More Than R36-Million in Lottery Money Has Been Spent on This Old Age Home in Nine Years. But It Is Still Not Ready

The unfinished old age home in eDumbe, KwaZulu-Natal, into which the lottery has poured over R36.8-million.

• After almost nine years, a lottery-funded old-age home in Northern KwaZulu-Natal is still incomplete.
• More than R36.8-million has been spent on the project since 2017.
• Nearly R24-million of this was paid to a dodgy shelf company.
• The Special Investigating Unit is looking into the matter.

A R36.8-million lottery-funded old age home in northern KwaZulu-Natal is still unfinished, and there is no prospect of it being finished soon.

The National Lotteries Commission (NLC) paid over R23.8-million between 2017 and 2020 to Ubusu, a dodgy shelf company, to construct the home in the rural village of eDumbe in the far north of KZN.

Then, when the home was left incomplete in 2021, the NLC brought in a new contractor, Lerumo Properties, to complete the project, paying it R13-million to finish it.

This means that the NLC has pumped over R36.8-million into the project, which is still far from habitable.

Ubusu, a Pretoria-based non-profit company, had no track record of undertaking or administering major infrastructure projects at the time of the first payment by the NLC in October 2017. The company was originally bought off the shelf about two years earlier, in 2015.

The NLC requires two years of bank statements from non-profits applying for funding, so it is unclear how Ubusu was able to meet this criterion.

GroundUp has previously reported how the NLC paid millions of rands more to organisations already involved in questionable, unfinished projects. All are currently under investigation by the Special Investigating Unit (SIU).

The NLC is now suing Lerumo for the repayment of R13-million, plus interest. The matter will come before the high court in Pretoria on 2 March, NLC head of legal, Lesedi Bohang, told GroundUp.

But Lerumo says Ubusu blocked them from the site and demanded that the NLC’s R13-million be paid to Ubusu to finish the construction of the old age home, claiming it was their project and they should do the work.

“Ubusu said if there is any funding to complete the project from NLC as per the agreement, it must be given to them. Together with the NLC, we tried a long time to get Ubusu to accept the new approach but failed,” said Kuhle Mthonjeni, a director of Lerumo.

He said Lerumo could not start construction until Ubusu agreed to let them take over the contract.

The eDumbe old-age home is one of several infrastructure projects, including old age homes, drug rehabilitation centres and sports facilities, that were left unfinished after hundreds of millions of rands in lottery grant funding was looted under the previous administration of the NLC.

“The NLC has not abandoned this project. This building forms part of the SIU infrastructure list,” the NLC told GroundUp in response to questions about the fate of the eDumbe project.

“The intention … is to facilitate engagement with the community to determine if this building can be repurposed in any way.”

Dodgy projects

Responding to a written Parliamentary question in November 2024, Parks Tau, the Minister for Trade, Industry and Competition, confirmed that the grant to Ubusu and the subsequent payment to Lerumo were being investigated by the SIU.

Kuhle Mthonjeni, a director of Lerumo, said Lerumo was unaware of the SIU probe.

During a May 2025 presentation to Parliament’s Standing Committee on Public Accounts (SCOPA), Aphendule Mantiyane, senior manager in the office of the Auditor-General, explained that the payment to Lerumo was one of the irregularities found in the NLC’s accounts for the 2023/24 financial year.

Mantiyane said when the NLC had discovered that Ubusu “was struggling in terms of finalising and completing the work relating to this development and construction of the old age home”, the NLC had appointed “a qualified engineering services company that was supposed to assist the contractor in terms of finalising the project”.

“An amount of around R13-million was then paid toward this contractor, but no work was ever delivered.”

No contract

The NLC had not asked for an invoice before the payment was made, and had promised Lerumo a formal contract, Mthonjeni said.

He claimed that Lerumo has tried to pay back the money, without success. But, he said, Lerumo had spent two years trying to get the project off the ground and expected to be paid for that first.

There are no ceilings and no water pipes.

When GroundUp visited eDumbe in September last year, we found the old age home was far from complete.

Although some channels have been cut into the walls for water pipes, none have been installed, and there are no toilets or ablutions on the premises. Grooves have been cut into the wall for electrical sockets and wiring, but little has been installed.

There are no ceilings. Many of the glass doors and windows are cracked or smashed, and parts of the building are unpainted, with damp spots and mould on some of the walls.

But despite the current state of the property, Keith Nyiko Sithole, the sole director of Ubusu, told GroundUp that the old age home project was complete, and that Ubusu had been maintaining the home. He said the NLC would “fund the operationalisation of the centre”.

Sithole said he was aware of the payment that was made to Lerumo and complained that the NLC had allocated the funds without consulting Ubusu.

He had raised this with the NLC but received no response, he said.

He did not respond to questions about whether or not Usubu had blocked Lerumo from finishing the project.

Joining the dots

Ubusu shares several past and present directors with Malusi WeSizwe, which received R13-million in lottery money in the 2018/19 financial year for an agricultural project in KwaZulu-Natal. It is also linked to a R900,000 payment towards a house for Alfred Sigudhla, the founder and executive director of the Southern African Youth Movement (SAYM). The Special Tribunal issued a preservation order on the house last year.

SAYM has received over R67.5-million in lottery funding for several dodgy projects

Malusi WeSizwe also shares directors and a registered address with Spirinex, another NLC-funded organisation. The address is for an unfinished drug rehab in Nelspruit, Mpumalanga, for which SAYM received R27-million in lottery funding.

In total, Malusi WeSizwe has shared six directors with Ubusu since its registration in 2012. Five of these directors have resigned from their roles in both companies. However, Sithole still serves as a director of Malusi WeSizwe.

One of the three current directors of Malusi WeSizwe is Goodness Neliswe Mahlangu, who is also a director of SAYM and Spirinex, which received R3-million in NLC funding in 2017.

Apart from sharing directors with Malusi and Spirinex, Ubusu also shares a registered business address with Upbrand Properties, a company linked to former NLC chief operations officer Phillemon Letwaba, who resigned under a cloud in 2022.

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