Parks Tau, the Minister of Trade and Industry, has postponed the announcement regarding the winning bidder for the management of South Africa’s lottery, which is expected to change hands after Ithuba’s term ends in May of next year.

The original expiration date for Ithuba’s licence was set for May 2023; however, it was extended for another two years by Tau’s predecessor, Ebrahim Patel, following a request from the newly appointed board of the National Lotteries Commission (NLC).

See: Leaked report uncovers misuse of lottery funds designated for minstrel group

The board has also confronted a rising tide of corruption within the NLC, acknowledging Ithuba’s assertions about significant effects from the Covid pandemic, which included a suspension of lottery ticket sales during the height of the crisis.

With the extension of the licence, Ithuba must now allocate a larger percentage to the NLC for charitable distribution than originally required by its licence.

New licence holders will have a six-month period to put in place necessary infrastructure, such as ticket vending machines across the country, before the existing operator’s licence expires.

This recent delay indicates that a smooth transition may not be attainable, and it seems unlikely that Tau will grant another extension to Ithuba’s licence.

The process to appoint a new licence operator has also been complicated by accusations of potential conflicts of interest and other issues.

Contingency plans

GroundUp has disclosed that the NLC has contingency plans in place to support charitable initiatives for up to a year in the event of a halt to lottery operations and ticket sales.

The plans also include financial backing in case of legal challenges from unsuccessful bidders once a new operator is eventually selected, which could impede the effective functioning of the lottery.

If ticket sales are suspended, the NLC has set aside reserves of R3.9 billion to sustain funding for eligible organizations, according to a source familiar with the contingency plan, as reported by GroundUp.

In a recent statement regarding the postponement, Tau remarked, “Unfortunately, I am unable to make a definitive decision at this time.”

“To make such a decision now would imply that I have not fully weighed all relevant factors.”

“I have encountered issues that require further examination. It would be inappropriate to disclose these concerns at this moment, as doing so could hinder the fair adjudication of the licence award.”

See:
Minister acts to appoint National Gambling Board members after ten years
Suspension of lottery funds affects SATMA awards
Lottery allocated R1.5 million on ‘lawfare’ to obstruct Patel’s anti-corruption battle

Tau stated he is awaiting advice on the best approach to ensure a seamless continuation of the lottery during this interim period and the “development of a strategy to finalize this process.”

This, he stressed, “should be carried out following consultations with the National Treasury.”

Tau also indicated that the political affiliations of the groups bidding for the licence might play a role in the delay.

He stated, “I must ensure that the owners and managers of the successful bidders are, as outlined by the Act, ‘fit and proper individuals’. Furthermore, I need to verify that no political party or political office-holder has any direct financial interest in the applicant or any of its shareholders.”

According to Business Day, many of the firms vying for the tender are politically connected.

The Gold Rush consortium is led by well-known businessman Sandile Zungu, who attempted to secure the ANC’s KwaZulu-Natal chairmanship in 2022 but withdrew after lacking sufficient support, as noted by the publication.

Another bidder with political connections is the JSE-listed Hosken Consolidated Investments (HCI), primarily owned by the South African Clothing and Textile Workers’ Union, a part of the ANC alliance.

HCI’s CEO Johnny Copelyn contributed to President Cyril Ramaphosa’s CR17 campaign during the ANC presidential race.

Another company on the shortlisted may include Thebe Investment Corporation, founded by ANC leaders in 1992. Thebe is partially owned by Batho Batho Trust, which has donated R60 million to the ANC since 2021, according to electoral commission records.

Alongside Ithuba, the current licence holder, other contenders are the Umbulelo Consortium, run by Afrirent Holdings, and Giya Games, as indicated by Business Day.

Vivien Natasen served as a consultant for Giya Games regarding its proposal. GroundUp previously reported that Natasen, through his company Neo Solutions, donated R2 million towards the luxurious residence of former NLC chair Alfred Nevhutanda while his company had a contract with the NLC.

Natasen affirmed that Neo Solutions was “appointed through the NLC’s procurement processes as required for services.”

© 2024 GroundUp. This article was published here.

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