“Criminal syndicate” was run inside the Lottery says SIU

Three-year investigation has revealed collusion between Lottery officials, former board members, lawyers and non-profit organisations

By Raymond Joseph

16 February 2024

The National Prosecuting Authority, Special Investigating Unit and National Lottery Commission delegations were in Parliament this week. Photo: Raymond Joseph

• The Special Investigating Unit told Parliament this week that a criminal syndicate was run from inside the National Lotteries Commission (NLC).
• A three-year investigation has revealed collusion between Lottery officials, former board members, lawyers and non-profit organisations.
• Money meant for good causes was instead plundered and used to buy luxury homes, farms and cars.
• There are people in the NLC still involved in crime who may not cooperate or else give misleading information, the Asset Forfeiture Unit says.

You could have heard a pin drop as the Special Investigating Unit (SIU) and the prosecuting authorities briefed Members of Parliament on Wednesday on the latest developments in the ongoing investigation into massive fraud and corruption involving Lottery grants.

MPs sat silently as SIU head Andy Mothibi briefed them on the unit’s latest investigations into Lottery grant fraud which, he says, found that money meant for good causes was instead plundered and used to buy luxury homes, farms and cars, including a Landrover bought for the wife of the former National Lottery Commission’s chief operating officer.

The SIU had uncovered a “criminal syndicate” operating inside the NLC involving members of the board and executives that “worked with employees and outside entities and lawyers”, Mothibi said.

Also appearing before the committee was a high-powered National Prosecuting Authority (NPA) team headed up by Rodney de Kock, its head of prosecution services, and a delegation led by Commissioner Jodi Scholtz.

The SIU three-year-long investigation has revealed a web of collusion between lottery officials, former board members, lawyers and non-profit organisations, Mothibi said.

“There is a complex web of criminality that we are unravelling … We found that some NPOs [non-profit organisations] are hijacked without the knowledge of their members. In other cases, members [of these NPOs] are involved.”

It was the first appearance by the NPA before Parliament’s Trade and Industry portfolio committee after MPs had insisted that it appear before them to explain the lack of prosecutions. MPs were surprised to discover that although 26 dockets relating to the NLC were under investigation, only one prosecutor had been assigned to liaise with the Hawks and SAPS on Lottery investigations.

“The NLC cases are receiving priority but there is much work still to do and we recognise that we must bring more resources to the project,” De Kock assured MPs.

Lack of prosecutions

The NPA has been under increasing pressure to charge people involved in the plunder and bring them before a court, causing tension between it and the NLC and the SIU, which are both concerned at the lack of prosecutions.

So far, despite investigations into some grants by the Hawks and South African Police Service (SAPS) having begun in 2020, no one has yet been charged for their role in the plunder of lottery funds.

But in Parliament this week the behind-the-scenes disagreements were, at least publicly, absent and the scene in the elegant, high-ceiling committee room M46 of the historic Marks Building was collegial.

De Kock told MPs that while several of the cases under investigation were at a stage where the NPA could decide whether to prosecute, “the bulk” were still under investigation.

This SIU briefing to Parliament followed an earlier one in September last year when Mothibi told Parliament that by then the SIU was investigating dodgy grants involving R1.4-billion. Late last year, the SIU told GroundUp that this now exceeded R2-billion.

One of the problems the NPA faced was that, in many cases, key documents needed to prosecute some cases were deleted from the NLC computer system or had gone missing from Metrofile, a warehouse where copies of documents are archived and stored.

Mashudu Netshikwera, who heads up the SIU team investigating the NLC, said they had discovered a 2018 memo that was distributed to senior officials claiming that the State Security Agency had “instructed the NLC to remove proactive documents from the [NLC’s grants] system and from storage.” But the SIU had managed to retrieve some documents from the NLC Mimecast email system which is used to manage and archive email,” he said.

“At least we have secondary evidence because original documents were destroyed. We will tell the courts that the people who destroyed the documents are the perpetrators”.

The NPA told MPs how “every step of the process” to preserve homes, properties and vehicles and other goods bought using Lottery funding “is challenged”.

Advocate Nkebe Kanyane, newly appointed head of the Asset Forfeiture Unit, told MPs, “Cases first reported in 2020 were now at ‘an advanced stage’ and we are ready to make a decision.”

“We are made to feel that people still in the [NLC] are still involved in crime and may not cooperate or else give us misleading information that impacts our investigation.”

Commissioner Scholtz said, “We have done integrity testing [of NLC staff] and we are currently drawing up a policy for lifestyle audits. We are also implementing consequence management and are in the process of building an integrated system.”

ANC MP Judy Herman, the committee chairperson, said, “This committee is determined that we see the criminals prosecuted.”

