SIU Wins Tribunal Order to Recover R6 Million in Lottery Grant Fraud

The ruling orders several individuals and entities involved in the scheme to repay R6 million, the amount already paid out before the fraud was uncovered.

The Special Investigating Unit (SIU) has secured a major legal victory after the Special Tribunal declared a R9 million National Lotteries Commission (NLC) grant unlawful and invalid, following the discovery that funds intended to build a sports complex in Soweto were instead diverted for personal gain. The ruling orders several individuals and entities involved in the scheme to repay R6 million, the amount already paid out before the fraud was uncovered.

Sports project never built

The grant had been awarded to the Motheo Sports and Entertainment Foundation to construct a sports complex in Protea Glen, Soweto. The project was never completed despite two funding tranches being released.

The Special Tribunal found that the non-profit organisation, together with former National Lotteries Commission officials and several associates, unlawfully diverted public funds intended for community development.

The SIU said the Tribunal cancelled the grant agreement and ordered Jeremane Petrus Sedibe, identified as the mastermind behind the scheme, along with Motheo, former NLC officials and associated individuals and companies, to jointly and severally repay R6 million.

The third and final R3 million payment was never released after the SIU's investigation revealed that the project had stalled and the submitted progress reports did not reflect the actual state of construction.

Investigation exposes fraudulent payments

The SIU investigation found that Motheo had initially applied for more than R61.6 million, but its application was unsuccessful after the NLC approved only R70,000, which the organisation declined.

Five months later, former NLC Grant Funding Projects Manager Marubini Ramatsekisa recommended that the organisation receive R9 million through the Commission's proactive funding programme. The recommendation was approved by former Acting Chief Operations Officer Nkhesho Njoni.

A grant agreement was signed in May 2021 by Tebogo Joseph Mohlala, director of Motheo, and Nonhlanhla Matshazi, co-director of Londilox NPC.

After the first R3 million payment was made, investigators found that:

• R950,000 was transferred to PSKO (Pty) Ltd, a company owned by Sedibe.

• R500,000 was transferred to Londilox NPC.

• R400,000 was paid to Synercon (Pty) Ltd.

• Hundreds of thousands of rand were withdrawn through teller and ATM cash withdrawals, while additional funds were spent through purchases, bank charges and other transfers.

False reports and pension preserved

The SIU also found that a progress report prepared by Ziphozinhle Khoza of SRSQS Quantity Surveyors, and approved by her supervisor Marito Mabunda, falsely claimed that construction work had progressed between June and November 2021.

Based on the evidence, the SIU concluded that there was a prima facie case of fraud, theft and corruption involving Sedibe, Motheo, Matshazi, Khoza and others connected to the project.

In addition to ordering repayment of the funds, the Tribunal upheld an earlier preservation order freezing the pension benefits of former NLC employee Sanele Dlamini, who authorised the release of the second funding tranche. The pension will remain preserved until the SIU has recovered the misappropriated public funds.

The SIU said the judgment reinforces ongoing efforts to recover state funds lost through corruption and to hold individuals accountable for the misuse of money intended for community development projects.