Documents and computers were seized by the Special Investigating Unit (SIU) during a raid on the East London offices of the National Lotteries Commission (NLC) as part of an investigation into dozens of dodgy grants totalling over R14-million, allegedly linked to a former board member.
The SIU began its investigation after a whistleblower provided a list of 40 questionable Lottery-funded projects allegedly linked to Muthuhadini Madzivhandila, who died earlier this year.
The SIU revealed some details of the raid in a series of tweets a few hours after the 8.30am surprise raid began on Wednesday.
Today, the SIU searched National Lotteries Commission (NLC) offices in East London, Eastern Cape, to seize documents relating to an ongoing investigations.#SIUWorkingForYou pic.twitter.com/fLV7yGJLXk
— Special Investigating Unit (SIU) (@RSASIU) November 16, 2022
“The SIU received a tip-off from a whistleblower alleging that 40 non-profit organisations were recruited to apply for grant funding,” the SIU’s official Twitter account tweeted. “They received approximately R14-million.”
In another tweet, the SIU said that the money was channelled to a “family member” of a “former NLC board member”.
Earlier this year, a whistleblower sent GroundUp what appears to be a similar list of dodgy projects allegedly linked to Madzivhandila. It contained the names of 40 different non-profit companies, based in small towns and villages in the Eastern Cape, which all received grants from the NLC’s Arts and Culture sector between 2019 and 2021.
The grants were paid to the companies within months – and, in some cases, only weeks – of them being registered with the Companies and Intellectual Property Commission (CIPC). The majority of these are based in the Maluti district in the Eastern Cape, including in Matatiele, Bizana, Mount Fletcher, and Mount Ayliff.
People were “specially recruited” to act as directors of the newly-formed companies, which were then used to apply for Lottery funding, according to a source with knowledge of what occurred. The source asked not to be identified as they were not mandated to speak to the media.
Once the NLC paid out the grants, the companies then transferred most of the money to a company owned by a close family member of Madzivhandila. The directors of the companies were each paid “a few thousand rands” for their role in the scam.
Since the companies were all newly-registered, it would have been impossible for them to produce the two years’ worth of genuine financial statements that must be submitted as part of a grant application. This suggests either that forged financials might have been submitted, or the NLC failed to obtain the financials.
It once again raises questions about the due diligence conducted by the NLC at the time.
After the SIU swooped on the NLC’s East London offices, some members of the raiding team immediately began seizing documents related to the dodgy grants. They also seized computers belonging to at least four staff members. Among the computers seized was one belonging to the provincial manager of the NLC and those of staff responsible for overseeing the grants.
At the same time, other SIU officers commandeered the board room where they spent hours questioning staff.
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