The Special Investigating Unit (SIU) welcomes the judgment of the Special Tribunal declaring the R14 million in funding awarded by the National Lotteries Commission (NLC) to the Madumelani Community Project unlawful, invalid, and set aside, and ordering the beneficiaries to repay the funding received.

The grant was intended for the construction of a cultural village in Hammanskraal, Gauteng Province. However, the project was already established in 2015 by Maubane Cultural Village and Community Arts and Centre, not by the Madumelani Community Project, following receipt of a grant of R300,000.00 from the NLC.

In her judgment, the President of the Special Tribunal, Judge Margaret Victor, found that the scheme orchestrated by brothers Tshimangadzo (T Mukutu ) and Ndoweni Mukutu (N Mukutu) was “clearly fraudulent”. The Judge declared that the Mukutu brothers, Netswinganani, Mukondeleli, Mudonde Events and Investment, RUM Management Consultancy, Ndhava Management, and Thwala Front acted together with the intent to defraud the NLC and are jointly liable to pay R14 million, together with the costs of the application.

Judge Victor stated that the severity of corruption in South Africa is a “catastrophic corruption epidemic”.

“In this case, the facts are such that the conduct of the antagonists is unconscionable, which justifies the piercing of the corporate veil. Money earmarked for a cultural village, a pride and joy of any community, has been lost to a fraudulent scheme,” Judge Victor added.

This follows an SIU investigation that has uncovered how the scheme involved extensive planning and deliberate misrepresentation, including the unlawful use of the Madumelani Community Project’s constitution, the appointment of fictitious office-bearers, the submission of fraudulent signatures, and the opening of a bank account through which millions of rand were disbursed.

The SIU investigation found that the original members of the Madumelani Community Project, a non-profit organisation (NPO), did not apply for NLC funding and were unaware of the grant application process. Instead, T Mukutu fraudulently submitted the application, falsely claiming to be a director of the organisation.

Further evidence from the SIU’s probe revealed that the brothers had previously approached the project’s members, obtained a copy of its constitution under the pretext of assisting with funding applications, and later used it without authorisation.

Several individuals listed as members in the application confirmed that they had no knowledge of the submission and that their signatures had been forged. The probe also uncovered misrepresentation regarding the purpose of the funding.

Other respondents cited in the matter include Dzata Accountants, which allegedly prepared false annual financial statements, as well as several companies and close corporations associated with the Mukutu brothers.

Following the disbursement of funds in February 2018 into a newly opened bank account, substantial payments were channelled to various entities and relatives, including companies associated with T Mukutu.

Between March and July 2018, the Madumelani Community Project made nine transactions with RUM Management Consultancy, owned by N Mukutu, totalling R3,070,000.00. In March 2018, Ndhava Management Consulting, owned by Tshisimba Collin Mukondoleli, received a payment of R4,999,000.00. On the same day, Thwala Front, owned by Mukondoleli’s wife, Kharivhe Fulufhelo Promise, was paid R1,400,000.00. Thwala Front then deposited R1,000,000.00 into a money trading account. On the same day, R50,000.00 was paid in salaries, and R400,000.00 was recorded as a hardware purchase.

The SIU found that the Mukutu brothers, along with Mukondoleli and his wife, and Tshilidzi David Netswinganani, who acted as the treasurer and one of the signatories, had “hijacked” the NPO.

In April 2018, five payments totalling R4,650,000.00 were also made, with R3,519,000.00 going to Mudonde Events and Investment owned by N Mukutu. These also included a payment of R3 million to a trust associated with Advocate William Huma, a former NLC Board member. Last year, the Special Tribunal ordered Huma to reimburse R21 million in misused grant funds, and the SIU obtained a preservation order for R10 million from the sale of his luxury residence.

This action followed an SIU investigation that uncovered how Huma and his associates diverted lottery funds into organisations managed by his family members.

The ruling follows an SIU investigation conducted under Proclamation 32 of 2020, issued by President Cyril Ramaphosa, which mandated the SIU to probe allegations of maladministration at the NLC.

The order of the Special Tribunal is part of the implementation of the SIU investigation outcomes and consequence management to recover financial losses suffered by State institutions due to corruption, maladministration, or malpractice. The SIU is empowered to institute civil proceedings in the High Court or a Special Tribunal to remedy any wrongdoing uncovered during investigations into corruption, fraud, or maladministration.

In line with the Special Investigating Units and Special Tribunals Act 74 of 1996, the SIU refers any evidence it uncovers that indicates possible criminal conduct to the National Prosecuting Authority (NPA) for further action.

Enquiries:
Selby Makgotho
Spokesperson: Special Investigating Unit
Cell: 083 718 6128
Email: siumedia@siu.org.za