Special Tribunal orders R4m repayment after SIU finds National Lotteries grant unlawful

The Special Tribunal has declared a R4 million National Lotteries Commission grant unlawful and ordered it repaid after a Special Investigating Unit probe found serious irregularities in the award and use of the funds.

Tribunal sets aside grant and agreement

The Tribunal declared the R4 million grant awarded under Project M12663 invalid and set aside the grant agreement between the National Lotteries Commission (NLC) and the Mshandukani Foundation. It ordered the foundation and several individuals to repay the full amount jointly and severally.

Parties ordered to repay and interest applied

The Tribunal ordered the Mshandukani Foundation, Pretty Shandukani, Takalani Israel Mulandana, Thambatshira Maria Khameli and Preldon Construction to repay the R4 million. The amount will attract interest of 10.75% a year from the date the application was instituted until payment. The ruling also found that those behind the foundation can be held personally liable.

SIU investigation: key findings

The SIU found that the Mshandukani Foundation applied in February 2019 for R4.708 million to fund a community water project in the Eastern Cape, claiming it would benefit 8 015 vulnerable people and create 15 part-time jobs. The application was approved by former NLC chief operating officer Phillemon Letwaba on 12 March 2019, and the foundation signed the grant agreement the same day.

The NLC paid R4 million into the foundation’s bank account on 20 March 2019. The SIU found the project had already been completed in 2016, and that borehole installations had been carried out years earlier by Mshandukani Holdings (Pty) Ltd, owned by Mashudu Mshandukani.

How the money moved

The SIU traced the grant funds and reported that R3.6 million was paid to Preldon Construction, a company owned by Pretty Shandukani. From that amount, Preldon Construction paid R500 000 to Ironbridge Travelling Agency and Events (a company owned by the wife of former NLC COO Phillemon Letwaba) and R550 000 to Mshandukani Holdings as a purported loan.

The SIU further reported that payments from the traced funds included R700 000 to the Mshandukani Foundation, R2.1 million to Mshandukani Holdings, R150 000 to an associate, R120 000 into Mashudu Mshandukani’s personal bank account and R39 675 to Rocbit Drilling Equipment.

Additional irregularities and compliance failures

A quantity surveyor appointed by the SIU found the borehole work to be of poor quality. The SIU also reported that the Engcobo Local Municipality had no authority over the schools and clinics where the work took place, and that the Chris Hani District Municipality is responsible for water services in the area under the Water Services Act.

Investigators found the foundation failed to obtain approvals required under the South African Schools Act and did not consult the Department of Basic Education. The SIU also discovered that two employees of Mshandukani Holdings had been listed as foundation members without their knowledge or consent.

Part of a wider lottery probe

The matter forms part of the SIU’s broader investigation into alleged corruption and maladministration at the National Lotteries Commission under Proclamation R32 of 2020, which was authorised by President Cyril Ramaphosa. The SIU said it will continue recovering public money lost through corruption and will refer evidence of criminal conduct to the National Prosecuting Authority for possible prosecution.