Public protector Busisiwe Mkhwebane is locked in an ugly legal battle over her report on the privatisation of SA’s horse racing industry, with the country’s largest horse racing body arguing that she failed to comply with her constitutional obligations.
John Stuart, group CEO of Phumelela Gaming and Leisure, said the group regards Mkhwebane’s May 2019 report, which sent its share price tumbling more than 60% since the beginning of May, as “tainted with bias”.
He said he views the report as “the product of fatal procedural irregularities” and “riddled with material errors of law, material errors of fact, the reliance upon irrelevant considerations and actions which exceed the scope of the public protector’s powers”.
“Phumelela has a reasonable apprehension that the public protector has not brought an impartial mind to bear on the adjudication of this case and has forfeited her independence,” he stated in papers filed at the Pretoria high court.
Mkhwebane is opposing Phumelela’s court challenge but has yet to file her reply to the allegations against her.
Stuart wants the public protector to face a 25% personal costs order over her conduct in the saga.
The Constitutional Court has previously ordered Mkhwebane to personally pay 15% of the costs attached to the successful legal challenge of her disastrous Reserve Bank report. The Pretoria high court also ordered her to pay 7.5% of the costs attached to her unsuccessful defence of her report on the Estina dairy farm scam. The costs order sought against Mkhwebane by Phumelela is therefore the largest.
Stuart argues that Mkhwebane released her far-reaching report on horse racing without providing Phumelela with the information she used to make damaging findings against it and refused the company the right to cross-examine the witnesses against it.
Mkhwebane has in turn accused Phumelela of deliberately frustrating her investigation, which emanated from complaints about the 1997 privatisation of Gauteng’s horse racing industry.
After finding that public funds intended for the development and construction of grooms’ quarters had been misappropriated, Mkhwebane ordered all provincial premiers, as well as the CEO and board of the Gauteng Gambling Board, to ensure that Phumelela — the corporate body put in place to run the horse racing industry in Gauteng and other provinces — did not receive the bookmakers levy it used to fund its operations.
Mkhwebane took particular issue with the fact that Phumelela benefited from that levy, through which it received half of a 6% levy placed on winning bets. That levy was effectively revoked by April 2019 amendments to Gauteng gambling regulations. Phumelela is challenging those amendments in a separate court case.
In addition, Mkhwebane called on President Cyril Ramaphosa and trade & industry minister Ebrahim Patel to establish a completely new entity to serve as a regulator for thoroughbred horse racing.
This, Stuart argues, constituted a serious violation of the principle of separation of powers — arguably not unlike Mkhwebane’s failed bid to change the constitutional mandate of the Reserve Bank.
Mkhwebane also directed the premier and the Special Investigating Unit (SIU) to request that Ramaphosa issue a proclamation for the SIU to probe unlawful transactions and expenditure by organs of state mentioned in her report, with a view to recovering such funds.
Stuart said that in doing so Mkhwebane “exceeded her powers”. According to Stuart, it appears Mkhwebane ordered this far-reaching remedial action without consulting with any of these officials.
Mkhwebane further found that the restructuring process linked to the 1997 privatisation of the Gauteng horse racing industry “was never intended to attract other racial groups into the sport of horse racing” and ordered the minister of sport to take “urgent” steps to ensure that the transformation of thoroughbred horse racing is expedited.
This, Stuart argued, is despite Phumelela being listed in the top 30 most empowered companies on the JSE in 2017, having seven black directors and being BEE compliant.
Further, Stuart argues, Mkhwebane is only empowered to investigate alleged maladministration, not transformation. “Transformation, or lack thereof, of a private entity falls wholly outside the public protector’s constitutional mandate and her findings in this regard are therefore irrelevant and ultra vires”, he says.
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