In a dramatic late-stage intervention in one of SA’s most lucrative tenders, trade, industry & competition minister Parks Tau overruled his own advisory panels by sidelining a bid backed by a consortium made up of ANC donor Batho Batho Trust over a conflict-of-interest finding.
The consortium, Ringeta, in which Batho Batho had a substantial interest, had been a shoo-in for the contract, said to be north of R60bn, after having topped both bid evaluation and adjudication panels before being ruled out at the last minute.
Its bid was scuppered by the quality assurance committee (QAC) appointed by Tau, to help him assess the bids and advise him accordingly.
Tau said the reasons for his decision to eventually opt for a Sizekhaya consortium was because the Ringeta bid was tainted by the participation of high-profile ANC MP Sibongiseni Dhlomo, trustee of the Batho Batho Trust.
“Dr Sibongiseni Maxwell Dhlomo is an ANC MP and a trustee of the Batho Batho Trust. He is therefore a political office-bearer as contemplated in the Lotteries Act,” Tau said in his reasons dated August 4.
“The Batho Batho Trust is reported to be a regular funder of the ANC. According to the reports of the Independent Electoral Commission (IEC) on the declarations of the funding of political parties, the Batho Batho Trust has contributed R15m to the ANC on each of the following dates: December 21 2021, October 20 2022, April 4 2023,” he said.
“The legal advice that I received from senior counsel was that there was indeed a contravention of this section in that Dr Dhlomo was a political office-bearer and had a direct financial interest in a shareholder of Ringeta.”
According to the information before Tau, the shareholding of Ringeta shows that the Batho Batho Trust holds 70% of the shares in Thebe Investment Consortium, which in turn, owns 49% of the shares in Ringeta.
The dramatic reversal could be hailed as a victory by civil society watchdogs that the Political Party Funding Act, which came into operation in 2021, can be a powerful tool for exposing donor networks, stifling opaque contributions and revealing hidden conflicts before deals are sealed.
Business Day reported in September on the proximity to the ANC of Ringeta’s bid, highlighting the generous donations Batho Batho Trust made to the ANC, amounting to R60m since 2021.
Batho Batho Trust was founded by ANC leaders in 1992. Beyond the links to the ANC, Tau said he found the Ringeta bid to fall short in other aspects as well.
“Ringeta was not my first choice because its projected rand value contributions to the NLDTF [the National Lottery Distribution Trust Fund], especially after the exclusion of its gambling games, were much lower than Sizekhaya’s,” he said.
Tau appointed Sizekhaya, half-owned by JSE-listed Goldrush, in May after several delays to the process. He said the size, scale and experience of Genlot, Sizekhaya’s technology partner, was “particularly impressive”.
The reasons show that Tau also picked Ithuba as the reserve bid.
‘Well-balanced bid’
“In my view, Sizekhaya pipped the others to the post. It presented a well-balanced bid. It has satisfied the requirements in section 13 of the Lotteries Act. It has an impressive technology partner. Its financial plans and models are sound. Its projected revenue is suitably ambitious, yet credible,” Tau said.
“Based on its projected revenue and percentage contribution to the NLDTF, Sizekhaya’s contributions to the NLDTF are likely to be the highest. I chose Ithuba Lottery as the reserve applicant. The reasons for this were the following: Ithuba Lottery’s technology partner was local.
Overall, it provided stronger localisation and supplier development strategies compared to the other bidders, and it also held a higher overall broad-based BEE rating. Ithuba Lottery submitted credible and pragmatic financial and business plans, with a high likelihood to grow contributions to the NLDFT.”
Tau revealed these details as part of his defence on the court challenge brought by Ithuba to set aside the award of the eight-year licence to Sizekhaya.
One of the legs of Ithuba’s legal challenge refers to media reports on Sizekhaya’s political connections. It cited a report by an article by amaBhungane Centre for Investigative Journalism, which raised Sizekhaya’s “close links” to deputy president Paul Mashatile. AmaBhungane reported that Mashatile’s sister-in-law Khumo Bogatsu has links to Sizekhaya via her directorship in Sizekhaya chair Moses Tembe’s outfit, Bellamont Gaming.
Tau said he has instructed the National Lotteries Commission to investigate this matter to determine whether there was in fact a contravention of section 13 (2)(b)(iv) of the Lotteries Act. The section deals with the provision that no political party or political office-bearer may have a direct financial interest in the applicant or a shareholder of the applicant.
According to Goldrush, Bellamont Gaming will be a 5.6% shareholder in Sizekhaya after the issue of the government shares.
“Through Bellamont, Khumo would have an indirect 1.6% shareholding in Sizekhaya. Her shareholding in Bellamont was specifically investigated since she is the sister-in-law of the deputy president of SA. There were no legal impediments found at the time which would preclude her participation in the consortium,” Goldrush has said. “Goldrush Holdings, Goldrush and Sizekhaya played no role in the appointment of members of the bid evaluation committee for the award of the licence.”
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