Special Tribunal Declares R4m NLC Grant Unlawful and Orders Full Repayment

Posted 22 July 2026 Written by Acts Online
Category Regulatory Compliance

Brought to you by SAnews: The Special Tribunal has declared the decision of the National Lotteries Commission (NLC) to award grant funding to the Mshandukani Foundation unlawful, reviewing and setting aside the grant decision and ordering the repayment of funds with interest.

Acting under Proclamation R32 of 2020, which authorises the Special Investigating Unit (SIU) to investigate allegations of corruption and maladministration at the NLC, the SIU uncovered procedural and legal irregularities surrounding a February 2019 application for R4 708 000. The grant application, signed by Mshandukani Foundation chairperson Pretty Shandukani, purported to fund a borehole community development project targeting 8 015 beneficiaries in the Eastern Cape.

The SIU investigation established that the application was based on a borehole project completed several years prior. Following grant approval by former NLC Chief Operating Officer Phillemon Letwaba, funds were channelled to private corporate entities and associates linked to the foundation and NLC executives:

  • Approximately R3.6 million was transferred to Preldon Construction CC, an entity owned by Pretty Shandukani.
  • From Preldon Construction CC, R500 000 was disbursed to Ironbridge Travelling Agency and Events (Pty) Ltd, a company owned by Mr Letwaba’s spouse, Ms Rebotile Malomane.
  • An amount of R550 000 was paid to Mshandukani Holdings, purportedly as a loan, along with additional disbursements including R2.1 million to Mshandukani Holdings, R700 000 back to Mshandukani Foundation, R150 000 to an associate, and R120 000 to a personal account.

Statutory Non-Compliance and Governance Failures

The SIU investigation further highlighted significant statutory breaches and governance defects:

  • Lack of statutory permissions: The foundation failed to secure required approvals under the South African Schools Act, No. 84 of 1996, and did not consult the Department of Basic Education.
  • Jurisdictional invalidity: Agreements were concluded with Engcobo Local Municipality, which lacked statutory authority over school and clinic water infrastructure; primary water services authority resides with Chris Hani District Municipality.
  • Falsification of governance records: Two employees of an affiliated company were listed as foundation members without their knowledge or consent.
  • Accounting failures: Neither the foundation nor related respondents provided valid accounting or evidence of lawful project expenditure.

What this means for you, your business, or your clients

  • For yourself: Ensure that your identity details and professional name are not included on board lists or statutory filings of non-profit organisations without explicit written consent to prevent exposure to regulatory and SIU liability.
  • For your business: Corporate contractors accepting payments funded by public or lottery grants must verify the lawful procurement authority and maintain transparent audit trails to guard against asset forfeiture and recovery proceedings under the Special Tribunals Act, No. 74 of 1996.
  • For your clients: Non-profit organisations seeking public funding must verify municipal jurisdictional boundaries, obtain formal regulatory authorizations under applicable legislation such as the South African Schools Act, No. 84 of 1996, and maintain complete project accounting records for all grant disbursements.

Originally published at https://www.sanews.gov.za/south-africa/npo-ordered-pay-back-unlawful-nlc-funding

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