Lottery throws millions more at dodgy projects

Maila Village elderly care home in Limpopo photographed late last year. Nothing much has happened since then. Photo: Anton van Zyl

The National Lotteries Commission paid out millions of rands more in grants to organisations already involved in questionable, unfinished Lottery-funded projects. This is revealed in a leaked list of payments made from April to December 2019.

In several cases the projects have ground to a halt because they have run out of money and the service providers, many of them small businesses, have struggled to be paid.

GroundUp has scrutinised the leaked list of payments made to organisations. We found payments to non-profits involved in projects that we have previously exposed as being dodgy, as part of our ongoing reporting on maladministration, nepotism and corruption involving Lottery funding.

Several of these projects are included in an “independent investigation” by auditors Sekela Xabiso “into allegations of improper use of funds intended for good causes” according to a document submitted to Parliament’s Portfolio Committee on Trade and Industry.

It is not known whether any of these organisations received additional funding in the 2018/19 financial year because the NLC has refused to publish a list of Lottery-funded grantees for that period, something it had done for the previous 18 years when it first began funding “good causes”.

This is only the list of payments mentioned in this story that have not been previously disclosed. The full list for April to December 2019 contains many hundreds of payments, including very large ones that we will be investigating in due course. (Amounts are rounded and listed in the order they are mentioned in this article.)

Among the projects that were paid money in the 2019/2020 financial year (which ended on 31 March 2020) are:

Nunnovation

Nunnovation Africa Foundation, a Gauteng-based NPO, received a grant of R23,720,000 on 13 July 2017 to develop a boxing arena in the tiny Eastern Cape hamlet of Storms River. Nunnovation, which has a core focus on innovation, has no experience in managing construction projects,

Almost two-and-a-half years later a GroundUp investigation late last year revealed that the “boxing arena” had morphed into a still-under-construction “multi-purpose community centre”. Work was continuing on the interior of the building but was halted after the nationwide Covid-19 lockdown was imposed, according to a source in Storms River.

Nunnovation still says on its website that it has “partnered” with the NLC “to build a boxing arena” that would be run by Boxing South Africa (BSA). The NLC also still describes the project as a “boxing facility”. But BSA has told the Daily Dispatch that it knew nothing about the project.

Details of the cost of the project are also shrouded in secrecy, Pumelelo Kate, the municipal manager of Koukamma Municipality, under which Storms River falls, previously told GroundUp.

“We have tried to get a figure relating to this project but unfortunately the implementers were not prepared to share this information, except that the budget was R14,500,000,” Kate said in a WhatsApp response to questions at the time. “We do not know anything about R23.7 million. I also cannot tell you about the value of the work on the ground. My understanding is that the multi-purpose community centre will be equipped and furnished.”

Khaya Lukwe, the owner of Khaya Construction, the main contractor, said he had charged R8 million for building the hall but had abandoned the project over “payment issues”.

Despite this, NLC paid Nunnovation an additional R4,165,555.61 on 17 September 2019, bringing the total of Lottery money used for building a large hall to almost R28 million.

Dinosys and Zibsifusion

These two projects – which have sequential NLC project numbers but were effectively run as a single project – were granted a total of R20 million late in 2018 to replace pit toilets with Enviro Loo toilet systems at schools in Limpopo and the Eastern Cape.

Both companies are linked to controversial Pretoria lawyer Lesley Ramulifho who GroundUp has revealed used Lottery funding as his personal ATM, including paying for a luxury home in a “country estate” in Pretoria.

The National Lotteries Commission paid a first tranche of R7 million to Zibsifusion for toilets at Limpopo schools on 21 November 2018. Although a GroundUp report published on 19 March 2019 raised red flags about the project, the leaked payments list reveals that Zibsifusion was nevertheless paid a further R3 million just a few weeks later, on 4 April 2019. Later reports by Groundup indicate that prior to the April payment, very little progress had been made in delivering the toilets.

Although the exact payment date of the first tranche of R7 million to Dinosys, which was awarded the East London project, is not known, it was almost certainly around the same time as the first Zibsifusion payment. The second payment of R3 million was also made on 4 April 2019, two weeks after GroundUp had reported that the company did not exist at the East London address it had supplied with its application for funding.

An analysis of the toilets projects, based on our own reporting, leaked bank statements, and a damning report by OUTA, later revealed how the toilet projects are mired in corruption and a failure to deliver.

