
Parks Tau, the Minister of Trade and Industry, has postponed the announcement regarding the successful bidder for the management of South Africa’s lottery, which is scheduled to change hands after Ithuba’s term ends in May of the following year.
The original expiry date for Ithuba’s licence was May 2023; however, Tau’s predecessor, Ebrahim Patel, extended it for another two years in response to a request from the newly appointed board of the National Lotteries Commission (NLC).
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See: Leaked report reveals the misuse of lottery funds allocated to a minstrel group
The board, aiming to combat rampant corruption within the NLC, also acknowledged Ithuba’s assertions about significant effects from the Covid pandemic, which included a suspension on lottery ticket sales during the height of the crisis.
Due to the licence extension, Ithuba must now allocate a greater percentage to the NLC for distribution to charitable purposes compared to what was specified in its initial licence.
New licence holders will have a six-month period to set up essential infrastructure, including ticket vending machines across the country, before the existing operator’s licence expires.
This recent delay suggests that a seamless transition may not be possible, and it is uncertain whether Tau will further prolong Ithuba’s licence.
The selection process for a new licence operator has also been complicated by allegations of potential conflicts of interest and other issues.
Contingency plans
GroundUp has disclosed that the NLC has contingency plans in place to support charitable organizations for up to a year in the event that lottery operations and ticket sales are suspended.
The strategies also include financial backing in case of legal disputes from unsuccessful bidders when a new operator is finally selected, which could pose a threat to the efficient operation of the lottery.
If ticket sales are halted, the NLC has reserved R3.9 billion to continue funding qualifying organizations, according to a source knowledgeable about the contingency plan, as reported by GroundUp.
In a recent statement concerning the delay, Tau remarked, “Regrettably, I am unable to provide a conclusive decision at this time.”
“Reaching such a conclusion now would imply that I have not fully contemplated all relevant factors.”
“I have uncovered matters that require additional scrutiny. It would be inappropriate to disclose these concerns at this stage, as doing so could hinder the impartial adjudication of the licence award.”
See:
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Tau stated that he is awaiting guidance on the best approach to ensure a smooth continuation of the lottery during this transitional period and the “formulation of a strategy to finalize this process.”
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This, he stressed, “must be done in consultation with the National Treasury.”
Tau has also indicated that the political affiliations of the consortiums competing for the licence could play a role in the delay.
He mentioned, “I must verify that the owners and managers of the successful bidders are, as per the Act, ‘fit and proper individuals’. Additionally, I need to ensure that no political party or office-holder has any direct financial interest in the applicant or any of its shareholders.”
According to Business Day, a significant number of the firms applying for the tender have political connections.
The Gold Rush consortium is spearheaded by notable businessman Sandile Zungu, who pursued the ANC’s KwaZulu-Natal chairmanship in 2022 but withdrew after not garnering sufficient support, as reported by the publication.
Another bidder with political affiliations is the JSE-listed Hosken Consolidated Investments (HCI), which is largely owned by the South African Clothing and Textile Workers’ Union, part of the ANC alliance.
HCI’s CEO Johnny Copelyn was a contributor to President Cyril Ramaphosa’s CR17 campaign for the ANC presidency.
Another entity on the shortlist is 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, based on data from the electoral commission.
In addition to Ithuba, the current licence holder, other competitors include the Umbulelo Consortium, led by Afrirent Holdings, and Giya Games, according to Business Day.
Vivien Natasen was a consultant for Giya Games in relation to its proposal. GroundUp had previously noted that Natasen, through his company Neo Solutions, contributed R2 million towards the luxury home of former NLC chair Alfred Nevhutanda while his company had a contract with the NLC.
Natasen claimed that Neo Solutions was “appointed through the necessary NLC procurement processes.”
© 2024 GroundUp. This article was published here.
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