Leaked Report Exposes Abuse of Lottery Money Paid to Minstrel Group

• A report by attorneys Dabishi Nthambeleni into a R27.3-million grant by the National Lotteries Commission to the Cape Town Minstrel Carnival Association (CTMCA) for a minstrels museum has found no proof that a museum ever existed.
• The investigators found that the CTMCA did not use the R5-million allocated to buy or build a museum.
• They also found that the CTMCA only bought land worth R1.7-million, not R5-million as allocated.
• They found the CTMCA used funds from the Lottery to purchase workshop equipment from one of its own directors, Richard “Pot” Stemmet.

A leaked forensic report reveals how millions of rand granted to the Cape Town Minstrel Carnival Association (CTMCA) by the National Lotteries Commission (NLC) to set up a museum to celebrate the city’s rich minstrel history went astray. The museum was never created.

The details of the abuse of millions of rands of Lottery funds for a museum that never was are revealed in an investigative report commissioned by the NLC in 2021.

The museum grant was part of more than R64-million in Lottery funds allocated to the TMCA between 2003 and 2017.

The first part of the investigation, by law firm Dabishi Nthambeleni, was conducted between September 2020 and January 2021 and focused on a R27.3-million grant to the CTMCA in 2014, which included funding for the museum. The approved budget for the museum was more than R12.8-million, with R5-million of that allocated for a building to house the museum.

The NLC tasked Dabishi Nthambeleni to investigate the purchase of a building for the museum and whether the museum “actually existed”.

The firm was also instructed to investigate

• the purchase with Lottery funds of two vehicles – a 60-seater bus and a 23-seater bus – for R2.4-million; and
• various machines “purchased for the manufacturing of the costumes and hats” for the minstrels carnival, for R5.4-million.

At the time, convicted criminal Richard “Pot” Stemmet was director of the CTMCA. He was appointed a director of the CTMCA in September 1996. He resigned in December 2016 but his wife Zainonesa and daughter Raziah continued as two of several directors of the organisation. Stemmet was reappointed as a director in May 2021.

The investigation followed extensive reporting by GroundUp about the millions of rands of Lottery funding allocated to the CTMCA. (See here, here and here) and the way the funds probably helped finance the ANC’s 2014 election campaign in the Western Cape, led by at the time by Marius Fransman.

In response to a Parliamentary question, former NLC Commissioner Thabang Mampane listed grants to three CTMCA “projects” – including the museum – between 2012 and 2015. All three projects had been completed, she told MPs.

But the investigators found no proof that a museum had ever existed.

At first the museum was due to open in rented premises in Crete Road, Wetton. A photo obtained by GroundUp of the supposed Wetton museum shows a coffee shop with some musical instruments and minstrel costumes and collages of photos haphazardly hung on the walls, and a model ship on its plinth in a corner.

In its report, Dabishi Nthambeleni said it was “not in a position” to confirm if a museum had ever operated from these premises.

Stemmet told the investigators the museum had been moved because they could no longer afford the rent of R100,000 a month. He said the CTMCA had purchased property for R1.7-million in Schaapkraal for the museum, but could not get it rezoned, and had been sold for the same price. Schaapkraal is in a peri-urban area far from the city.

As a result, the museum had been moved to a new location in Primrose Park in February 2021, Stemmet told the Dabishi Nthambeleni investigators. But after visiting the premises, which are in an industrial area, the investigators said they doubted whether a proper museum existed there. Photos attached to the report show a mishmash of randomly displayed uniforms, musical instruments and assorted minstrel paraphernalia nailed to the wall, displayed on tables and spread out on the floor, with no explanation.

“There is a minimal amount of items at the museum [that] in no way represent the more than 100-year history of the Cape Town Carnival, the investigators said, adding that there was “no signage outside the premises indicating that they housed a museum and … generally, the museum does not look to be open to the public.”

The CTMCA had breached the grant agreement, Dabishi Nthambeleni noted, by moving the location of the museum to an alternative location without notifying the NLC.

Buses

Stemmet told the investigators that the CTMCA had to move from the rented Crete Road premises because it had run up a R4-million debt with the City of Cape Town and was afraid its equipment would be attached.

“Due to the legal battles and the debts, the organisation had to move its property from 5 Crete Road to avoid the sheriff from attaching the property of the organisation,” Stemmet told the investigators.

Sedrick Soeker, the current director of the CTMCA, told them that the two buses bought with lottery funds were stored in a secret location “hidden from the Sheriff”. But the investigators said they were unable to confirm that any buses had ever been bought.

