Tribunal Orders Repayment of R4 Million NLC Grant After SIU Uncovers Irregularities Linked to Mshandukani Foundation
The Special Investigating Unit has secured another victory in its fight to recover public money lost through alleged corruption and maladministration after the Special Tribunal set aside a R4 million National Lotteries Commission grant awarded to the Mshandukani Foundation.
The Tribunal declared the funding decision unlawful and ordered the foundation, along with several individuals and entities linked to the grant, to repay the full amount with interest.
The judgment follows an extensive SIU investigation that uncovered a chain of irregularities surrounding the 2019 grant, including claims that the funded project had already been completed years before the application was submitted and that millions of rand were redirected to companies connected to individuals involved in the foundation’s leadership.
The Special Tribunal ordered that the NLC’s decision to approve the grant under Project M12663 be reviewed and set aside. It also declared the grant agreement between the NLC and the Mshandukani Foundation invalid and ordered that the foundation’s separate legal personality be disregarded.
The Mshandukani Foundation, Pretty Shandukani, Takalani Israel Mulandana, Thambatshira Maria Khameli and Preldon Construction were ordered to repay the R4 million jointly and severally. The amount will also attract interest at 10.75% per annum from the date the SIU launched its application until payment is made.
SIU Investigation Reveals Questionable Grant Application
The SIU investigation found that the Mshandukani Foundation, a registered non-profit organisation, applied to the NLC in February 2019 for funding of R4,708,000 for a community water project in the Eastern Cape.
The foundation claimed that the project would provide clean water to 8,015 vulnerable people and create 15 part-time employment opportunities.
The application included costs for salaries, stipends, audit fees, bank charges and travel expenses.
Former NLC Chief Operating Officer Phillemon Letwaba approved the application on 12 March 2019, and the foundation was informed that it had been successful. On the same day, Pretty Shandukani signed the grant agreement.
A week later, on 20 March 2019, the NLC transferred R4 million into the foundation’s bank account.
At the time of the transfer, the SIU found that the account had a balance of only R6,004.87 and was controlled by Shandukani and her husband, Mashudu Mshandukani.
Grant Funds Redirected to Linked Entities
The SIU’s financial investigation traced the movement of the grant money and found that significant portions were paid to entities linked to the foundation’s leadership and people connected to the NLC.
Investigators established that borehole installations presented as part of the 2019 funded project had actually been completed in 2016 by Mshandukani Holdings (Pty) Ltd, a company owned by Mashudu Mshandukani.
According to the SIU findings, R3.6 million of the grant was paid to Preldon Construction CC, a company owned by Pretty Shandukani.
From this amount:
- R500,000 was paid by Preldon Construction to Ironbridge Travelling Agency and Events (Pty) Ltd, a company owned by Rebotile Malomane, the wife of former NLC executive Phillemon Letwaba.
- R550,000 was paid to Mshandukani Holdings, described as a loan.
- R700,000 was transferred back to the Mshandukani Foundation.
- R2.1 million was paid to Mshandukani Holdings.
- R150,000 was paid to an associate.
- R120,000 was transferred into Mashudu Mshandukani’s personal account.
- R39,675 was paid to Rocbit Drilling Equipment.
The SIU also found that a quantity surveyor appointed during the investigation raised concerns about the quality of the borehole work.
Water Project Faced Legal and Regulatory Problems
The investigation further revealed concerns about whether the project had the necessary legal approvals.
The SIU found that Engcobo Local Municipality did not have authority over the schools and clinics involved in the project because responsibility for water services falls under the Chris Hani District Municipality in terms of the Water Services Act.
The foundation also allegedly failed to obtain required approvals under the South African Schools Act and did not consult the Department of Basic Education as required.
Investigators discovered further irregularities involving the foundation’s membership records. Two employees of Mshandukani Holdings, a geologist intern and a receptionist, were listed as members of the foundation without their knowledge or consent.
SIU Pushes for Accountability and Recovery of Public Funds
The SIU said the foundation, Letwaba, Ironbridge Travelling Agency and Events, and Malomane failed to provide explanations for how the grant money was used.
The Tribunal noted that the SIU had also referred three additional matters involving parties connected to the proceedings.
The investigation forms part of a broader SIU probe into alleged corruption and maladministration at the National Lotteries Commission.
President Cyril Ramaphosa authorised the SIU investigation through Proclamation R32 of 2020, granting the unit powers to investigate wrongdoing at the NLC and recover losses suffered by the state.
The SIU said the Tribunal’s judgment strengthens ongoing efforts to recover public funds, enforce accountability and ensure consequences for those involved in the misuse of state resources.
In terms of the Special Investigating Units and Special Tribunals Act 74 of 1996, any evidence of criminal conduct uncovered during investigations will be referred to the National Prosecuting Authority for further action.
