In a major victory for public integrity, the Special Tribunal has set aside a R4 million National Lotteries Commission (NLC) grant awarded to the Mshandukani Foundation, ordering the NPO and its leadership to repay the siphoned funds with interest.

The judgment, handed down by Judge B.A. Mashile on 13 July, pierced the corporate veil of the foundation, holding chairperson Pretty Shandukani, associated individuals, and linked business entities personally liable for the full amount.

The Special Investigating Unit (SIU) welcomed the ruling on 21 July, marking another significant milestone in its ongoing mandate under Presidential Proclamation R32 of 2020 to root out systemic fraud and maladministration within the NLC.

Grant application built on misrepresentations

The core of the dispute dates to February 2019, when the Mshandukani Foundation applied for grant funding to drill and equip boreholes for clean water in rural Eastern Cape communities. On 12 March 2019, former NLC Chief Operating Officer Phillemon Letwaba approved a R4 million grant. Eight days later, the NLC transferred R4 million into the NPO’s account, which previously held a balance of just R6 004,87.

Subsequent forensic investigations by the SIU revealed that the grant application was built on fraudulent misrepresentations.

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The borehole installations claimed under the 2019 grant had already been constructed in 2016 by Mshandukani Holdings, a company owned by Shandukani’s husband, Mashudu Shandukani.

The NPO listed a receptionist and a geologist intern from Mshandukani Holdings as office bearers without their knowledge or consent, forging signatures on annual financial statements.

Quantity surveyors found the actual borehole infrastructure was of poor quality, constructed without mandatory approvals from the Department of Basic Education or local water authorities.

Financial tracing showed that upon receiving the R4 million, the funds were rapidly disbursed to private companies and individuals rather than community development.

Over R3,6 million was funnelled to Preldon Construction CC, an entity owned by Pretty Shandukani. Preldon then made several questionable transfers:

• R500 000 to Ironbridge Travelling Agency and Events, owned by Rebotile Malomane – the wife of former NLC COO Phillemon Letwaba.
• R2,65 million combined in direct transfers and “loans” to Mshandukani Holdings.
• R120 000 directly into Mashudu Shandukani’s personal bank account.

Tribunal pierces foundation’s corporate veil

Judge Mashile dismissed the respondents’ procedural objections, finding that the grant was procured through unlawful non-disclosures, fraudulent misrepresentations, and clear statutory conflicts of interest.

The Tribunal declared the NLC’s March 2019 approval and the grant agreement invalid and void ab initio. To ensure the state recovers the siphoned public funds, the Tribunal pierced the foundation’s corporate veil, ordering the Mshandukani Foundation, Pretty Shandukani, Takalani Israel Mulandana, Thambatshira Maria Khameli, and Preldon Construction CC to jointly and severally repay the R4 million. The repayment carries a 10,75% per annum interest rate, calculated from the date proceedings were instituted.

The SIU confirmed that evidence of criminal conduct uncovered during the investigation will be referred to the National Prosecuting Authority (NPA) for further prosecution.

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