The OUTA report, based on site visits to the Limpopo schools, called the toilets project a “disaster”. The report was issued in November 2019, the same month the NLC paid the second tranche to Zibsifusion.

Old aged homes

The NLC has funded six old age homes in rural areas to the tune of tens of millions of rands. During the course of our investigation, GroundUp has revealed several examples which, almost three years later, are still under construction. They include one in Marapyane — the home village of NLC COO Phillemon Letwaba — in Mpumalanga, and one in Kuruman in the Northern Cape. Each received a payment of R20 million in October 2017.

Despite receiving multi million-rand grants, construction had ground to a halt at both sites, with sources saying the reason was that they had run out of money. The Kuruman project received a second tranche of R3,825,053.16 on 23 May 2019. The old age home in Marapyane received an additional R3,751,025.15 on the same day.

Mushumo Ushavha Zwanda, an NPC based in Soshanguve, Pretoria, with no obvious track record, also received a grant of R20 million In October 2017 to build an old age home at Maila village in rural Limpopo.

When a reporter visited the site in November 2019, more than two years later, he found only partly built structures with roof trusses, but no roof tiles or anything else protecting the buildings from the elements. There were also piles of building rubble where shoddily built structures had been demolished. There were no signs of active construction on the site and sources said contractors had downed tools as they had not been paid.

Despite the obvious lack of progress, an additional tranche of almost R3 million more was paid to Mushumo Ushavha Zwanda on 23 May 2019.

In January, NLC spokesperson, Ndivhuho Mafela, said: “The delay was caused by contractual matters between the funded NPO and its contractors.” Mafela said that the NLC had appointed engineers together with the main contractor. A site visit was scheduled for 21 January 2020 to “discuss the technical issues and resumption date for construction. The NLC engineers will then advise on the revised schedule”. He was unable to give an anticipated date of completion.

Mafela ignored specific questions about whether any further payments were made to the beneficiary, in light of the fact that the project is not even close to 50% completion.

Another grant of R20 million to develop an old age home in North West Province was paid to NPO WAR_RnA (War Against Rape and Abuse) on 5 October 2017. It was an odd choice, since the organisation’s constitution states that WAR_RnA is focused on combating sexual and domestic abuse, exposing “current sexual and domestic criminals”, assisting “victims and survivors”, and helping “mentor males against sexual and domestic crimes.”

There is no indication that it has experience working with the aged or being involved in major infrastructure projects. The organisation was paid another R2.5 million on 23 May 2019.

Additional payments of just over R3.9 million and R3.6 million were made on 23 May 2019 to the SA Youth Movement - which had already received R20 million in the 2016/17 financial year - for an old age home in the Free State.

The sixth old age home is in KwaZulu-Natal, for which Ubusu NPC was paid R20 million on 5 October 2017 to develop. It did not receive any additional payments in 2019.

Plans by GroundUp to visit the North West, Free State and KZN old age homes in March were called off because of the nationwide Covid-19 lockdown.

Tawanda Productions

Tawanda Productions was named in a 2014 report which found “major irregularities” in Lottery funding applications it had submitted, and also on behalf of other non-profits. Despite this, Tawanda subsequently received grants of R2.7 million in 2017 and a further R570,000 and R100,000 in 2019.

The 2014 report revealed how Tawanda had applied for R25.4 million and R17.9 million for projects, of which R12.4 million and R10 million had already been allocated. A third application of R15.9 million has yet to be adjudicated. The report called for the allocated grants to be cancelled and the third not to be considered because of “major irregularities”.

Tawanda also applied for R28.3 million and R7.9 million on behalf of other organisations, which were yet to be considered. Again, “major irregularities” were uncovered and the report recommended that they not be considered for funding.

Sanctuary Drug Rehabilitation Centre

Despite receiving grants totalling R17 million for the Sanctuary Drug Rehabilitation Centre in Kuruman, Northern Cape, construction had ground to a halt over non-payment issues when GroundUp visited the site in August 2019.

The first tranche of R7.5 million was paid on an unspecified date in 2017 to Abrina 3641, a Kimberley-based non-profit company, according to the NLC’s annual report for that year. A second tranche of R7.5 million was paid to Abrina on 8 January 2018. A further R2 million was also paid, but it is unclear when that payment was made.

