South Africa tribunal orders repayment after SIU lottery probe
South Africa has taken another step in its efforts to strengthen oversight of National Lottery funding after the Special Tribunal ordered the repayment of R6 million (US$359,500) linked to an unlawfully awarded National Lotteries Commission (NLC) grant intended for a sports complex in Soweto.
The ruling follows an investigation by the Special Investigating Unit (SIU), which uncovered irregularities in a R9 million ($539,200) proactive grant awarded to the Motheo Sports and Entertainment Foundation for the construction of the Protea Glen Sports Complex.
In a judgment delivered by Judge André Petersen, the Special Tribunal declared both the funding decision and the grant agreement unlawful after finding that the approval process failed to comply with the National Lotteries Act. The court found there was no evidence that the mandatory independent research or stakeholder consultation required for proactive grant funding had been undertaken before the project received approval.
The tribunal also reviewed and set aside the NLC’s decision of 14 April 2021 to allocate the funding, declaring the grant agreement signed on 31 May 2021 invalid.
Grant funds diverted from intended purpose
Under the grant agreement, the funding was scheduled to be released in three instalments of R3 million each. The tribunal found that only the first two tranches, totalling R6 million (US$359,500), were paid before the third payment was halted.
The SIU’s investigation found that the grant money was not used to build the sports complex as intended. Instead, after the first instalment of R3 million (US$179,700) was paid to the foundation in June 2021, portions of the money were transferred to companies and individuals linked to those controlling the foundation. These included R950,000 ($56,900) to PSKO, R500,000 ($29,900) to Londilox NPC and R400,000 ($24,000) to Synercon (Pty) Ltd. The tribunal also found there was no credible evidence that any meaningful construction work had started after the first payment.
The second tranche of R3 million (US$179,700) was released in February 2022 after an allegedly inaccurate progress report was accepted by NLC officials. The SIU found that the report contained material inaccuracies, including false representations about project implementation and the state of construction. After the second payment was made, R2.123 million was transferred to a personal Capitec bank account belonging to one of the individuals involved, while additional payments were made to 2MC Consulting CC and other parties. The sports complex was never constructed.
Officials criticised over oversight failures
Judge Petersen found significant failures in the administration and monitoring of the grant. The judgment concluded that the proactive funding proposal was approved without any documented assessment of the foundation’s organisational capacity or financial standing. It also found that officials approved the proposal on the same day it was prepared without verifying whether statutory requirements had been met.
The tribunal was also critical of former NLC officials involved in authorising the second tranche. It found that documentation supporting the payment contained obvious inconsistencies, including claims that construction and fencing works were under way despite photographs showing an undeveloped site. The judgment further noted that no site visit had been conducted before the funds were released.
The tribunal ordered the repayment of R6 million (US$359,500) and held the respondents jointly and severally liable, while also specifying the amounts recoverable from respondents who received identified portions of the grant.
Part of wider recovery effort
The latest ruling forms part of the SIU’s broader investigation into allegations of maladministration, corruption and unlawful conduct involving National Lottery funding, which was authorised under Presidential Proclamation 32 of 2020. The SIU argued that the grant allocation process failed to comply with the statutory framework governing proactive funding and that public money had been diverted from the purpose for which it had been allocated. The National Lotteries Commission supported the SIU’s application throughout the proceedings.
The ruling follows an earlier Special Tribunal decision ordering the repayment of R4 million ($223,000) in connection with a separate unlawful National Lotteries Commission grant.
NLC continues funding public benefit projects
The judgment comes at a time when the National Lotteries Commission is continuing to distribute funding to qualifying public benefit organisations under its grant programmes.
Earlier this week, the NLC awarded a R3 million (US$168,000) grant to the Louis Trichardt Society for the Prevention of Cruelty to Animals (SPCA) in Limpopo to support animal welfare operations and community outreach over a two-year period. The first instalment of just over R1.8 million ($101,000) was released in June, with the remaining balance scheduled for 2027.
The funding will support staff salaries, the recruitment of a part-time kennel assistant, the purchase of a new inspection vehicle for Senior Inspector Lawrence Khodobo, fuel for inspections and outreach programmes, and sterilisation campaigns in rural communities including Tshikota, Sinthumule and Kutama. The organisation also plans to use part of the funding for infrastructure improvements after years of relying largely on public donations.
Committee member Antjie Brennan said: “This will fill a lot of gaps.” She added: “These funds will greatly impact our ability to continue the efforts to fulfil our mandate and we are deeply appreciative that the NLC has deemed our society worthy of supporting. The motto of the SPCA Louis Trichardt is ‘speaking for those who cannot speak for themselves’ and we are thrilled that NLC has joined our cause.”
The award was the Louis Trichardt SPCA’s first National Lottery grant in several years after the Commission reopened funding applications for eligible animal welfare organisations in 2023. The sector had been excluded from National Lottery funding since 2016 following changes to the Commission’s funding priorities.
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