This is a dramatic change from how the ANC, under the former chair Duma Nkosi, protected the NLC and frustrated attempts by opposition MPs to hold it to account.

New cases under investigation

Mothibi briefed MPs on several new investigations nearing conclusion, including:

• R4.27-million was paid (of a R5-million grant) to Zibsicraft for a chicken farming project to uplift communities in the MidVaal area. Only R209,500 appears to have been spent on agricultural products. Two companies in which Ttsosi actress Terry Pheto is a director, were paid over R3-million from the grant and she was paid R182,000 into her personal bank account. Pheto’s luxury Bryanston home, also paid for with Lottery money, was sold for R3.9-million last year after it was frozen under a preservation order. Her sister, Dimakatso, who is a director of Zibsix and for whom the farm was purchased, was also paid R315,500. The offer to purchase the farm for R850,000 was signed by former NLC board chairperson Alfred Nevhutanda. The case has been referred to the SIU’s civil litigation unit and criminal referrals are being prepared
• An NLC grant of just under R25-million was transferred to the South African Sports Confederation and Olympic Committee (SASCOC) for a “roadshow sendoff” for the 2016 South African Olympic team. SASCOC paid almost the entire amount to the foundation, which then transferred over R15-million to Ironbridge Traveling Agency and Events, in which members of Phillemon Letwaba’s family have served as directors, and of which his wife is now the sole director. Shandukani also paid R1-million to a car dealer towards the cost of a Rolls Royce for Alfred Nevhutanda. Shandukani was involved in the construction of a poorly built school in Limpopo. The Foundation also received R4-million from the NLC to install seven boreholes in the Engcobo Local Municpality. But when the SIU visited the sites it found the boreholes were of “poor quality”.
• A grant of R1.95-million was paid to the Tumelo Home and Hospice Centre in the Northen Cape, which acted as a conduit for Mintirho Rifumo, an NPO, for a project involving “farming and ploughing of vegetables and running a poultry production facility for residents of Kromkuil, Ga-Motle, Winterveld, Makapstad and surrounding areas”. Tumelo then bought a car and registered it in the name of an official employed in the NLC Kimberly office. The Hawks swooped on the Kimberly office last year as part of a corruption probe. The office’s assistant manager was placed on suspension and is due to face a disciplinary inquiry.
• Over R500,000 of a R2-million payment to Abrina 3641, which was part of a larger grant to build a drug rehab in Kuruman, was paid to a construction company that was a building a house for the NLC former head of legal Tsietsi Maselwa. The house, on a gated estate in Pretoria, is currently frozen under a preservation order.
• Money from a Lottery grant to The Samaritan Initiative was used to buy a property and build a state of the art poultry and egg processing facility for a project meant to uplift women in Marikana, the site of the massacre of striking miners in 2012. Instead, the property was registered to Silverlite Trading company, with former NLC board member William Huma as the sole director. Huma also used Lottery money intended for an old age home to buy an estate in North West, which has since been turned into a boutique hotel. The SIU investigation found five farms registered to Silverlite.
• None of a R9.5-million grant allocated to Limpopo Recreation Providers appears to have been used for its intended purpose of “arranging an annual cycling competition, recruiting cyclists, promoting good morals for the youth, providing of cycle resources to the needy and empowering youth cyclists for competitions”. Just over R1.8-million of the grant was used to buy a Landrover for Phillemon Letwaba’s wife, Malomane, whose company also got R4.8-million to stage a soccer tournament for grannies.
• Tsotsi star Presley Chweneyagae also scored big from the Lottery when his foundation received a R15-million grant for a musical that only ran for five nights. The South African Youth Movement, which acted as a conduit for the grant, scored over R67.5-million in a series of dodgy lottery grants.
• The TS Sedibe Foundation received a grant of over R1.4-million “for the empowering of Free State Schools in Matjabeng area on creative events/festivals”. An amount of R100,000 of the grant was paid to a company in which a former NLC employee was a director. Sedibe, who was arrested for fraud last year, had a finger in several lottery pies, including a R6-million sports centre in Soweto that was never built.
• A syndicate headed up by dodgy pastor Joyline Josamu raked in over R9-million for a series of non-profits in which she and family members and friends were directors. Among the things she purchased with Lottery grant money were a R4.65-million house in a gated estate and two cars, according to the SIU.

Mothibi told MPs that the first phase of the SIU investigation, which probed grants valued at nearly R280-million, had been completed. The second phase, valued at R247-million is “90 per cent completed”, and will be finalised by the end of April. The third phase, involving grants of R906-million, would be completed by the end of December. An interim report will be submitted to the Presidency at the end of this month.

However the SIU continued to receive new allegations of fraud and corruption and the investigation may have to be extended to include a fourth phase, Mothibi said.