The Special Investigating Unit (SIU) has achieved a significant result in its efforts to recover misappropriated public funds linked to alleged corruption and administrative failures. This follows a ruling from the Special Tribunal, which nullified a R4 million grant from the National Lotteries Commission (NLC) to the Mshandukani Foundation.
The Tribunal deemed the decision to provide this funding unlawful and mandated that the foundation, along with several individuals and organizations associated with the grant, return the total sum along with interest.
This ruling comes after a comprehensive SIU investigation that revealed several irregularities regarding the grant issued in 2019. Investigators found that the project funded by this grant was claimed to have been completed long before the application was made, with millions redirected to companies linked to leaders within the foundation.
The Special Tribunal ordered a review of the NLC’s decision approving the grant under Project M12663, declaring the agreement with the Mshandukani Foundation invalid and dismissing the foundation’s separate legal status.
Among those required to repay the R4 million are the Mshandukani Foundation, its leaders, Pretty Shandukani, Takalani Israel Mulandana, Thambatshira Maria Khameli, and Preldon Construction. The repaid amount will accrue interest at 10.75% per year from the time the SIU initiated its proceedings until it is paid in full.
The SIU investigation revealed that the Mshandukani Foundation submitted a funding request to the NLC for R4,708,000 in February 2019 for a community water project in the Eastern Cape.
In its application, the foundation asserted that the project would provide clean water for 8,015 vulnerable individuals and generate 15 part-time job opportunities.
The proposed budget covered salaries, stipends, audit fees, travel expenses, and bank charges.
Phillemon Letwaba, the former COO of the NLC, approved the application on March 12, 2019, with Pretty Shandukani signing the grant agreement on the same day.
A week later, on March 20, 2019, R4 million was transferred to the foundation’s bank account. At the time of the transfer, the SIU discovered that the account only contained R6,004.87 and was controlled by Shandukani and her husband, Mashudu Mshandukani.
The SIU’s financial investigation tracked the flow of the grant money, uncovering that a substantial portion was disbursed to entities connected to the foundation’s leadership and affiliated individuals at the NLC.
Investigators revealed that borehole installations claimed as part of the 2019 project had actually been completed back in 2016 by Mshandukani Holdings (Pty) Ltd, owned by Mashudu Mshandukani.
The SIU’s investigation indicated that R3.6 million of the grant was allocated to Preldon Construction CC, owned by Pretty Shandukani. From this amount:
- R500,000 was disbursed to Ironbridge Travelling Agency and Events (Pty) Ltd, owned by Rebotile Malomane, the spouse of former NLC executive Phillemon Letwaba.
- R550,000 was described as a loan to Mshandukani Holdings.
- R700,000 was returned to the Mshandukani Foundation.
- R2.1 million was paid to Mshandukani Holdings.
- R150,000 was given to an associated individual.
- R120,000 was transferred to Mashudu Mshandukani’s personal account.
- R39,675 was paid to Rocbit Drilling Equipment.
Concerns were also raised by a quantity surveyor appointed during the investigation regarding the quality of the borehole work.
The investigation illuminated potential legal issues regarding the project’s approvals.
The SIU concluded that the Engcobo Local Municipality lacked jurisdiction over the schools and clinics involved since water service responsibilities fall under the Chris Hani District Municipality per the Water Services Act.
Moreover, the foundation was said to have neglected to secure necessary approvals mandated by the South African Schools Act and failed to consult the Department of Basic Education.
Investigators flagged further irregularities regarding the membership records of the foundation. Two employees from Mshandukani Holdings were inappropriately listed as members without their knowledge or consent.
The SIU indicated that the foundation, Letwaba, Ironbridge Travelling Agency, and Malomane fell short in accounting for the utilization of the grant funds.
The Tribunal observed that the SIU had referred three additional cases involving related parties for further scrutiny.
This investigation is part of an extensive effort by the SIU into suspected corruption and mismanagement at the National Lotteries Commission.
President Cyril Ramaphosa endorsed the SIU investigation through Proclamation R32 of 2020, granting the unit authority to probe misconduct at the NLC and recover state losses.
The SIU stated that the Tribunal’s decision bolsters ongoing initiatives to reclaim public finances, enforce accountability, and ensure appropriate consequences for those implicated in the misuse of public resources.
As stipulated by the Special Investigating Units and Special Tribunals Act 74 of 1996, any evidence of criminal behavior uncovered during investigations will be forwarded to the National Prosecuting Authority for further action.
