Lottery’s R10.1m grant for phantom youth awards

The National Lotteries Commission (NLC) awarded a grant of more than R10m to a non-profit entity to stage an SA Youth Awards ceremony — but the company had nothing to do with the event and none of the grant was spent on it.

The R10.1m grant allocated to Life for Impact in the 21st Century, was shared among people and companies with no links to the awards, according to a Special Investigating Unit (SIU) presentation to parliament last year.

At the time of the award, the dormant company wasn’t compliant with statutory department of social development reporting requirements. It is now in the final stages of deregistration with the Companies and Intellectual Property Commission (CPIC) after failing to file annual reports and submit documents.

Life for Impact claimed “at least three times” that the youth awards event took place, but failed to present any evidence to substantiate that, audit firm Nexia SAB&T said in a report detailing its investigation into the grant. The grant is one of several investigated by Nexia at the request of Minister of Trade, Industry & Competition Ebrahim Patel.

The awards did take place but were organised by the National Youth Development Agency (NYDA), which told Nexia’s investigators it had covered the full cost. That was confirmed by the St George’s Hotel in Irene, Pretoria, where the event was held. The hotel was paid R514,900 by Ultimate Travel, the NYDA’s travel and events supplier.

Parliament informed

SIU head, Advocate Andy Mothibi gave details to parliament in 2022 about how the Life for Impact grant, meant for the Youth Awards, was shared out with people, companies and a trust, none of which were involved with the event.

He did not name Life for Impact or the entities that received money, but said the company had submitted reports and invoices to the NLC suggesting that the event had taken place as planned.

GroundUp has been able to identify the entities that received these payments:

• R1m was paid to Sunguti Projects, of which Terry Pheto, the actress known for her role in Tsotsi and The Bold and the Beautiful is the sole director. Pheto also received R3m from the recipient of an unrelated grant to help build a R5m home in Bryanston, Johannesburg. The house, which was paid for in cash, was frozen by the Special Tribunal but failed to attract any bids when it went on auction earlier this month;
• Just over R1.03m was paid to Mosokodi Business Trust, of which former NLC chief operating officer Phillemon Letwaba and members of his family are beneficiaries;
• R1.5m was paid to Letwaba Holdings — since renamed LRB Holdings and Trading — of which Letwaba and his wife Daisy are directors;
• An upmarket restaurant and party venue owned by Letwaba’s wife, Just Cuban, in Pretoria, received R500,000;
• R3.21m was paid to Blue Sky Trading and Projects, of which Life for Impact director Themba Mabundza is the sole director. Mabundza is an associate and former business partner of Letwaba;
• R1.735m was paid to Mhani Rosy Investments, of which Malwandla Siweya and three members of his family are directors. Siweya resigned as a director of Life for Impact in November 2015, six months before the first of two applications Siweya is an associate of ANC secretary-general Fikile Mbalula. Siweya acted as the middleman in the purchase of a luxury house in Bryanston, in Johannesburg, by Upbrand Properties, a construction company linked to Phillemon Letwaba and his family. Mbalula and his wife made a R5.6m cash offer to buy the house. The couple dropped out of the bidding and Upbrand then bought the house on identical terms, with Siweya acting on its behalf. GroundUp also previously reported how three non-profit companies linked to Siweya had received R93m in lottery grants in recent years;
• R2.17m was paid to Nzhuku Trading. GroundUp hasn't been able to find details of Nzhuku being listed as a company by the CIPC, or as a non-profit company by the department of social development;
• R151,600 was paid to Gemini Moon Trading — the name of dozens of shelf companies, each with a number after the company’s name. In some cases, companies that started out as Gemini Moon have been renamed. GroundUp was unable to identify which of these entities received the Lottery money.

Responses from parties identified

Letwaba did not respond to emailed questions.

In a response to questions sent via WhatsApp, Mabundza said: “I’m particularly concerned at the level of ‘investigation’ that you are conducting on me (without being duly authorised to do so) precisely because it makes me suspicious of the process that is happening at the SIU.”

Mabundza added that he was seeking “legal opinion on your violation of my privacy and other related illegal activities that you are conducting about my person”.

Pheto did not respond to questions sent to her via WhatsApp.

In his response to questions, Siweya said he had not been a director or trustee of Life for Impact when applications for the grant were lodged. But he didn’t explain why his company, Mhani Rosy, received a payment from the youth awards grant.

GroundUp asked Siweya again in a follow-up question why his company had received the payment. He said that Mhani Rosy is a private company and did not have to disclose its financial information.

The funding application document submitted by Life for Impact was the same one the company had used in 2016, before it was taken over by new directors, Nexia said. The previous directors had applied for R50.5m to stage a series of youth awards in different parts of the country but got no response from the NLC.

More about Life for Impact

Life for Impact was registered as a non-profit company in May 2015. Its founding directors are Reginald Tshikota and Edward Matakanye. A third director, Caroline Tshikota, was appointed on November 9 2015.

Tshikota and Matakanye told the Nexia investigators that Life for Impact was dormant when they were approached by Mabundza, who offered to take it off their hands. Besides Mabundza, two other people, Sibongile Kheswa and Dikeledi Patricia Nkosi, were appointed as the new directors of Life for Impact.

