The Special Investigating Unit (SIU) will seek to recover any financial losses suffered by the State and the National Lotteries Commission (NLC) after an investigation into the affairs of the commission uncovered millions of rands in alleged money laundering and corruption.
The SIU is presenting progress on the investigation to Parliament’s Portfolio Committee on Trade, Industry, and Competition.
The ongoing investigation is expected to be completed this month with a report to be handed to President Cyril Ramaphosa in April.
SIU Chief National Investigations Officer Leonard Lekgetho described how in one instance, a former board member of the NLC allegedly “hijacked” a non-profit organisation (NPO) that was granted at least R23 million in funding to build an old age home in Mpumalanga.
“The project was started but not completed as funds allocated to the project were redirected to individuals connected to the NLC.
“The investigation has revealed that R5 million of the R23 million received from the bank account [of the NPO] was transferred to one attorney of [a group of companies] belonging to the former board member for the transfer of luxurious immovable property in favour of their client,” Lekgetho said.
Lekgetho revealed that the investigation into the same former board member found that an NPO transferred at least R3.3 million into the bank account of a company linked to a senior NLC official a day after receiving R7.5 million funding for the construction for a rehab centre in Gauteng. That company subsequently transferred R1 million into the board member’s account.
The same modus operandi was executed for the construction of a rehab centre in Mpumalanga.
“[Furthermore], the SIU investigation has revealed that during the period March to May 2018, the former board member received a total amount of R5.47 million into his personal bond account from various NPOs. The bond was for his primary residence in Gauteng,” he said.
Lekgetho said an investigation into a second former board member found that they had received – either directly or indirectly – at least R10 million from an NPO which was in part used as a deposit for an R27 million house and a deposit for a luxury vehicle.
Trusts
Lekgetho told the committee that a senior official at the NLC was allegedly involved in the establishment of trusts to act as conduits for money laundering.
“[A] senior official was involved in a number of business activities with individuals and entities that are directly or indirectly benefitting from NLC grants. We have identified the key individuals involved. During 2015, the senior official and one known individual registered two trusts,” he said.
According to Lekgetho, the trust received at least R14 million in transfers from a non-profit company and private companies which received monies from these NPOs.
“After the trust received funds from the NLC [beneficiaries], the funds were further redistributed to senior NLC officials’ personal accounts and other family businesses,” he said.
The investigation also found that a company owned by the brother of a senior NLC official received at least R34 million in payments from NPOs that were granted funding by the commission.
“So what happened is that NPOs transferred money to the trust account then from the trust account, the money is transferred to the company…then from the company, the money is transferred to the benefit of the NLC official.
“During the period 3 March 2016 to 11 July 2018, the company…paid a total of R5.6 million to the benefit of the senior NLC official and entities linked to his family members,” he said.
Borehole drilling funding
Lekgetho told the committee that during the investigation, the SIU found how an NPO was granted R55.4 million in funding to drill at least 200 boreholes in five provinces but, the bulk of the funds ended up in the pockets of individuals and companies.
He said upon transfer:
R10 million was transferred to a company “for services which were never rendered”. R750 000 was used for the purchase of two vehicles, R2.6 million was directed to the purchase of a house.
R1 million was transferred to the call account of the entity, R2.2 million found its way to the account of another entity, and some R340 000 was used to purchase another vehicle.
Lekgetho said the boreholes were drilled in the provinces by two companies with one entity receiving at least R10 million for doing no work.
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