Leaked report sheds more light on the rot at Lottery-funded school

The National Lotteries Commission’s claims about how R28.3-million was spent to rebuild Vhafamadi Secondary School don’t stand up to scrutiny

By Anton van Zyl and Raymond Joseph

8 September 2022

Photo of school opening

At the official opening of the new Vhafamadi High School in December 2016 (from left to right): School principal Mashau Thenga, Chief Livhuwani Matsila, traditional leader ThoveleVho-Thavha, National Lottery Commission Chairman (at the time) Alfred Nevhutanda, Deputy Minister of Co-operative Governance and Traditional Affairs Obed Bapela, and MEC Ishmael Kgetjepe. Photo supplied by Limpopo Mirror

An independent investigation commissioned by the National Lotteries Commission (NLC) in 2020 recommended that legal action be taken against the non-profit organisation (NPO) and its directors responsible for rebuilding Vhafamadi Secondary School in 2015.

Audit firm SkX found that the non-profit organisation, Simba Community Develop Foundation (Simba), which received grants totalling R28.3 million to build a new school, had submitted fraudulent documents and had never finished the project and that the Lottery funds could not be accounted for. Unregistered contractors had been used to build the school.

The NLC, however, ignored the recommendations and kept the report under wraps for almost two years. It was only when copies were leaked to GroundUp, that more details of what had happened at Vhafamadi came to light.

The SkX report revealed that at least R100-million out of grants of almost R300-million was lost to corruption in the 11 grants it investigated.

Several of the projects investigated by SkX were in Limpopo’s Vhembe district. The report highlights the numerous irregularities both in the manner in which the grants were awarded and in how the funds were spent.

In the case of Vhafamadi, SkX found that the NLC disregarded its own control mechanisms, that a family business linked to its former Chief Operating Officer benefitted, and that poor work was delivered without the provincial Department of Education exercising oversight and raising the necessary red flags.

Vhafamadi under the spotlight

Almost four years ago Limpopo Mirror carried the first of several articles about a controversial R28,3 million Lottery grant. The article, co-published with GroundUp, focused on one of the NLC’s “flagship” projects, the rebuilding of the Vhafamadi Secondary School in Limpopo.

The Vhembe school was destroyed during violent protest action that started in 2015. A year later the Lottery arrived as the big benefactor and provided the funds to build a new school. What only became clear much later, were links between this project and the rot at the NLC.

The article that appeared early in October 2018 was titled “NLC school ‘falling apart”. It investigated the circumstances surrounding the grant and reported on structural problems clearly visible in the new buildings, just 19 months after they were constructed. (GroundUp, which co-published the story, ran a similar article.)

But it was very difficult to obtain any information about the grant, which was one of eight “flagship projects” featured in a paid-for NLC advertorial in the Mail & Guardian newspaper in December 2018.

One major anomaly is that the recipient of the grant, Simba, is not mentioned in the list of grantees in any of the NLC’s annual reports.

In its 2016/17 Annual Report, the NLC states that “R28,330,274.80 was granted to build Vhafamadi Secondary School in Limpopo, which was successfully completed in December of 2016. The building includes a fully furnished administration block, classrooms and a fully equipped laboratory centre.”

There is no mention of the Vhafamadi grant in the 2015/16 annual report, when the grant was most likely made.

The NLC was extremely secretive about this grant. A Promotion of Access to Information Act (PAIA) application filed by a GroundUp reporter in 2018 to obtain information about the project was at first ignored. When the reporter inquired about the request a month later, the reply was that the application was “not received” and had to be resubmitted. The NLC asked for an extension, but ended up not responding at all.

At the time the NLC’s information officer was former NLC Commissioner, Thabang Mampane. (Mampane resigned suddenly in August this year, just months before her term was due to end. Shortly before her resignation, GroundUp reported how almost R3.9-million of the Vhafamadi grant had been used to pay for Mampane’s luxury home in a North West golf estate.)

No track record, no registration

Thanks to leaked documents, interviews with sources and lots of groundwork, it was possible to put together a timeline of events for the Vhafamadi project. The information contained in the leaked SkX report also helped to fill in some of the blanks.

On 16 August 2016, the NLC’s adjudication committee sat to approve the Vhafamadi school project. Simba, which had previously unsuccessfully applied for funding, was identified as the organisation to oversee the project.

Simba was established in December 2013 by Vhembe-based boxing promoter, Azwindini Simba.

The SkX report revealed that the Department of Social Development records indicate that Simba’s directors filed an affidavit stating that the company was not active in 2015 or 2016. Yet somehow the non-profit organisation produced two years of financial statements when applying for Lottery funding in 2016.

According to the SkX report, the vetting of organisations such as Simba to ensure that they had the necessary expertise to conduct the work, was mainly the responsibility of the NLC’s Chief Operating Officer, Phillemon Letwaba, along with Marubini Ramatsekisa, a Risk Manager at the NLC. Ramatsekisa has since been appointed as the NLC’s Chief Risk Officer.

On 17 August 2016, the first tranche of R25-million was paid into Simba’s bank account which, at the time, had a balance of just R226. But the money did not stay there for very long. On Monday, 22 August, R15-million was paid to a construction company, MShandukani Holdings, which did most of the work at the school.

