Trade unionist turned businessman Johnny Copelyn has lashed out at the bid adjudication of the fourth licence to operate the national lottery, saying the processes warranted a sequel of Alan Paton’s most famous work, Cry, the Beloved Country.
Wina Njalo, offshoot of Hosken Consolidated Investments, is one of the seven losing bidders of the lucrative contract.
However, minister of trade, industry & competition Parks Tau in the reasons provided to the court on what informed his decision to award the contract to Sizekhaya, said Wina Njalo’s bid was simply below par compared with other bidders.
“Wina Njalo’s financial model and business plans were less compelling. Wina Njalo’s plans to rejuvenate the current lottery games were described as modest and its marketing expenditure on new games was low,” Tau said.
“Its increase in ticket prices and its low prize payout percentage (48%) would probably affect sales detrimentally.”
Copelyn, HCI’s mainstay CEO, said the process should be restarted.
“For reasons best known to the new ‘cleaned up’ National Lottery Commission (NLC), it appointed an evaluation committee entirely comprising people who had no lottery experience and certainly no capacity to evaluate the technical merits of any bidder’s offering,” Copelyn said in his letter to HCI’s shareholders.
“One is left in the uncomfortable position where it is obvious the matter is an intractable mess incapable of fair resolution and the best the court can probably do is set the entire process aside. If so, it must either close down the lottery in the interim or it must allow Ithuba to continue operating irrespective of the lawfulness thereof,” he said.
“Either way, one would have to hope that redoing the process would have a better result. In the absence of anyone admitting to a complete failure to administer the current bid properly, one really is bound to be thoughtful before again spending the time and money such a bid would require.”
Copelyn said: “If Alan Paton was still with us I can’t help feeling all this would have provided enough material for a second Cry, the Beloved Country, 77 years after the first.”
Tau in May announced the Sizekhaya consortium as the preferred bidder to take over from Ithuba as the operator of the popular lottery.
Ithuba has launched a legal challenge against Tau’s decision.
Tau has said that, though unfortunate, it is not an anomaly for the national lottery tender process to be adjudicated by the courts, considering the history of the previous three licences.
Ithuba is challenging the award of the fourth licence on several grounds. In the main, Ithuba in its affidavit said “it appears Sizekhaya lacked fully committed funding prior to the award, since it has indicated that it will only secure funding by October 22 2025”.
According to Ithuba, this constitutes unlawfulness, as Tau should not have awarded the contract to Sizekhaya without fully committed funding when he made his decision in May.
Ithuba said it secured R280m in capital from its shareholders and a funding commitment from Standard Bank of R700m.
Sizekhaya is expected to refute the allegation it lacks funding and will tell the court that bank guarantees were made to the NLC before the licence was awarded.
The second leg of Ithuba’s challenge is that Sizekhaya was awarded the licence while it was unable to “ensure continuous and seamless transition from the existing operator”.
It bases its argument on the NLC’s contention that Sizekhaya said it would need a nine-month transition period to enable it to take over the lottery.
Sizekhaya is expected to argue that the timelines contained in the request for proposals were “indicative”, giving the minister the right to amend, change or augment the timetable, a process he has already completed, as he was initially supposed to award the licence in September last year.
JSE-listed gaming group Goldrush owns 50% of Sizekhaya. Goldrush’s stock is up 70% over the past three months.
HCI’s lottery bid has not been without its own conflict of interest allegations. HCI is majority owned by the SA Clothing and Textile Workers’ Union, an affiliate of Cosatu, which is in alliance with the ANC.
Copelyn was one of the businesspeople who donated to President Cyril Ramaphosa’s CR17 campaign for the ANC presidency.
The minister who kick-started the process, Ebrahim Patel, served as Copelyn’s deputy when the HCI CEO was secretary-general of the Southern African Clothing and Textile Workers’ Union, before eventually succeeding him in the early ’90s.
According to Tau, political parties had no direct interest in the Wina Njalo bid.
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