Suspended National Lotteries Commission chief operating officer Phillemon Letwaba has been accused of conflicts of interest involving lottery funding. At the centre of this is a company called Upbrand Properties, which is linked to Letwaba and members of his family. It’s a conflict of interest that Letwaba and the NLC have repeatedly denied.
But the seemingly innocent purchase of a luxury home in an upmarket Johannesburg suburb sheds new light on this and paints an intriguing picture of linked transactions.
The story starts in February 2016, when Transport Minister Fikile Mbalula and his wife were house shopping in Johannesburg. They found a house to their liking in Mandeville Road, Bryanston.
Negotiations led to a cash offer by the Mbalulas on 24 February 2016 to purchase the property for R5.6 million. The offer is signed by Nozuko Mbalula, the minister’s wife. The offer was accepted by the sellers the next day and a binding contract came into being.
But nine days later, the Mbalulas were off the scene and Upbrand was the new buyer – making an offer to purchase the house at the same price and on the same terms as the Mbalulas.
What happened in the intervening days is opaque and strange. First the signature of Fikile Mbalula’s friend Solly Siweya appeared on the contract.
Siweya helped arrange a holiday for Mbalula, then Minister of Sport, and his family in Dubai in December 2016, according to a report by Public Protector Busisiwe Mkhwebane. Mkhwebane found that Mbalula had violated the Executive Ethics Code.
The house purchase offer appears to have been amended with the Mbalulas’ names scratched out and the name of Siweya put in instead. Siweya also happens to be an associate of Letwaba.
Then on 5 March a new offer to purchase was made by Upbrand Properties. At the time, Letwaba’s brother Johannes was the sole director of Upbrand. Upbrand is at the centre of several GroundUp stories about misspent lottery grants. Curiously, although he seemingly has no connection to Upbrand, Siweya’s signature also appears on Upbrand’s offer to purchase.
The property was transferred to Upbrand on 29 July 2016 and the company remains the owner. However, the property has been back on the market for most of this year.
Mbalula distanced himself from the purchase of the house, in a WhatsApp statement to GroundUp via Department of Transport spokesperson Esethu Hasane.
“The minister has nothing to do with the mentioned property. Any intention to buy it in the past did not happen,” Hasane said. “Therefore, the questions about this property are best placed for answers by the owners of the property and must be referred to them. The minister cannot account for a property that he does not own.”
“The minister is unable to account for Upbrand properties,” said Hasana.
We have seen no evidence of wrongdoing by the minister. But the circumstances of his involvement and the conduct of his associates do raise troubling questions.
The Upbrand connection
GroundUp has seen Upbrand’s annual financial statements for the year ended February 2020. They show Upbrand as having property, plant and equipment of just over R3 million, including motor vehicles at the depreciated value of R1.3 million. Land and buildings, which should include the Bryanston property, are listed at R1.64 million.
Either the property is not on the books of the company, or the asset is hopelessly undervalued in the financial statements. Upbrand paid R5.6 million for the property. It is unbonded and now on the market for R5.5 million.
A greater mystery is where the money came from for the purchase of the property. Upbrand was registered on 22 January 2016 yet 42 days later, it purchased a luxury home. What the house had to do with a start-up construction company is not clear.
The first tranche of R3 million of the purchase price came from Ironbridge Travelling Agency and Events. At the time that company’s sole director was Karabo Sithole. Sithole is the Letwaba brothers’ first cousin.
Between 2016 and 2017 various Letwaba family members served as directors of Ironbridge, with Phillemon Letwaba’s wife, Rebothile Malomane (he is married to two women) remaining in the chair as sole director since late 2017.
The story does not end there.
Two months after the sale, the sellers threatened to cancel the deal. Siweya sent the transferring attorney proof of sufficient funds in the call account of a non-profit organisation called Lulamisa Community Development, which has received tens of millions of rands in lottery grants.
Why an unrelated non-profit organisation’s bank balance was relevant to Upbrand’s purchase of a residential property is a further mystery. As will be seen later, Lulamisa has no apparent link to Upbrand, and it is hard to see what relevance its bank balance had to the Upbrand purchase.
Malwandla Solly Siweya, the apparent middleman in the house purchase, is a co-director with Letwaba in at least 10 companies registered with the Companies and Intellectual Property Commission (CIPC). All are listed as being in the process of deregistration after failing to submit annual returns.
He is also linked to several non-profit companies that have received more than R93 million in lottery grants. Lulamisa received R80 million, and as we have seen, was linked to the Bryanston house purchase.
He is also a former director of Lulamisa Enterprise where both Letwaba’s second wife, Rebotile Malomane – they were not married at the time – and Themba Mabundza, who has also been linked to several Letwaba linked companies, are both former directors.
