Accountability at the heart of trust

To respond proactively to these claims, the NLC applied the following globally accepted techniques of measuring corruption:

Measure 1: Perceptions of corruption

The Board undertook to measure perceptions by commissioning an independent ethics risk assessment, which included a media exposure analysis.

The media exposure analysis offers a comprehensive review and examination of the NLC’s media coverage with the aim of establishing the quantity and quality of media coverage afforded to the organisation in the recent past, where these reports could have either enhanced or undermined the organisation’s reputation.

The analysis covered print, broadcast and online media. At an overall level, media stories that portrayed the NLC as ethical accounted for 52% of the total media share while media coverage that described the NLC as unethical accounted for 48%.

Key findings revealed that, in general, online media dominates the media coverage, led by GroundUp, followed by Daily Maverick. Print Media is led equally by the Citizen, Johannesburg Edition, the Citizen KZN and the Citizen Country Edition. eNCA, followed by SAfm lead broadcast media reports.

From the media analysis, it became clear that media reports relating to unethical conduct concerned proactively funded projects, which have been investigated. Furthermore, in a bid to ensure the NLC’s integrity is not undermined, these projects were reinvestigated at the Board’s direction by calling for members of the public to submit any alleged fraud, corruption and misappropriation of funds under a special investigation by an independent audit firm. The outcomes of the special investigations are imminent.

Measure 2: Experience of corruption

We believe that leadership based on ethical foundations results in a culture of ethical and moral behaviour and compliance with laws, rules, codes and standards. During the year, we carried out an independent assessment to monitor adherence to the company’s ethical standards. Such audits establish the depth and clarity of leaders’ understanding of ethics and, specifically, the extent of ethical practices within the company.

The response rate for the ethics monitor survey was 69.7%, relative to the benchmark average of 65%. This is especially noteworthy given that the survey took place during the lockdown, reflecting a sound level of ethical engagement among employees. The NLC scored an overall AA ethics rating on a scale from D to AAA, where AAA is the best result and D is the worst.

The NLC also conducted an analysis of its stakeholder’s real level of interaction with corruption. The assessment was conducted through our whistleblowing hotlines, where NLC was able to gauge the public’s experience as it relates to corrupt activities over the past three years. It is noteworthy to mention that the NLC experienced a 2% loss on annual revenue to fraud over the past three years, which was significantly less than the ACFE benchmark of 5% loss on annual revenue to fraud.

Measure 3: Proxy indicators and risks of corruption

The NLC has a zero-tolerance risk appetite for fraud and corruption. All possible cases have been thoroughly assessed and, where required, internally and independently investigated.

In line with this, we continue to focus on clean administration and transparency to enable accountability. The audit of the NLC Group carried out by the Auditor-General of South Africa is one such avenue of accountability. The Auditor-General audits each state entity, providing insight into the way public funds are managed.

It is against this backdrop that we recognise our heightened responsibility to demonstrate effective, ethical governance practices. Pleasingly, the NLC has over the past five years sustained financially unqualified opinions with no findings on compliance focus areas for the National Lotteries Commission (separate annual financial statements) and National Lottery Distribution Trust Fund (separate annual financial statements) and National Lotteries Participants Trust (separate annual financial statements). Furthermore, the NLC has been recognised by the Auditor-General of South Africa at the Clean Audit Awards for these achievements. The NLC’s audit outcomes are detailed here, here and here

The NLC takes cognisance of measures that could result in corrupt activities in regard to service delivery standards, as a result, the following measures are in place to mitigate risks:

Measure 4: Informality and the limits of corruption

Informal practices like the acceptance of gifts tend to blur the lines between bribery and genuine gifts provided in the ordinary course of business. The NLC ethics office has evolved over the years through its review of the NLC Code of Conduct, which incorporates and provides clear guidelines on the handling of gifts, as well as instituting a technological platform to manage these.

According to these records, employees received minimal gifts, with the practice of accepting gifts not encouraged. Quarterly analysis is conducted, with a trend analysis showing no indication of gifts received that contradict policy.

Measure 5: Integrity – Shifting policy agendas

The NLC has a progressive policy framework that draws from legislation and global corporate governance best practice, as well as directives issued by relevant bodies to ensure proactive adherence. Our policies are intended to empower, educate and foster a values-based implementation of our mandate.

The advances we have made through the use of technological platforms and innovative means of engagement with our stakeholders has inculcated a culture of governance and control, ensuring credibility and integrity in our processes.

Looking ahead

We welcome the continued feedback from our stakeholders, understanding that accountability truly does reside at the heart of trust. We will continue to proactively respond to all concerns raised and to rigorously investigate all allegations. While this cycle of measures gives us a good gauge that ethical and effective leadership have been embedded and that the correct measures are in place to ensure that this sense of ethical responsibility is cascaded throughout the organisation, we also understand that to guard against the corruption we have seen take root in other institutions, we must remain constantly vigilant in observing the principles of corporate governance within our legal framework to ensure we build trust. Ethical and effective leadership will therefore remain a key area of focus in the year ahead.