A further R764,750 was paid to Abrina on 21 May 2019, about three months before the GroundUp visit that found half-finished buildings and no sign of building activity. A Lottery-branded sign at the site indicated that the building contractor was a company based in Limpopo.

The stadium of dreams

The NLC’s Limpopo manager Matsobane Legodi announced that an athletics stadium would be built at Muduluni, a small and remote village in Limpopo, to the south of the Soutpansberg mountain range, at a sod-turning ceremony in January 2018. The stadium would honour the late Olympic silver medalist Mbulaeni Mulaudzi, he said.

The ceremony was held about six months after the NLC had awarded R15.9 million to Mavu Sport Development, an NPO with no apparent experience in infrastructure projects. Mavu’s stated vision is to promote grassroots sport. Part of its mission is to create support systems for emerging elite athletes.

The amount seemed not nearly enough to construct a stadium, but Legodi promised during the ceremony that the stadium would be completed by the end of June 2018, a mere six months later.

Mavu has previously received Lottery funding for two other projects, although it is not known what they involved.

In the 2015/2016 financial year it received payments of R3 million and R2.8 million for projects. The next year, Mavu received another R1.9 million.

Almost four years later, on 23 August 2019, Mavu received a further R2 million, linked to a project dating back to 2015/16. This, coincidentally, was during a period when work at the athletics stadium had virtually ground to a halt.

Mavu has received over R26.6 million in Lottery funding between 2015 and 2019.

Former South African Football Association President Kirsten Nematandani serves on Mavu’s board and is also its spokesperson.

Asked late in 2018 about the unrealistic completion date for the stadium, he agreed the deadline would not be met. He also said that R15.9 million was not enough to build the entire facility.

Nematandani said that the budget had been revised and R11 million was earmarked for an athletics track and soccer field. Basketball, netball, tennis and volleyball fields would cost R605,000, while R350,000 has been budgeted to fence off the facility.

By the end of 2019 very little of the stadium had materialised. A visit to the site in December 2019 revealed that only one multi-purpose court had been completed. As for the rest of the project, only unfinished groundwork was visible.

“The construction work started on 1 April [2019] and [the stadium] was supposed to be completed by end October, but due to challenges such as rain it could not be completed,” Israel Ramambila, the project’s liaison officer said recently. He added that they had asked the NLC for an extension to complete the first phase. “[It is] sitting at 70% completion,” he said.

The stadium will have an eight-lane synthetic track surrounding a grass field that will cater for sports such as rugby and soccer, Ramambila said in a WhatsApp message. Another track, adjacent to the one currently in progress, is planned and three more multipurpose courts would be built.to cater for tennis, volleyball, basketball and netball.

Mavu applied for additional funding from the NLC, but its request was rejected. The NPO also tried to get additional funding from the Makhado Municipality and the Department of Sports and Recreation, but when GroundUp visited the site in December 2019, no mention was made of any additional funding being received.

In March this year, shortly before the Covid-19 lockdown, Ramambila said that the concrete work on the athletic track as well as the preparation of the playground had been completed.

“But we are unable to plant grass nor rubberise the concrete track due to the delay on delivery of the fencing,” he said.

NLC responds

Responding to detailed questions about additional payments to specific unfinished projects that had already received tens of millions, NLC spokesperson Ndivhuho Mafela responded with a general response. He also failed to respond directly to a question about whether infrastructure projects that are still incomplete several years after receiving funding would benefit from the NLC’s Covid-19 fund.

The NLC “used to fund organisations for infrastructure, who in turn implement projects on their own without any technical support,” he said.

“Through a process of continuous improvement, the NLC identified a need to appoint a panel of professional engineers to assist in ensuring that infrastructure projects are implemented in line with relevant standards and norms.” Qualified engineers were then appointed to assist, he said.:

The NLC has identified “some of the major factors” resulting in delays and cost escalations for infrastructure projects. These include:

• “The geographical location of the site: the soil condition might not be conducive for the project”;
• “Lack of required construction material locally”;
• “Contractual disputes between the funded organisation and its contractors”;
• Civil unrest, and;
• Natural disasters.

“The cost escalation leads to requests for variation or additional funding to complete the projects,” Mafela said.

“In line with NLC processes, all requests for variation are submitted to NLC engineers for evaluation and recommendation for approval. Once [a] request for additional funding is approved, the engineers will continue to monitor and report on the implementation of the project.”

Correction made after publication: Khaya Lukwe was not paid R8 million but he charged that amount.

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