Special Tribunal sets aside R4m grant awarded to Mshandukani Foundation

The money was meant to be spent on a community project aimed at providing clean water to communities in the Eastern Cape.

SIU spokesperson Selby Makgotho said the tribunal found that the grant was awarded unlawfully and ordered the repayment of the funds with interest.

He said the order follows an investigation by the SIU that uncovered 'serious irregularities' in the awarding of the multimillion rand grant.

He added that the grant application was based on a project that had already been completed years earlier, and the funds were diverted to entities like the foundation's leadership.

"The SIU’s investigation found that the Mshandukani Foundation, a registered non-profit organisation, applied in February 2019 for grant funding of R4,708,000 to implement a community development project aimed at providing clean water to communities in the Eastern Cape," said Makgotho.

"The application, signed by the Mshandukani Foundation’s Chairperson, Pretty Shandukani, to the NLC indicated that the project would benefit 8,015 vulnerable people and create 15 part-time jobs."

Makgotho said the SIU found that the 2016 borehole installations were carried out by Mshandukani Holdings, owned by Mr Mshandukani, and were not part of the 2019 NLC-funded project.

According to Makgotho, the former NLC CFO, Phillemon Letwaba, approved the application on 12 March 2019 and immediately notified the foundation of this decision.

The foundation's chair, Pretty Shandukani, signed the agreement on the same day.

He said the NLC transferred the R4 million to the foundation just eight days later.

"At the time, the SIU found that the account held a balance of only R6,004.87 and was controlled by Ms Shandukani and her husband, Mr Mashudu Mshandukani.

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

Makgotho alleges the R4 million grant was distributed to several organisations and people.

This includes R3.6 million paid to Preldon Construction CC, a company owned by Mshandukani.

"Additionally, from the R3.6 million, R500,000 was paid by Preldon Construction to Ironbridge Travelling Agency and Events (Pty) Ltd, 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."

He said Preldon Construction made numerous payments, including R700,000 to the Mshandukani Foundation, R2.1 million to Mshandukani Holdings, R150,000 to an associate, and R120,000 to Mr Mshandukani's personal account. Additionally, R39,675 was paid to Rocbit Drilling Equipment.

"A quantity surveyor appointed during the investigation found that the borehole work itself was of poor quality."

Makgotho claims the investigation found that the Engcobo Local Municipality had no legal authority over the schools and clinics, as the Chris Hani District Municipality was responsible for water services under the law.

Mshandukani Foundation also did not have the required approval under the South African Schools Act and failed to consult the Department of Basic Education.

"The SIU also discovered that two employees of Mshandukani Holdings, a geologist intern and a receptionist, had been listed as members of the foundation without their knowledge or consent,” Makgotho said.

The investigation uncovered that the foundation, Mr Letwaba, Ironbridge Travelling Agency and Events, and Ms Malomane did not provide an explanation as to how the funds were used.

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