Tribunal orders NPO to repay R4 million lottery grant to Mshandukani

According to the SIU, the Mshandukani Foundation applied in February 2019 for R4.708 million to fund a project aimed at providing clean water to communities in the Eastern Cape.

The Special Tribunal has declared the National Lotteries Commission's (NLC) decision to award a R4 million grant to the Mshandukani Foundation unlawful, ordering that the funding be repaid with interest after an investigation uncovered serious irregularities in both the approval and use of the money. The ruling follows an investigation by the Special Investigating Unit (SIU), which found that the grant application was based on a community project that had already been completed years before the funding was approved.

SIU uncovers irregular grant approval

According to the SIU, the Mshandukani Foundation applied in February 2019 for R4.708 million to fund a project aimed at providing clean water to communities in the Eastern Cape. The proposal claimed it would benefit more than 8,000 people and create 15 part-time jobs.

The funding was approved by former NLC Chief Operating Officer Phillemon Letwaba. Investigators later found that much of the money was transferred to companies and individuals linked to the foundation's leadership instead of being used for the stated community project. About R3.6 million was paid to Preldon Construction CC, a company owned by the foundation's chairperson, Pretty Shandukani.

Funds allegedly diverted to linked businesses

The SIU found that R500,000 from the grant was transferred to Ironbridge Travelling Agency and Events, a company owned by Mr Letwaba's wife, Rebotile Malomane, while another R550,000 was paid to Mshandukani Holdings as what was described as a loan.

Investigators also traced additional payments made by Preldon Construction, including R2.1 million to Mshandukani Holdings, R700,000 back to the Mshandukani Foundation, R150,000 to an associate, R120,000 to Mr Mshandukani's personal account and R39,675 to Rocbit Drilling Equipment. The SIU said none of the parties involved provided a satisfactory explanation for how the lottery grant funds were ultimately spent.

Project failed to meet legal requirements

The investigation also found that the borehole project itself was of poor quality and that the Engcobo Local Municipality did not have legal authority over the schools and clinics where the work was carried out, as responsibility for water services falls under the Chris Hani District Municipality. The Mshandukani Foundation was also found to have failed to obtain the approvals required under the South African Schools Act and had not consulted the Department of Basic Education before carrying out the project.

Investigators further discovered that two employees of Mshandukani Holdings had been listed as members of the foundation without their knowledge or consent. The SIU launched its investigation under Proclamation R32 of 2020, signed by President Cyril Ramaphosa, which authorised the unit to probe allegations of corruption and maladministration at the National Lotteries Commission.