Lottery Bidder’s Connections to Paul Mashatile Being Probed, Says Minister Tau

Ithuba Lottery, an unsuccessful bidder for the fourth lottery licence, has taken Minister Parks Tau to court.

• Alleged links between Sizekhaya Holdings and Deputy President Paul Mashatile are being investigated, says Trade Minister Parks Tau.
• Sizekhaya was announced in May as the successful bidder to take over the operations of the lottery for eight years.
• Losing bidder Ithuba Lottery alleges that Mashatile has an indirect interest in the company through his sister-in-law and associates.
• But Tau says there is no evidence that Mashatile has a financial interest.

Minister of Trade and Industry Parks Tau says he has instructed the National Lotteries Commission (NLC) to investigate “fresh allegations” of political connections linked to the winner of the fourth lottery licence, Sizekhaya Holdings, after announcing the successful award.

This was “not an admission of a flawed process”, however, but rather a demonstration of his commitment to the ongoing integrity of the licence, he says. Tau had announced in May that the Sizekhaya consortium was the winning bidder to operate the national lotteries for the next eight years.

Ithuba Lottery, a losing bidder for the license, has taken Tau to the Pretoria High Court, seeking an urgent interdict to stop the licence being awarded to Sizekhaya

Ithuba alleges that Deputy President Paul Mashatile has an indirect interest in Sizekhaya, through his sister-in-law, Khumo Bogatsu, who is a co-owner of Bellamont Gambling (a shareholder of Sizekhaya); close associate Moses Tembe, who is chair of Sizekhaya and also a shareholder of Bellamont Gambling; and Sandile Zungu, who is also part of the Sizekhaya consortium with alleged links to Mashatile through the ANC.

But in an affidavit, Tau denies that Mashatile has any direct or indirect financial interest in Sizekhaya and says Ithuba has failed to provide any evidence to establish that Bogatsu, Tembe or Zungu were political office bearers.

“[Ithuba’s] argument relies entirely on media speculation and innuendo regarding their personal relationships and political associations,” says Tau.

The NLC, which is also opposing the application, has confirmed that an investigation is ongoing into the matter. But as with many of the affidavits filed by all parties in the case, its further submissions on the issue have been redacted.

Ithuba Lottery launched its urgent application in September this year. This was on the back of a pending review application, in which it seeks to set aside the award in its entirety.

Ithuba Lottery is a sister company to Ithuba Holdings, which ran the lottery under the third licence and is currently running it under a temporary licence granted by Tau under his special powers. Ithuba Lottery was ranked second in the licence bid race.

In justifying its need for the interdict, Ithuba says that when Tau released the record of his decision in the review application, it showed the process was “vitiated by a series of irregularities”.

These included that Tau and his various committees had “jettisoned the scoring criteria set out in the Request for Proposals (RFP) and instead adopted an entirely subjective and unauthorised scoring criteria”.

In essence, the company said, the minister had ignored the “rules of the game” and Sizekhaya should not be allowed to take over the running of the lottery, ahead of the review.

One of several issues it raised as being of “significant concern”, was political connections.

Ithuba said that while the minister had instructed the NLC to investigate these links, it had not been notified of the outcome of the investigation or if it had been completed.

The minister had also not explained why these connections were not considered or identified in the bid evaluation process.

Tau said the “ongoing due diligence” was an act of “continuous oversight” and did not invalidate the award to Sizekhaya.

The allegations of political connections were “hearsay”.

“I am satisfied that there was no prohibited direct or indirect financial interest in Sizekhaya by a political party or political office bearer”.

He said Ithuba had no right in law to the interdict. Sizekhaya was in the process of implementing the award “at its own risk”, and it was well aware of the pending review litigation, he said.

Should the interdict be granted, it could mean an interruption in the operations of the lottery and the much-needed contributions to good causes.

“I find Ithuba’s claim that a denied interdict would harm the public interest to be contradictory and self-serving. It is the very act of granting the interdict that would cause the most direct and severe harm to the public. It would disrupt the lawful administrative process…and halt the flow of billions of rands for good causes and community projects.”

“Ithuba’s position attempts to prioritise its commercial interests over the undeniable public good served by a fully operational lottery,” the minister said.

In its final, replying affidavit, Ithuba’s attorney Johan Roodt said the “irregularities are glaring and clear”.

On the issue of political connections, Roodt said the Request for Proposals had expanded the Lotteries Act requirements concerning financial interests to include “indirect interests”.

“The affidavits of the minister and the NLC make it plain that they misconstrued this requirement and did not consider whether a political officer bearer had an indirect financial interest in Sizekhaya. This was a fatal irregularity,” Roodt said.

While Sizekhaya has filed an opposing affidavit, this remains confidential until the company files a redacted version.

The matter has been set down for argument from October 28 to 30.

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