUp and this reporter.
A company that consults to government and big business on ethics billed the NLC more than R28-million for media monitoring and ethics-related “interventions” at a time when the NLC was overwhelmed with allegations of corruption, fraud and conflicts of interest.
ProEthics was also paid over R1.74-million for “Ethics Media Monitoring” during the same period, consisting of payments of R364,192 in July 2022, R325,887 in August 2022 and R1,053,366 in June 2021.
The NLC also paid over R600,000 to several companies to monitor reporting about the NLC in print, on radio and TV and on social media, and to monitor the performance of advertising and paid-for advertorials, according to an October 2022 written reply to Parliament’s Trade, Industry and Competition portfolio committee. The information was supplied in response to a question by Democratic Alliance MP Mat Cuthbert requesting details of “NLC communications, media and marketing services contracts”.
Though the payments to ProEthics in 2021 and 2022 fall within the same time period as the payments revealed in Parliament, these payments are not included in the NLC’s parliamentary response.
Just over a month after he was appointed acting NLC commissioner on 1 September 2022, Lionel October, instructed company secretary Nompumelelo Nene to stop using ProEthics and to suspend any outstanding payments to the company. Nene is currently on suspension pending a disciplinary hearing, which is expected to begin soon. October was recently appointed to the NLC board.
In the memo, headed “Forensic investigation - ProEthics”, October wrote: “Please be advised that all services and payments to the above service provider should be suspended until further notice.”
The payments to ProEthics are among several to be investigated by a new forensic panel that the NLC is setting up, according to a source with knowledge of what is being planned. It has also been flagged by the Special Investigating Unit (SIU), which has applied to President Cyril Ramaphosa to extend its mandate to allow it to probe payments to NLC service providers as well as grants by the NLC.
ProEthics also attracted the attention of the Auditor General (AG), which flagged at least one payment of R2,443,426 to ProEthics by the NLC, for failing to obtain three quotes as required by the National Treasury.
Responding to detailed questions, ProEthics founding director Janette Minnaar said she was unable to give details of the payments and the work done for the NLC because of a “confidentiality clause” they had signed.
“The SLA (service level agreement) between ProEthics and the NLC contained a confidentiality clause; all information regarding material, costs, and service providers should therefore be obtained directly from the NLC,” she said in an email.
She said ProEthics “was placed on an NLC panel of service providers of the NLC following a proper tender process and an SLA was signed. Appointment on projects was done through a thorough RFQ (request for quote) process and all services were rendered ethically and professionally.
“In rendering our services, we aim to assist our clients to build a culture of integrity. Where the project required services outside our scope of expertise the NLC appointed service providers from their panel to assist in the particular project,” Minaar said.
She warned: “… that should any defamatory statement be published or included in any press release we shall take all the necessary steps to hold you personally and GroundUp liable”.
And, in a subsequent email, Minnaar added: “We again stress that our rights are reserved in toto.”
NLC Commissioner Jodi Scholtz, without commenting specifically on ProEthics, said: “The NLC has received a draft report about some procurement irregularities and is studying that to determine the best course of action.”
What ProEthics was paid for
GroundUp has seen a list of payments made to ProEthics between 2019 and 2022 totalling over R28.4-million. Besides the payments for media monitoring and “ethics interventions”, ProEthics was also paid by the NLC for a variety of other services, including:
- “Conflict of interest and “conflict of interest vetting”: almost R4.9-million;
- “Mental Health Day” over R2.9-million;
- “Ethics video”: almost R1.1-million;
- “Ethics intervention: International Fraud Awareness Week”: R2.4-million;
- “International Fraud Week - Virtual Conference”: over R2.8-million;
- “Ethics Risk Assessment”: R1.7-million; and
- “Ethics training”: R35,850.
ProEthics states on its website that it is currently on the NLC’s “Corporate governance panel for the NLC ethics office and secretariat”. It has an extensive list of the work it has done for the NLC.
ProEthics does extensive ethics consulting work and training for government, state entities and big business. Besides the NLC, ProEthics clients include the Auditor-General, the Land Bank, the office of the Gauteng Premier, The Office of the Ombud for Financial Services Providers, The Public Investment Corporation, the Reserve Bank, Parliament and the Road Accident Fund. The company has also consulted on ethics, and provided ethics training, to a variety of blue chip companies and corporations.
“At ProEthics, we strive to live up to the highest standards of ethical behaviour and professionalism,” the company says on its website. “We will not compromise our core values of integrity, excellence and responsibility. We do what we say and we keep our promises. Our personal and corporate integrity are our key drivers to deliver excellent service.”
“At ProEthics we promote professional ethics and business integrity. We empower our clients to fight dishonest business practices and prevent losses resulting from crime and irregularities, by promoting an ethical culture and responsible organisational governance.
“We are committed to combat economic crime and harmful business practices that could hurt the innocent, destroy profit and damage quality service delivery.”
Minnaar addressed a virtual conference on anti-corruption and integrity organised by the Organisation for Economic Co-operation and Development (OECD) in 2021. The NLC was a key sponsor of the event and several of its executives featured on panels.
Minnaar told the conference, which was streamed live from Pretoria, that “the NLC is working hard to ensure that the organisation roots out fraud and corruption, which impact negatively on the organisation’s operations.”
Highlighting five main steps to apply in the fight against corruption, Minnaar said it was “crucial to understand how rogues can be dealt with when they get involved in illegal activities.
In fighting corruption, there should be prevention, detection, investigation, reporting and prosecution as key factors that can eradicate the rot that is consuming the country, she said.
“There is a duty on persons who hold a position of authority or who knew or ought reasonably to have known or suspected that any person has committed an offence in terms of the act or theft, fraud, extortion, forgery or uttering involving more than R100,000 to report it to the police,” she said.
But far from reporting corruption, the previous executive and board of the NLC took extraordinary steps to hide it, hurling legal threats at GroundUp, members of its own staff who blew the whistle on corruption, and anyone they perceived as critical of the Commission.
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