A further R160,000 was paid to Ndavha Management, with Collins Tshisimba as sole director. Tshisimba acted as spokesperson for the Vhafamadi project when journalists started enquiring in 2018. His name, however, pops up in connection with several other multi-million rand Lottery projects that are currently being probed by the Special Investigating Unit (SIU).

On 29 August, most of the remaining money was moved out of Simba’s account.

Of this, R4-million was transferred to Upbrand Properties, a company linked to Phillemon Letwaba. At this stage his brother, Johannes, was the sole director of the company. A further R2-million found its way to Ironbridge Travelling Agency and Events. At the time, Karabo Sithole, the first cousin of former NLC chief operating officer Letwaba, was the director of Ironbridge. Letwaba’s second wife, Rebotile Malomane, became a director of the company in February 2017.

The last payment was for R1.5-million, paid to Mishsone Trading, with Jeanette Mashele as sole director. Although she is not listed in the DSD records as a director of Simba, her name also appears on Simba’s NLC application form for the funding. Mashele also features in other NLC projects under investigation, including War_RNA, a non-profit company that received R22-million for an old age home that has never been completed.

Money for mansion

MShandukani Holdings’s owner, Mashudu Shandukani, told GroundUp recently that his company had been appointed as contractor to build the school. “Upbrand Properties were the nominated civil and earthworks contractor. We paid them for the work done,” he said. Why both Simba and Shandukani paid Upbrand, was never explained.

Upbrand Properties was only registered as a company on 22 January 2016. Three months later, on 26 April, it was issued with a registration certificate as a member of the National Home Builders Registration Council.

Before the R4-million payment from Simba, Upbrand had a balance of just over R100,000 in its bank account. The account was further topped up with payments from Shandukani and Ironbridge. Simba had earlier paid Ironbridge R2-million.

The SkX report found that Upbrand Properties received just over R6.7-million into its account from entities linked to the rebuilding of the school.

GroundUp’s investigations revealed that Upbrand paid R3.6-million on 16 September 2016 to Jacobs Robbertse Attorneys. A week before, on 11 September the Mojakgomo Family Trust, of which Mampane, her husband and their two adult children are beneficiaries, signed an offer to purchase a house in Pecanwood Estate for R3.6-million. Upbrand also made an additional payment of R269,848 to cover transfer and legal costs. The house was registered in the name of the trust on 1 December 2016.

But it was not only the Mampane family that seemed to have benefited from the grant. Mishsone Trading also paid R9.2-million to lawyers acting in the purchase of a R27-million mansion by a company owned by former NLC board chairperson Alfred Nevhutanda, according to an SIU report to Parliament. The SIU obtained a preservation order in June this year on the mansion and its furniture.

During a presentation to Parliament in March this year, SIU head advocate Andy Mothibi said investigations had identified Mishsone as a “vehicle to distribute NLC funds” to businesses “directed by members of the NLC’s Chief Operating Officer” Phillemon Letwaba’s family.

Turning a blind eye

One of the several anomalies highlighted by SkX’s investigating team is that proper processes were not followed when appointing contractors to build Vhafamadi School.

In terms of legislation, contractors wishing to tender for construction projects in the public sector must be registered with the Construction Industry Development Board (CIDB). Neither Upbrand nor MShandukani Holdings were registered with the CIDB at the time.

It also appears as if the Limpopo Department of Education looked the other way and did not insist that properly registered companies perform the work at the school.

When the new facilities were officially handed over to the education department in February 2017, the guest list included the then Deputy Minister of Cooperative Governance and Traditional Affairs, Obed Bapela, and the Limpopo MEC for Education, Ishmael Kgetjepe.

Questions were sent to the spokesperson for the Limpopo Department of Education, Mike Maringa, last month. He was asked what processes would normally apply to a non-profit company wanting to build a public school. Maringa was also asked why, in the case of Vhafamadi, private contractors without proper registration had been allowed to build the school.

Maringa acknowledged receipt of the questions on 18 August, but did not initially respond. He eventually responded last week, saying only: “It has come to our attention that the matter raised is being probed by the SIU and as such, we are unable to respond until the investigation is concluded.”

Maringa was asked whether, in light of the SIU investigation, the department has launched its own internal investigation into the Vhafamadi project. He did not respond.

And the real losers are …

In a press release issued on 13 December 2016, the NLC boasted about the Vhafamadi project. “The funding was directed toward rebuilding 20 classrooms; a library; a computer lab; a science laboratory; an NSNP kitchen; and a school hall. A palisade fence has also been installed in order to minimise vandalism,” it said.

The NLC responded to initial media reports about problems with the project with a hastily organised press briefing at the school on 9 October 2018. During this visit Letwaba denied that any structural problems, describing them as mere “defects that can be remedied”.

Letwaba was also asked about outstanding items, including the computer and science lab. Members of the media were not allowed to inspect the building said to house the computer lab because, they were told, it was locked and the keys were not available. There was no sign of a science lab. Letwaba said that a separate contractor was to supply the equipment for both labs.

Learners and teachers at the school who were interviewed over the past few weeks said that no such facilities were ever established.

“There are no science or computer labs,” said a teacher who preferred to remain anonymous, fearing victimisation.

There was no purpose-built hall either, as the NLC had claimed. “They have divided two classrooms and made a hall. There are 18 classes that are in use,” the teacher said.

Anton van Zyl is publisher of the Limpopo Mirror. This article is co-published with the Limpopo Mirror.