Yasmin Bilal
A Special Tribunal has set aside a R4 million National Lotteries Commission grant awarded to the Mshandukani Foundation after finding the funding was unlawfully approved.
The ruling orders that the money be repaid with interest following an investigation by the Special Investigating Unit (SIU). The probe uncovered irregularities in both the approval and use of the grant.
The Tribunal declared the National Lotteries Commission’s decision to award the grant invalid. It also ruled that the grant agreement between the commission and the foundation is void.
In addition, the Tribunal ordered that the foundation’s separate legal identity be disregarded.
The Mshandukani Foundation, Pretty Shandukani, Takalani Israel Mulandana, Thambatshira Maria Khameli and Preldon Construction were ordered to repay the R4 million jointly and severally. The amount will attract interest of 10.75% a year until it is paid.
The SIU investigation found that the funding application was based on a community water project that had already been completed several years before the grant was approved.
According to the SIU, the foundation applied for more than R4.7 million in February 2019 to provide clean water to communities in the Eastern Cape. The proposal stated the project would benefit more than 8,000 people and create 15 part-time jobs.
The grant was approved by former National Lotteries Commission chief operating officer Phillemon Letwaba on 12 March 2019. The commission transferred R4 million to the foundation’s bank account eight days later.
The SIU said its financial investigation traced the money to companies and individuals linked to the foundation’s leadership. It also found payments to people associated with the National Lotteries Commission.
Investigators found that R3.6 million was paid to Preldon Construction, a company owned by Ms Mshandukani. From that amount, R500,000 was transferred to Ironbridge Travelling Agency and Events, a company owned by Letwaba’s wife, Rebotile Malomane.
A further R550,000 was paid to Mshandukani Holdings. Other payments included R700,000 to the foundation and R2.1 million to Mshandukani Holdings.
The investigation also found payments of R150,000 to an associate, R120,000 to Mashudu Mshandukani’s personal bank account and R39,675 to Rocbit Drilling Equipment.
The SIU also found the borehole installations linked to the application had already been completed in 2016 by Mshandukani Holdings, a company owned by Mashudu Mshandukani. They were not part of the 2019 grant project.
A quantity surveyor appointed during the investigation found the borehole work was of poor quality.
The investigation also found that the Engcobo Local Municipality had no authority over the schools and clinics involved. Responsibility for water services rests with the Chris Hani District Municipality.
The SIU said the foundation had not obtained the approvals required under the South African Schools Act. It had also failed to consult the Department of Basic Education.
Investigators also discovered that two employees of Mshandukani Holdings had been listed as members of the foundation without their knowledge or consent.
According to the SIU, neither the foundation, Letwaba, Ironbridge Travelling Agency and Events, nor Malomane explained how the grant money had been spent.
The Tribunal also noted that the SIU has referred three additional matters involving some of the parties implicated in the case.
President Cyril Ramaphosa authorised the SIU in 2020 to investigate allegations of corruption and maladministration at the National Lotteries Commission. The investigation also seeks to recover financial losses suffered by the State.
The SIU said it will continue pursuing the recovery of public funds. It will also refer any evidence of criminal conduct uncovered during its investigations to the National Prosecuting Authority.