South Africa’s Special Investigating Unit (SIU) has secured a significant legal victory. The victory comes in its investigation into corruption at the National Lotteries Commission.
The Special Tribunal declared a R4 million grant to the Mshandukani Foundation unlawful. It ordered that the funds be repaid with interest.
The SIU welcomed a judgment. The judgment acknowledged the Special Tribunal’s review. The Tribunal reviewed and set aside the NLC’s grant decision. This action invalidated the funding approval. It declared the grant agreement invalid. The outcome affects the terms of the grant.
No further action is required by the parties, and the ruling stands as the tribunal’s final determination.
However, the Tribunal ordered the Mshandukani Foundation and its leaders: Pretty Shandukani, Takalani Israel Mulandana, Thambatshira Maria Khameli, and Preldon Construction.
Moreover, they must repay the R4 million jointly and severally.
Additionally, interest will accrue at 10.75% per annum until fully repaid.
According to the SIU, the investigation uncovered serious irregularities in both the awarding and use of the grant.
“The order follows an SIU investigation which uncovered serious irregularities in the award and use of the grant, revealing that the funding application was based on a project that had already been completed several years earlier and that the grant funds were diverted to entities linked to the foundation’s leadership,” the SIU said.
The investigation found that the Mshandukani Foundation applied in February 2019 for R4.7 million to fund a community development project aimed at providing clean water to communities in the Eastern Cape. The application stated that the project would benefit more than 8,000 vulnerable people and create 15 part-time jobs.
Former NLC Chief Operating Officer Philemon Letwaba approved the application on 12 March 2019, and R4 million was transferred to the foundation’s bank account on 20 March 2019.
However, the SIU established that the borehole project referenced in the application had already been completed in 2016 by Mshandukani Holdings, a company owned by Mashudu Mshandukani, meaning the project predated the NLC funding.
A financial investigation traced the movement of the grant funds and found that R3.6 million was paid to Preldon Construction, a company owned by Ms Mshandukani. From that amount, R500,000 was paid to Ironbridge Travelling Agency and Events, a company owned by Letwaba’s wife, Rebotile Malomane, while a further R550,000 was transferred to Mshandukani Holdings.
Investigators also identified additional payments from Preldon Construction, including R2.1 million to Mshandukani Holdings, R700,000 to the foundation, R150,000 to an associate and R120,000 to Mshandukani’s personal bank account.
The SIU further reported that the borehole project itself was poorly executed.
“A quantity surveyor appointed during the investigation found that the borehole work itself was of poor quality,” the SIU said.
The investigation also identified governance and compliance failures. According to the SIU, the Engcobo Local Municipality had no legal authority over the schools and clinics where the boreholes were installed, while 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 found that two employees of Mshandukani Holdings had been listed as members of the foundation without their knowledge or consent.
“The SIU found that neither the foundation, Letwaba, Ironbridge Travelling Agency and Events, nor Ms Malomane had provided any explanation for how the grant funds were used,” the statement said.
The Tribunal also noted that the SIU had referred three additional matters involving parties implicated in the proceedings.
President Cyril Ramaphosa authorized the SIU through Proclamation R32 of 2020 to investigate allegations of corruption and maladministration at the National Lotteries Commission and recover losses suffered by the state.
Welcoming the ruling, the SIU said the judgment forms part of its broader efforts to recover public funds lost through corruption and strengthen accountability across the public sector.
“The Tribunal’s orders form part of the SIU’s ongoing efforts to implement investigation outcomes, recover public funds lost through corruption and strengthen consequence management across the public sector,” the SIU said.
