The Special Investigating Unit (SIU) has obtained a preservation order from the Special Tribunal to freeze assets belonging to Nhlakanipho Mngomezulu, director of Lubelo Hlomuka Holdings trading as SA Scrum Assembly, over allegations that the company unlawfully received more than R16 million in COVID-19 Temporary Employer/Employee Relief Scheme (TERS) funds from the Unemployment Insurance Fund (UIF) between 2020 and 2022.
SIU spokesperson Selby Makgotho confirmed the development, stating that investigations are ongoing to establish the full picture, including whether any internal human factors within the system played a role in facilitating the alleged irregularities.
During the height of the COVID-19 pandemic, the TERS scheme was intended to provide relief to distressed employees and employers, particularly in sectors such as restaurants and tourism. However, Makgotho noted that some individuals and entities exploited the system by creating fictitious companies and submitting claims for non-existent “ghost workers.”
In this case, the SIU’s probe identified approximately 852 ghost workers allegedly created to enable fraudulent claims through the UIF system. The assets allegedly acquired with the misappropriated funds include properties in and around Pietermaritzburg, an agricultural holding, and luxury vehicles purchased in cash — including a brand-new car in 2021 and another in 2023, following an earlier 2019 purchase. These patterns of expenditure have raised red flags, as the funds were meant to support workers in need rather than fund personal acquisitions.
Makgotho explained that the preservation order prevents the sale, transfer, leasing, or encumbrance of the identified properties and vehicles, ensuring they remain available for potential recovery by the state. A caveat will also be registered against the properties at the deeds office to safeguard the state’s interest pending the outcome of the investigations.
The SIU is examining the “missing layer” in the approval and payment processes, including possible governance failures or human involvement that allowed funds to be disbursed to fictitious accounts without proper oversight. Bank records and money flows are under analysis to determine how the claims bypassed internal controls.
This matter forms part of broader SIU efforts under a 2021 proclamation to investigate widespread irregularities in the TERS scheme. Makgotho indicated that cumulative allegations across various cases total an estimated R148.4 million (excluding the current R16 million case and a recent separate R19 million matter). Referrals have already been made to the National Prosecuting Authority (NPA) where elements of criminality have been identified, and further referrals can occur as investigations progress.
Makgotho acknowledged that such probes are complex and time-intensive, often involving the emergence of new evidence from the public and on-the-ground analysis. While some may view the timeline as lengthy since the proclamation in 2021, he emphasized that thorough evaluation is necessary before proceeding with civil recovery or criminal actions.
The SIU views these incidents not as isolated cases of greed but as symptoms of a potentially coordinated and systematic attack on public systems, including possible involvement by officials in procurement and supply chain roles. The unit continues to focus on accountability gaps to prevent future abuse and recover public funds.
Investigations remain active, with the SIU committed to piecing together all aspects of the scheme to ensure funds intended for vulnerable workers during the pandemic are returned to the state where wrongdoing is established.