SIU wins Special Tribunal order forcing repayment of nearly R25m in NLC grant case

The Special Investigating Unit (SIU) has won a judgment from the Special Tribunal ordering SASCOC and several associated parties to repay nearly R25 million that was diverted from a National Lotteries Commission (NLC) grant linked to the Mshandukani Foundation.

Tribunal sets aside R24.98m payment, finds misrepresentation

The SIU said on 26 June that the tribunal declared the R24.98 million payment made by the NLC to SASCOC unlawful, set it aside and found the grant to be tainted by misrepresentation, maladministration and unlawful enrichment, SIU spokesperson Selby Makgotho said.

How the funding flowed

The SIU investigation found that SASCOC applied for a R34.83 million grant from the NLC on 7 July 2016 as a conduit for the Mshandukani Foundation. Makgotho said,

“This came after the Mshandukani Foundation was registered as a non-profit organisation (NPO) on 16 February 2016 and opened a bank account on 12 April 2016.”

According to the SIU, the NLC approved the funding on 13 July 2016 and transferred it to SASCOC on 20 July 2016. SASCOC then transferred R24.83 million to the Mshandukani Foundation in three tranches between 21 and 27 July 2016, retaining R150,000 for “services rendered,” the SIU said.

Investigators identify irregular payments and beneficiaries

The SIU found the Mshandukani Foundation did not qualify for funding because it was newly established and lacked required annual financial statements. Financial analysis showed substantial portions of the grant were moved to multiple entities.

• R15.35 million to Ironbridge Travel Agency (between 22 July and 28 September 2016)
• R7.23 million to Mshandukani Holdings (between 22 July 2016 and 6 March 2017)
• R2 million to Ndzhuku Trading (between 23 and 28 July 2016)

On 22 July 2016 the Mshandukani Foundation also paid a total of R240,000 to several beneficiaries under the reference “SASCOC Events”: Benza Consulting (R80,000), Imbizo Events (R85,000), Koleka Music Productions (R30,000) and media personality Minenhle “Minnie” Dlamini (R50,000), Makgotho said.

Links to former NLC official and use of funds

The SIU said some companies paid by Ironbridge were linked to former NLC chief operations officer Philemon Letwaba, his relatives and associates. Identified payments included R450,000 to Letwaba, R600,000 in legal fees to a former NLC official and R3 million to Mosokodi Business Trust, an entity linked to Letwaba.

The investigation concluded that the R15.35 million transferred to Ironbridge was used for purposes unrelated to the grant’s objectives, including purchases such as vehicles and livestock, panel-beater work, network installation and decor, and to enrich Letwaba, his family and associates, the SIU said.

Fraudulent use of identities and tribunal orders

Makgotho said the identities of two women a receptionist and a geologist intern at Mshandukani Holdings (Pty) Ltd were used without their consent and their signatures forged to register the Mshandukani Foundation, which had no affiliation with SASCOC. The tribunal found those two women were not complicit.

The Special Tribunal ordered all respondents, except for the two women whose identities were fraudulently used, to repay jointly and severally R24.83 million to the SIU. The respondents named by the SIU include SASCOC, SASCOC’s former chief financial officer Vinesh Maharaj, the Mshandukani Foundation, Iphi Lukoko, Pretty Shandukani, Mashudu Shandukani, Benza Consulting, Ironbridge Travel Agency and its owner Karabo Charles Sithole, Koleka Music Production, Mshandukani Holdings and Ndzhuku Trading.

The tribunal also directed SASCOC and Maharaj to jointly and individually repay R150,000 to the SIU, with payment by one clearing the debt for both, Makgotho said.

Settlements and asset preservation

The SIU noted that Dlamini and Imbizo Events had already concluded settlement agreements with the SIU to reimburse portions they received and had paid R50,000 and R85,000, respectively. The SIU previously obtained a preservation order that led to the freezing of two luxury properties in Centurion linked to Shandukani and his wife, Pretty, and the freezing of a R1.7 million Powerstar drilling borehole machine linked to Letwaba, the SIU said.

Mandate and next steps

The SIU said it was authorised by President Cyril Ramaphosa in terms of Proclamation R32 of 2020 to investigate allegations of corruption and maladministration in the affairs of the NLC and the conduct of NLC officials and to recover financial losses suffered by the state. Makgotho said the tribunal orders form part of implementing SIU investigation outcomes and consequence management to recover losses suffered by state institutions due to corruption or negligence.

He added that, “In line with the Special Investigating Units and Special Tribunals Act 74 of 1996 (SIU Act), the SIU will refer any evidence of criminal conduct uncovered during its investigation to the National Prosecuting Authority (NPA) for further action.”