Leaked report shows how Lottery school toilet project was hijacked

A leaked forensic report has revealed details of the way millions of rands intended to build toilets at rural Eastern Cape and Limpopo schools were hijacked by Lottopreneurs.

GroundUp and the Limpopo Mirror first exposed the dodgy dealings in the R30-million toilet project in 2019. This spurred the National Lotteries Commission (NLC) to appoint audit firm SekelaXabiso (SkX) to investigate.

The report by SkX is one of several commissioned by the NLC in 2020 following allegations of malfeasance. SkX handed the report to the NLC in 2020, but the new NLC board, the Department of Trade, Industry and Competition, and the Special Investigations Unit (SIU) only received the report this year. The NLC lied to Parliament in 2021 about supposed delays in finishing the report.

Companies controlled by Lesley Ramulifho

The report confirms that two non-profit companies controlled by lawyer Lesley Ramulifho – Zibsifusion and Dinosys – each received R10-million in grants to build new toilets. Ramulifho has been involved in several dodgy lottery deals and has received more than R60-million in lottery grants.

One company, Zibsifusion, was to construct 10 new toilet blocks in Limpopo and the other, Dinosys, was to construct new toilets at 15 schools in the Eastern Cape. SkX’s report found that toilets were built at only seven Limpopo schools and only four Eastern Cape schools, and that the workmanship and materials used were of poor quality.

Two other companies, T2 Tech and SRSQS, received almost R10-million to conduct quality assurance on behalf of the NLC. This brings the total expenditure on the project to close to R30-million. SkX’s quantity surveyor said the project should have cost about R9-milllion, not R20-million, and that the fees charged by T2 Tech and SRSQS were “overly inflated”.

During site visits both in Limpopo and the Eastern Cape, SkX found discrepancies between progress reports submitted to the NLC and the reality on the ground. Where new sanitation facilities had been constructed, they were of inconsistent quality. Some schools identified as needing sanitary facilities were found to already have them.

The scope of the Eastern Cape project was reduced from the construction of 15 new toilets to the construction of four new toilets and the renovation of 16 blocks of toilets. This deviation was never requested or approved by the Department of Education, SkX found.

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SkX also visited several Eastern Cape schools that already had toilets and found that the schools had been approached by a company called East London Sanitation, who said they were instructed to conduct maintenance services on their EnviroLoo sanitation facilities. The schools were told to pay 50% of the service fees.

Upon further investigation, SkX found that East London Sanitation had an agreement with Lesley Ramulifho, on behalf of Dinosys, to provide the services. Half of the cost would be paid by the schools and the rest by Dinosys. East London Sanitation invoiced Dinosys for the fees, but was never paid. The schools SkX visited were unaware of the link between East London Sanitation and the NLC project.

According to the report, the bank statements for Zibsifusion showed that R2-million was paid to Ramulifho and that R110 000 was sent to Rebotile Malomane. Malomane is former NLC Commissioner Phillemon Letwaba’s second wife and is the mother of three of his children. Her company received millions in Lottery money.

Several irregularities in grant applications

SkX found several irregularities in the grant application processes of Zibsifusion and Dinosys. Marubini Ramatsekisa, a risk manager at NLC at the time, was found by SkX to have pushed through documents with incorrect information, to have neglected to carry out due diligence, and to have compiled some documents himself that were said to have been compiled by other officials in the NLC.

Ramatsekisa later became Head of Risk, one of the most important and senior roles at the NLC. He was suspended earlier this year.

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SkX found that the proposal for the project, asking for R10-million for each province, contained no cost breakdown. In some instances, payments were processed without supporting documents having been provided, the report says.

No evidence was provided of any criteria used to select Zibsifusion and Dinosys. Several documents in the application process are potentially fraudulent, the report says.

The report also mentions that Dinosys identified “Mr T Monare” as the representative for the Eastern Cape Education Department. Monare does work for the department, according to spokesperson Malibongwe Mtima, as a director in one of the infrastructure sections. But when SkX tried to call Monare on the cellphone number supplied, the call was answered by Ofentse Modibane, a project manager for Zibsifusion and Dinosys.

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Progress reports submitted by SRSQS and T2 Tech were misleading, SkX found. In one case, pictures purportedly showing progress at several sites were in fact of the same structure at the same school.

SRSQS did not carry out any geotechnical services and only conducted a geotechnical desktop study. This was “improper as they were appointed to provide geotechnical services on behalf of the NLC” the report found. There were also changes in the scope of the project in the Eastern Cape but there was no evidence that the Eastern Cape Department of Education had requested or approved the changes.

SRSQS submitted invoices to the NLC for quality assurance for the construction of facilities at 20 public schools. They were paid the whole amount, despite only four schools having received sanitation facilities.

Recommendations

SkX recommended:

• that all other “pro-active” grant funded projects be probed. “Pro-active” funding, where the NLC could identify projects considered worthy of funding, was used to defraud the NLC of millions. The new board placed a moratorium on pro-active grant funding this year;
• that disciplinary charges be instituted against Ramatsekisa for misrepresentation and submitting untruthful information;
• that Letwaba should face disciplinary charges for dereliction of duty;
• that funds should be recovered from SRSQS, T2 Tech, Dinosys and Zibsifusion;
• and that criminal charges should be laid against Lesley Ramulifho, Zibsifusion and Dinosys.

This article is republished from GroundUp under a Creative Commons license. Read the original article here.