South Africa’s Lottery Licence Decision Delayed Amid Allegations of Corruption and Political Ties

Trade and Industry Minister Parks Tau has postponed the announcement of South Africa's next National Lottery operator, leaving uncertainty as Ithuba, the current operator, nears the end of its extended licence in May 2024. This delay raises concerns about the future of the lottery and the potential for disruption.

Ithuba's licence was originally set to expire in May 2023 but was extended for two years by then-Minister Ebrahim Patel. The extension followed a request from the National Lotteries Commission (NLC), which at the time was embroiled in extensive corruption allegations.

Ithuba cited the economic impact of the COVID-19 pandemic, including a temporary ban on lottery ticket sales, as a justification for the extension.

As part of the agreement, Ithuba was required to increase its contributions to the NLC's fund for good causes. However, the delay in selecting a new operator now threatens the potential for a smooth transition. Establishing the necessary infrastructure and systems typically requires a six-month lead time, making further extensions unlikely.

Corruption Allegations Surround Licence Bidding Process

The bidding process for the next National Lottery licence has been tainted by allegations of political influence and conflicts of interest involving several shortlisted contenders. Most of the bidders are politically exposed individuals or entities, including:

• Gold Rush Consortium: Headed by businessman Sandile Zungu, who previously vied for the ANC KwaZulu-Natal chairmanship.

• HCI: A company majority-owned by the South African Clothing and Textile Workers’ Union, an affiliate of the ANC-aligned labor federation, Cosatu. HCI’s CEO, Johnny Copelyn, reportedly donated to President Cyril Ramaphosa’s CR17 campaign.

• Thebe Investment Corporation: Established by ANC leaders in 1992, Thebe has donated R60 million to the ANC since 2021 through Batho Batho Trust, its half-owner.

• Giya Games: Linked to consultant Vivien Natasen, who has faced allegations of questionable payments associated with the NLC.

The current operator, Ithuba, and the Umbulelo Consortium, led by Afrirent Holdings, are also competing for the licence.

Contingency Plans for Possible Disruptions

To mitigate the potential impact of ticket sales being halted, the NLC has implemented contingency measures. It has a reserve of R3.9 billion that can support qualifying organizations for up to a year. This reserve could also provide financial continuity in the event of legal challenges by losing bidders.

Tau Calls for More Evaluation

Minister Tau, in a weekend statement, stressed the importance of a comprehensive evaluation process before making a final decision. He explained:

“Unfortunately, I am not in a position to make a final decision at this stage. Any such decision at this time would, in all good conscience, mean that I have not applied my mind with due consideration of all the relevant factors.”

Tau also emphasized the importance of ensuring that all applicants are “fit and proper persons” and free from connections to political parties or office-bearers.

In the interim, advice from the National Treasury will guide efforts to maintain the lottery’s operations while the licensing process continues.

The delay highlights the difficulties in balancing transparency, governance, and operational continuity in the administration of South Africa’s National Lottery.

By fLEXI tEAM