The Special Investigating Unit (SIU) has scored a major victory in its fight against corruption at the National Lotteries Commission (NLC). The Special Tribunal has declared a R4 million grant paid to the Mshandukani Foundation unlawful and ordered that the money be repaid with interest.
In a judgment delivered, the Tribunal reviewed and overturned the NLC’s decision to approve and fund the grant. It set aside both the funding approval and the grant agreement as invalid. The Tribunal ordered that the Mshandukani Foundation, its chairperson Pretty Shandukani, as well as Takalani Israel Mulandana, Thambatshira Maria Khameli, and Preldon Construction repay the R4 million jointly and severally. The amount will accrue interest at 10.75% per year until fully repaid.
The ruling stems from an SIU investigation that found serious irregularities in how the grant was awarded and how the money was used. The SIU said the project described in the funding application had already been completed several years earlier, and that grant funds were diverted to entities linked to people connected to the foundation’s leadership.
According to the investigation, the Mshandukani Foundation applied in February 2019 for R4.7 million for a community development project in the Eastern Cape. The application stated that the project would provide clean water to more than 8,000 vulnerable people and create 15 part-time jobs.
The NLC approved the application on 12 March 2019. Shortly afterwards, on 20 March, the NLC transferred R4 million into the foundation’s bank account. Investigators found, however, that the project referenced in the application had been completed earlier. The SIU reported that borehole installations mentioned in the funding application were carried out in 2016 by Mshandukani Holdings, a company owned by Mashudu Mshandukani, and not as part of the NLC-funded project.
A financial review of the lottery money traced how funds moved from the NLC and showed that substantial portions were channelled to companies and individuals linked to the foundation’s leadership and to individuals connected to the NLC. The SIU said 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, owned by Rebotile Malomane, the wife of former NLC chief operating officer Phillemon Letwaba. A further R550,000 was paid to Mshandukani Holdings. The SIU also reported additional payments made from Preldon Construction, including R2.1 million to Mshandukani Holdings, R700,000 to the foundation, R150,000 to an associate, and R120,000 to Ms Mshandukani’s personal bank account.
Investigators further found that the borehole project was poorly executed. A quantity surveyor appointed during the investigation reported that the borehole work was of poor quality. Beyond the financial issues, the SIU identified governance and compliance failures related to the project. It found that Engcobo Local Municipality had no legal authority over the schools and clinics where the boreholes were installed.
The SIU also said the foundation failed to obtain approvals required under the South African Schools Act and did not consult the Department of Basic Education. In another finding, the SIU reported that two employees of Mshandukani Holdings were listed as foundation members without their knowledge or consent.
The SIU further said that neither the foundation, Letwaba, Ironbridge Travelling Agency and Events, nor Ms Malomane provided explanations for how the grant funds were used. The Tribunal also noted that the SIU had referred three additional matters involving other parties implicated in the proceedings. President Cyril Ramaphosa authorized the SIU to investigate allegations of corruption and maladministration at the NLC and to recover losses suffered by the state through Proclamation R32 of 2020.
Welcoming the judgment, the SIU said it forms part of broader efforts to recover public funds and strengthen accountability in government institutions. It stated that the Tribunal’s orders are intended to support investigation outcomes, recover money lost through corruption, and promote consequences for wrongdoing across the public sector.