Stemmet also confirmed that the buses had been hidden to stop them being seized. But when the investigators asked to be taken to the place where the buses were stored, he told them that “the owner of the secret location was not available to open the premises for us”.

“The CTMCA could not provide proof of payment for two vehicles that it allegedly purchased with grant money,” the investigators reported.

Soeker also told them the Schaapkraal property had been sold because of the debt.

“Mr Soeker explained that according to his understanding, due to the debt owed to the City of Cape Town, the CTMCA decided it would be best to sell their [Schaapkraal] property … and to also to hide the assets of the CTMCA to avoid the sheriff from attaching the property.”

JP Smith, Cape Town’s mayco member for safety and security, has previously told GroundUp that the CTMCA “threw money away” on litigation with the City.

“Every year like clockwork, as we approach the end of the year, the CTMCA picks a legal fight with the City, over permits or something else. We never initiate it. They keep throwing money away on vexatious litigation that they lose and have costs awarded against them. This is entirely self-inflicted,” he said.

Soeker told the Dabishi Nthambeleni investigators that the main role players on issues of Lottery funding were Stemmet and former CTMCA board member Kevin Momberg, “who were in charge of all the admin, finances and running the CTMCA.” The investigators said they had been unable to contact Momberg.

Hats

During their “investigation in loco” at the Primrose Park premises, the investigators “found numerous machines, some in good condition, some in bad condition and some that looked rusty and extremely old”. Stemmet told the investigators that there was also an off-site storage facility where “instruments and some machinery” were kept.

“We asked him to take us to the facility but he was evasive to our request.”

Based on photos and invoices in GroundUp’s possession, some, if not all, of the items appear to be equipment that was illegally removed from the CTMCA’s previous premises. Stemmet is facing charges for this removal.

According to the final progress report submitted to the NLC by the CTMCA, the machinery was purchased from Martin-Conne Milliners, a company in which Stemmet, his wife and his daughter were directors at the time.

The investigators found this “alarming”.

“From the CIPC search of Martin-Conne Milliners and the invoices submitted, we note the following alarming finding: Mr Stemmet himself is a director of Martin-Conne Milliners. The registered address of the company is 5 Crete Road, Wetton, Cape Town, the same address on which the museum was intended to be built and/or converted,” they reported.

An audit by accountants Kopano Incorporated, attached to the investigative report, recorded that the CTMCA was in the process of purchasing “machinery, plant and stock” valued at R8.1-million from Stalph 164 CC, trading as Martin-Conne Milliners. Staph 164 was a close corporation of which Stemmet was one of the directors.

According to Dabishi Nthambeleni, the company has paid R1.2-million as a deposit, meaning R6.9-million is still owed, though there is no payment date set for when this must be paid.

The Kopano audit and the close link between the companies “indicate to us that there is ‘foul play’ involved in the purchase of the machinery of the museum workshop”, the investigators said in the report.

“We find that it is highly probable that CTMCA used the funding of the NLC to ‘refund’ one of its main directors for the property at a higher overpriced rate than the actual price and value of the property and/or machinery.”

Recommendations

Dabishi Nthambeleni concluded that it was unable to establish how the grant to the CTMCA had been spent.

“In reality, a detailed report on how the funding of the NLC was used, would be impossible as the CTMCA does not have any receipts, or proof of payments to confirm the amounts spent on each item it requested funding for. The interim report and final report of the CTMCA only attach invoices,” Dabishi Nthambeleni concluded.

The investigators found that the NLC had not conducted a site visit before approving the grant. But this was not standard practice at the time and they found no evidence of negligence by NLC employees.

At the time, the NLC’s rules did not require funded organisations to submit proof of payment with interim reports, they pointed out. This meant that the CTMCA was able to receive a second tranche of funding without having to provide proof that it had used the first tranche for its intended purpose.

Following the appointment of a new board, commissioner and senior executive team, the NLC has tightened up on these and other issues.

Dabishi Nthambeleni recommended that

• the NLC decline any future funding applications from the CTMCA;
• the CTMCA and any members who were involved in the grant be subjected to the NLC’s “delinquency” process;
• the NLC open a criminal case of fraud with SAPS or the Hawks for allegations of fraud; and
• the NLC begin the process of recovering the misappropriated funds.

But, rather than act on the report’s recommendations, the NLC – under its previous administration – chose to suppress it, as it had done with the previous reports into corruption it had commissioned.

GroundUp sent questions to Stemmet and Soeker via sms, and asked for email addresses to send the questions by email too. But no response had been received at the time of publication.

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