Lotto heist: beneficiaries ordered to pay back millions

A Gauteng company scored R4m from the National Lotteries Commission (NLC) for a community water provision project it completed three years before.

The Special Tribunal has declared the awarding of the grant unlawful and ordered all the implicated people in the elaborate scheme to repay the money with interest.

The Special Investigating Unit (SIU), which probed the plot, uncovered possible collusion between members of Mshandukani Foundation, Mashudu Mashandukani and his wife Pretty, together with disgraced former NLC chief operations officer Phillemon Letwaba and Ironbridge Travelling Agency and Events, a company owned by his wife Rebotile Malomane.

The paper trail was done through bank accounts.

According to the SIU, the foundation had applied to drill and equip boreholes in the Eastern Cape and Limpopo in February 2019. In their application they said the project would benefit 8,015 vulnerable people and create 15 part-time jobs. It included operational costs such as salaries, stipends, audit fees, bank charges and travel expenses.

However, the SIU’s investigation revealed the funding application was based on a project that had been completed several years earlier, and the grant funds were diverted to entities linked to the foundation’s leadership.

Mshandukani Holdings, owned by Mshandukani, had completed the project.

A month after the foundation’s grant application submission, Letwaba told Pretty her proposal had been “duly considered”. A few days later the NLC paid the grant into the foundation’s bank account which had a balance of R6,000 at the time, said the SIU.

The SIU’s financial investigation traced the movement of the grant funds and found they were redirected to entities linked to the foundation’s leadership and individuals associated with the NLC.

“The R4m grant was distributed to individuals and organisations, including R3.6m paid to Preldon Construction, a company owned by Ms Mshandukani. From the R3.6m, R500,000 was paid by Preldon Construction to Ironbridge Travelling Agency and Events, a company owned by Mr Letwaba’s wife, Ms Rebotile Malomane, and R550,000 was paid by Preldon Construction to Mshandukani Holdings, purportedly as a loan.”

The SIU said Preldon Construction made several payments:

• R700,000 to Mshandukani Foundation;
• R2.1m to Mshandukani Holdings;
• R150,000 to an associate;
• R120,000 to Mshandukani’s personal account; and
• R39,675 to Rocbit Drilling Equipment.

The investigation also established Engcobo local municipality had no legal authority over the schools and clinics because the responsibility for water services rests with the Chris Hani district municipality in terms of the Water Services Act.

“Furthermore, the Mshandukani Foundation lacked the necessary approvals under the South African Schools Act and had failed to consult the department of basic education as required. The SIU also discovered two employees of Mshandukani Holdings, a geologist intern and a receptionist, had been listed as members of the foundation without their knowledge or consent,” said the SIU.

It found the foundation, Letwaba, Ironbridge Travelling Agency and Events and Malomane had not provided an explanation for how the grant funds were used.

The tribunal ordered the Mshandukani Foundation, Pretty, Mshandukani, Takalani Israel Mulandana, Thambatshira Maria Khameli and Preldon Construction to repay the R4m jointly and severally.

“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,” SIU.

Sowetan