Siweya also signed the offer to purchase the house on behalf of Upbrand, with no obvious link to the company. Siweya claims that he was not acting for the company and had planned to buy the house himself.
“With regard to the purchase of the house, I was not representing Mr. Mbalula and/or Upbrand or acting as their intermediary,” he said in an emailed reply to detailed questions. “I have no authority to do so; I was representing my own business interests intending to purchase the property. However, I ended up not purchasing it. I did not pay any money to them.”
“With regards to your inquiry on my involvement with Mr. Letwaba I wish to place it under no obligation at all, but indeed confirm that I did share directorships [with him] on dormant registered companies. It was business ventures [that] never took off the ground. These registered dormant companies remain dormant and/or under deregistration as per CIPC.”
Timeline: Following the money
On 24 February a cash offer to purchase the house for R5.6 million, with a 10% deposit, was made, with the buyers stated as April Fikile Mbalula and Nozuko Mbalula “for and behalf of a company to be formed”. But these details were crossed out without new buyers being identified. The offer was signed by “N Mbalula” – which was also crossed out. Siweya’s signature appears next to Nozuko’s crossed out signature.
On 5 March a new offer to purchase by Upbrand Properties was made.
On 5 May Siweya sent proof to the transferring attorney that Lulamisa had R5.3 million in an FNB “Money on Call” account.
On 11 May 2016 Ironbridge Travelling and Events paid R3 million to the transferring attorneys.
Somewhere in between, another R2 million was paid to the attorneys, according to a source with knowledge of the transaction. We were unable to conclusively confirm the source of this payment.
Between 26 and 28 July 2016, another R300,000 was paid to the transferring attorneys, according to leaked Upbrand bank statements. It is possible that this was to make up a shortfall on the transfer or costs.
Part of this, R165,000, was paid on 28 July, on the same day that an electronic transfer of R165,000 arrived in the Upbrand account from “Mshandukani”.
Before the Mshandukani payment was received there was a credit balance of only R3,289.85 in the Upbrand account.
The name “Mshandukani” features in numerous payments to Upbrand. Vincent Mashudu Shandukani is the sole director of Mshandukani Holdings and he and Siweya are former co-trustees with Themba Mabundza, in a few business trusts. Mabundza is a sole or co-director of several companies related to Phillemon Letwaba.
Shandukani’s foundation, the Mshandukani Foundation, also received a R4 million lottery grant in 2019/20, which he says was for “drilling of boreholes in the Eastern Cape”.
He said in a written response to questions: “Mshandukani Foundation has donated [a] couple of boreholes to communities. In this case additional funding was applied for by the community together with Mshandukani Foundation.”
Shandukani confirmed that he knew both Siweya and Mabundza and that they had been co-trustees on the T & M Property Trust but said they were no longer “part of my businesses”.
“They were supposed to be business partners on the property development trust with me. The trust was opened, [but]the relationship didn’t work,” he said. Siyewa resigned from the trust in 2017.
On the payments by “Mshandukani” to Upbrand, Shandukani said: “They have worked as a subcontractor on a building project we were [the] main contractor on. Therefore, there were a couple of payments done to Upbrand for the work done under us.
“We paid invoices due to them. We do not get involved in how they spend money paid to them. Therefore, we’re not aware of the transaction they made.”
Upbrand bank statements show that Mshandukani paid a total of R4,686,840 to Upbrand over a three month period in 2016, R2 million of which is reflected as loans.
The house at the centre of it all
The face brick house is on a 4,000m² property on a very quiet, tree-lined suburban street with large houses on very big properties. Like its neighbours, it is behind high walls topped with electric fencing. The 600m² house has four bedrooms, three bathrooms, a double garage with additional outdoor parking for four cars, and a separate flatlet.
There is a high-security presence on the street, with several of the homes having guardhouses and permanent private security guards on 24/7 duty. Cars belonging to Proforce, a private security company, regularly patrol the street, with one of their vehicles permanently stationed in the road. Besides cameras on the walls of many houses on the road, the grassy pavements on the street are lined with CCTV cameras.
Responses to questions
Letwaba did not respond to questions sent to him via WhatsApp.
NLC spokesperson Ndivhuho Mafela said the matter was being investigated by authorities. “The NLC cannot provide parallel commentary on these matters until such time that such investigations have been concluded”.
Sthembiso Jim Skosana, who has been Upbrand’s sole director since July 2020, did not respond to questions sent to him via email and WhatsApp.
Editor’s Note: This article contains a corection, and was updated on 2021-12-13. It had initially contained a quote that incorrectly stated Siyewa was removed from a Trust via court order. In fact he resigned. Our apologies.
This article first appeared on GroundUp and was republished with permission. Read the original article here.