Life for Impact’s original directors told Nexia that the company had never compiled financial statements while they were directors.

“As the new directors took over as from March 6 2017, there were thus no financial statements for the financial years preceding their appointment,” Nexia said.

Mabundza and the others nevertheless did present some financial statements to the NLC, for the years ending February 2015 and February 2016. But, according to Nexia, the financial statements they submitted were “identical in all respects and only the name of the entities differ” from those submitted by a hijacked non-profit company, Denzhe Primary Care. Denzhe received a R27.5m lottery grant for a drug rehabilitation centre in Pretoria. At least R22m of the Denzhe grant is unaccounted for.

Charles Tawedzwa Muswere, the accountant who compiled the financial statements for Life for Impact and for Denzhe Primary Care “was invited for comments as to why the sets of financials were identical, but he declined the invitation,” Nexia said.

The bank account for Life for Impact was opened at FNB on March 22 2017, a few days before the adjudication of its application.

‘Peculiar approval’

Nexia noted that it was “peculiar that an amount of R10,106,800 had already been approved on April 11 2017, though the NLC claimed it had only received the application forms and documents on May 24 2017.”

In fact, the NLC adjudicated the Life for Impact application for funding on April 11 2017 and the first payment to the company was made just nine days later, on April 20 2017.

“All of this happened within a matter of seven weeks of the appointment of Mabundza, Nkosi and Kheswa as directors of Life for Impact in 21st Century on March 6 2017, ‘piggybacking’ on the original application that had been laying at the NLC since June 2016.”

Despite “numerous requests” the NLC failed to provide Nexia with the original file for the Life for Impact grant, making it difficult for the investigators to find out what had happened. That “amounts to a serious dereliction of duties”, Nexia said.

“It was clear that the NLC did not verify whether the expenses allegedly incurred by Life for Impact in the 21st Century in the amount of R10,106,800 were in fact spent as portrayed,” Nexia added. “The NLC merely accepted the interim progress report submitted by Life for Impact in the 21st Century as evidence. No attempt whatsoever was made to request any invoice, receipt, proof of payment and similar documents to verify expenditure incurred.”

“Instead, documents are merely accepted at face value, without verification of their authenticity.

“The failure to verify expenditure by NLC was not only limited to Life for Impact in the 21st Century and was also evident in the three other matters that were investigated [by Nexia], namely, Denzhe Primary Care, I am Made for God’s Glory and Zibsimanzi.”

Nexia’s investigators said some of the people they interviewed as part of their investigation, asked “to remain anonymous as they fear for their personal safety and that of their family”.

Besides Life for Impact, Mabunza is also a director of Zibsimanzi, which benefited handsomely from lottery grants. Letwaba’s second wife, Rebotile Malomane — he is married to two women — is also a director.

NLC under investigation

Audit firm SkX, also appointed to investigate corruption at the NLC, found “[b]oth Zibsimanzi and Life for Impact received grants in 2017 within six months apart, totalling R14,906,800”. Letwaba, representing the NLC, and Mabundza, for Life for Impact, had both signed the Life for Impact grant agreement on the same date, SkX said.

Kheswa is also a director of Zibsilor, which contributed R1m towards the purchase of a mansion for former NLC board chair Alfred Nevhutanda, and which received R20.7m in lottery funding to build a drug rehab centre in Soshanguve, near Pretoria. Six years after receiving the grant, the rehab is still not complete and the new NLC board has allocated an additional R8.6m to finish construction.

Siweya, whose company received R1.7m from the Life for Impact grant, resigned as a director of Life for Impact in November 2015, six months before the first application for funding in May of the following year. Siweya is linked to a controversial R80m grant to Lulamisa Community Development, for a sports project. A GroundUp investigation found that there was very little to show for that grant, which was shrouded in secrecy.

Siweya, Lulamisa, and former Life for Impact director Ronald Tshikota also featured in another lottery investigation. In January last year, GroundUp reported how R25m of a R30m grant to the SA Sports Association for the Intellectually Impaired to host the World Championships for people with Down syndrome in Bloemfontein in late 2015, was paid to Tshikota’s company, One World Media. That was meant to cover the costs of the event, including documenting it. But that never happened and when asked about the project at the time, Tshikota and the NLC refused to say what had happened to the money.

Expenses listed

The budget submitted by Life for Impact for the one-night event, totalling R10,106,800, includes the folllowing line items.

• R2m for “venue hire, décor and catering”, and a further R2m for “technical and creative production;
• R1.5m for “judges and facilitators travel, meals, accommodation and compensate”;
• R1.2m for “PR, advertising and marketing”;
• R1m for “entertainment and brand ambassadors”;
• R605,000 each for “arts and entertainment”, “environment” and “social cohesion” categories; and
• R400,000 for security.

Nexia said the documents submitted by the new directors of Life for Impact indicated that they were applying for funding to host a “glamorous gala event”, but this was “not in line with the aims and objectives of Life for Impact as set out in its constitution and the Project Business Plan”.

GroundUp