The Special Investigating Unit has hailed a ruling by the Special Tribunal that declared a R14 million National Lotteries Commission grant to the Madumelani Community Project unlawful.
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The Special Investigating Unit (SIU) has obtained a Special Tribunal order declaring a R14 million grant awarded by the National Lotteries Commission (NLC) for a community cultural village project to be fraudulent, invalid and unlawful.
The ruling, issued in February by retired Special Tribunal President Judge Margaret Victor and released by the SIU on Tuesday, reviewed and set aside the grant awarded to the non-profit organisation Madumelani Community Project. The contract for the funding had been signed in February 2018, and the grant has now been declared void ab initio (from the beginning).
In her judgment, Victor found that brothers Tshimangadzo and Ndoweni Mukutu, along with Tshilidzi David Netswinganani, Mudonde Events and Investment, Rum Management Consultancy, Ndhava Management, Tshisimba Collin Mukondoleli and Thwala Front, acted in concert with the intention to defraud the NLC.
According to the tribunal, the Mukutu brothers were the principal participants in the scheme and both served as directors of the Madumelani Community Project.
Victor further ruled that Mudonde Events and Investment, Rum Management Consultancy, Ndhava Management and Thwala Front are not to be regarded as juristic persons in respect of any rights, obligations or liabilities relating to the NLC grant. She held the directors personally liable for repayment of the R14 million.
The judgment also found that the directors of certain entities knowingly enabled the fraud. Victor said there was a clear case that the directors of Mudonde and Rum Management Consultancy were aware of the scheme and used their companies to facilitate it, and should therefore be held personally liable.
“I find that the scheme established by the two brothers, Mukutu, are clearly fraudulent. Ndoweni Mukutu's lack of knowledge cannot be explained in any plausible or credible manner by him. The raising of R14m is no simple matter. Tshimangadzo Mukutu's claim that he could not afford legal representation is implausible. He is a project manager responsible for managing millions of rand,” reads the ruling.
Victor was critical of Tshimangadzo Mukutu’s conduct during the proceedings.
“He could have, of his own accord, sought an interview with the SIU investigator. He could have produced documentation demonstrating the project's authenticity. Instead, he sought to remain silent and ride on his brother's coattails, rather than deposing to an affidavit and opposing the relief sought,” the judge added.
The tribunal found that the scheme involved extensive planning, including obtaining a copy of Madumelani’s constitution, appointing fictitious office bearers, inserting fraudulent signatures into the grant application, opening a bank account and rapidly disbursing millions of rand. It further found that Ndoweni Mukutu ultimately received nearly R7.5 million, close to half of the total grant.
The SIU said the funding had been intended for the construction of a cultural village in Hammanskraal, Tshwane. However, its investigation established that the project had already been initiated in 2015 by Maubane Cultural Village and Community Arts and Centre, which had received a separate R300,000 grant from the NLC.
Investigators also traced the movement of funds between March and July 2018. During that period, Madumelani Community Project made nine payments totalling just under R3.1 million to Rum Management Consultancy, owned by Ndoweni Mukutu.
Ndhava Management Consulting, owned by Mukondoleli, received nearly R5 million in March 2018, and on the same day Thwala Front, owned by Mukondoleli’s wife Kharivhe Fulufhelo Promise, received R1.4 million.
Further payments followed in April 2018, amounting to R4.65 million. Of this, R3.519 million was paid to Mudonde Events and Investment, also owned by Ndoweni Mukutu. These transactions included a payment of R3 million to a trust linked to Advocate William Huma, a former NLC board member.
The tribunal had previously ordered Huma to repay R21 million in misused grant funds, and the SIU subsequently secured a preservation order for R10 million from the proceeds of the sale of his luxury residence.