Report into R66m netball lottery grant recommends litigation to recover funds

• Forensic consultants probing a R66-million National Lotteries Commission (NLC) netball grant have recommended litigation to recover possible losses.
• The consultants say members of the NLC’s Sport and Recreation Distributing Agency committee who adjudicated the grant could be held liable.
• The committee exercised its “discretion” and granted over five times more than Netball SA applied for.

An investigation into a R66-million lottery grant to Netball South Africa has pointed to possible “maladministration and/or gross negligence” on the part of the agency responsible for approving the funding, and has suggested litigation to recover any losses there may have been.

The grant was for the construction of dozens of all-weather netball courts in all nine provinces, and was intended as a legacy of the 2023 Netball World Cup staged in Cape Town, GroundUp reports.

But the project is far from complete and mired in controversy and allegations of impropriety.

The National Lotteries Commission (NLC) commissioned Open Water Advanced Risk Solutions to investigate the multimillion-rand grant awarded by the NLC’s Sport and Recreation Distributing Agency (SRDA).

In its report, Open Water found conduct that was “indicative of maladministration and/or gross negligence by the SRDA” and advised the NLC to “consider civil legal recovery against the members of the erstwhile SRDA jointly and severally” should there be any losses.

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GroundUp has seen sections of the Open Water report relating to the “conduct of the SRDA”, including the findings.

The NLC has handed its records relating to the funding to the Special Investigating Unit (SIU).

This includes a recording of the meeting at which the grant was approved.

The NLC also confirmed that it had implemented “consequence management” for officials identified in the forensic report, in terms of its disciplinary policy and procedures.

But the NLC declined to say which officials had been disciplined or provide details of the outcomes.

Responding to questions from GroundUp, former SRDA member Dr Harold Adams, who participated in the decision to award the grant, said the investigators got it wrong.

He said Netball SA had submitted a “below par” application as part of a so-called “targeted call” covering only four provinces.

Adams added that their budget of R300 000 per court was unrealistic.

There was also an application from the Netball Local Organising Committee (LOC) World Cup Legacy programme to expand netball to all nine provinces, in accordance with a commitment made by the NLC authorities in 2018/2019.

Adams said:

He added that the fault lay with the NLC.

The SRDA instructed that “if the NLC authority decides that the infrastructure money cannot be allocated to the legacy fund directly, then there should be a formal meeting between Netball SA, the NLC and the legacy group to finalise and spell out how the legacy allocation will work”.

“The SRDA made it clear that it needed two separate grant agreements to be put in place to ensure that everyone understood their role and that the monitoring and evaluation should ensure that the land, plans, etc be in place before the money gets paid, with an acceptable maintenance plan.”

Funding dramatically increased

Netball SA originally applied for R11.9 million for infrastructure and training activities, which included the construction of 20 all-weather netball courts in four provinces.

Instead, the SRDA exercised its “discretion” and dramatically increased the grant by more than five times what Netball SA had applied for.

The increased funding included R60 million for the construction of 65 netball courts across all nine provinces, according to a tender issued by Netball SA in September 2023.

A further R3 million was allocated for marketing and branding of the legacy programme.

Besides that, an additional R3 million was allocated to “capacity building” for skills development of umpires, coaches and administrators.

However, after paying R3 million in June 2023 for marketing and branding and R21 million in March 2024 for construction, the NLC halted payments on the next two tranches of R21 million each.

The payment was frozen after an NLC monitoring and evaluation official flagged several issues with the NSA funding application and its adjudication.

This led the NLC to commission Open Water to do a forensic audit.

The NLC previously said progress in building the netball courts varied across locations.

“Some courts were constructed or refurbished, while others were incomplete, delayed, or not handed over. Quality and compliance issues were identified at several sites, and formal handovers remain outstanding in certain instances.”

Netball SA originally applied for R11.9 million for infrastructure and training activities.

Netball SA president Mami Diale, who told GroundUp the organisation was surprised at the increased funding, said only five sites had so far been certified as “practically complete”.

Netball SA said R14.3 million was paid to contractors before further payments were frozen.

Five companies successfully tendered: Four to design and construct the courts, and a fifth as the overall national project manager.

The amount allocated to these companies was over R57 million. All those contracts are being scrutinised by the SIU.

Also under investigation is the R3-million contract allocated for marketing and branding of the courts and the legacy project.

Fiduciary duty

Three SRDA members adjudicated the grant and allocated the funding: Mveli Ncula, who chaired the meeting, Adams and Raymond Mali.

The NLC previously said progress in building the netball courts varied across locations.

Jacob Wackerhausen/Getty Images

A senior NLC administrator was also present, but was not part of the adjudication decision.

Ncula’s and Adams’ tenure ended a month later on 30 April 2023, while Mali’s term ended a year later, on 30 April 2024.

Open Water said in its report that members of a lottery distributing agency “have a fiduciary duty toward the NLC to act in the best interest of the National Lottery Distribution Trust Fund (NLDTF) and its intended beneficiaries”.

“Under instances where maladministration and gross negligence are found, which lead to the incurring of financial damages, the members of the [SR]DA may be held liable, in full or in a contributory cause, in civil legal recovery action…” it added.

“The NLC may, therefore, once a financial loss has been identified and quantified, consider civil legal recovery against the members of the erstwhile SRDA jointly and severally.”

Adams said: “I have not received any report to comment on, unfortunately, and that is grossly unfair.”

Neither Mali nor Ncula responded to initial questions sent via WhatsApp, nor to subsequent questions about the Open Water report.

Adams blames NLC

Adams places the blame for the grant implementation on the NLC.

He said monitoring and evaluation officials had failed to do their job properly, as his and Ncula’s contracts expired on 30 April 2023, and nobody at the NLC contacted anyone from the SRDA to question anything that may have been unclear.

According to Adams, Netball SA should never have been allowed to implement the legacy project.

He said that after they left, it was NLC officials who had to implement the conditions that the SRDA set.

Adams believes that the NLC did not implement the conditions the SRDA set during the meeting.

Responding to Adams, the NLC said: “Grant applications are adjudicated by the SRDA, which carries out its duties independently from the NLC commissioner in terms of a section of the Lotteries Act.

“[The commissioner] signs off on grant applications that have been adjudicated and quality-assured by SRDA members. Her delegation empowers her to approve applications above specified amounts, and the Netball SA grant was signed off by her based on the recommendations by the SRDA.”

Adams said the SRDA wanted the full grant amount to be awarded directly to the LOC’s legacy fund, and proposed conditions to be met before the grant was awarded to ensure the projects were successful.

Open Water has been embroiled in controversies over the years.

For example, the company was accused of biased reporting (in the case of their Eastern Cape Development Corporation investigation.