Trade, industry & competition minister Parks Tau on Monday refused to divulge to the court reasons why he stopped the announcement of the multibillion-rand national lottery licence winner.
Doing so would taint the bidding process, the minister said through his lawyer, Adv Pat Ellis.
One of the bidders for the lucrative tender, estimated to be worth more than R100bn, Wina Njalo, took the minister to court challenging his decision not to award the tender. The announcement of the winner in the bidding process was supposed to have been made in September 2024.
The winning bidder was set to take over the eight-year contract from the current lottery operator, Ithuba Holdings, from June 1. But this will not happen as the new bidders need more than five months to set up operations.
Wina Njalo wants the court to order Tau to award the fourth national lottery and direct him to determine and announce the successful bidder on or before May 9.
The company also wants the court to set aside the minister’s proposal to award a temporary licence to one of the eight bidders to take over operations from June 1. The legal challenge threatens to disrupt lottery operations, should the court rule in favour of Wina Njalo, Tau has said.
Representing Wina Njalo, Adv Gilbert Marcus argued Tau was in breach of constitutional principles of transparency and accountability by failing to disclose his reasons to the court for delaying the announcement.
Announcing the delay last December Tau said he wanted to ensure that no political party or political office-bearer had any “direct financial interest” in the winning company.
Business Day previously reported that a number of companies vying for the tender were politically connected either through company ownership or as donors of elite political parties.
Ellis told the court that if the minister disclosed the reasons, this would have a negative effect on the tender awarding process.
“If this court orders him to make a decision by May 28 or 9 as the applicant wants, then he may come up with an argument that it is impossible. The undertaking the minister has made is the best undertaking [to announce by May 28 if possible].”
Judge Sulet Potterill asked how the court could find out if the minister had made the best decision, as the reasons were not disclosed to the court.
“Under what circumstances? Has he ever told this court why it is such a difficult decision to make? Because then perhaps I could understand and say under such circumstances the decision is acceptable. You are arguing about difficult circumstances but I do not know what those circumstances are.”
Ellis conceded: “I concede it is difficult for my lady to understand what makes it difficult for the minister to make this decision. He is stuck between a rock and a hard place. If he discloses in confidentiality with the applicants, Ithuba and Sizekhaya Holdings, which is three of the eight bidders, and it becomes [clear] that his queries were unfounded then that could jeopardise the tender process. He will give all his reasons when he makes the call.”
Ellis argued if the court found in favour of Wina Njalo and made an order, it could do so without having to declare Tau’s non-decision unconstitutional.
“The absence of reasons means fundamentally that the decision is unconstitutional because it is arbitrary," Marcus argued. “Even in his answering affidavit, the minister has done nothing more than reassert the need to protect the ‘sanctity’ of the process.”
National Lotteries Commission (NLC) lawyer Ngwako Maenetje told the court that though Tau had not disclosed his reasons to the board, there were adequate consultations about not announcing winner and undertaking a process of appointing a temporary operator for a year.
Maenetje said Wina Njalo’s argument that no disclosure meant no substantial consultations, were incorrect.
Should the court find in favor of Wina Njalo, it should suspend its order declaring the temporary licence process unlawful, because if it were not suspended, charities depending on the lottery would suffer due to revenue losses, he said.
The suspension would only be in effect until the tender was awarded.
The current tender holder, Ithuba Holdings, opposed the application. Its lawyer, Alfred Cockrell argued Wina Njalo attempted to confuse the court by not distinguishing between Ithuba Holdings and Ithuba Lottery.
Both companies fall under the Zamani Group. Wina Njalo contested the temporary licence process arguing that it favoured one bidder, Ithuba, which has the resources to operate the lottery when the contract ends on May 31.
Cockrell said Ithuba Holdings was not a bidder for both tenders considered by the department and that it would sell its infrastructure and resources after its contract came to an end.
Though Ithuba Lottery and Ithuba Holdings were sister companies, Ithuba Holdings would consider offers from the eight bidders.
Judgment is expected to be delivered before May 31.
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