21 September 2007
The Lotteries Act required me to issue a new licence to operate the Lottery
at the end of the term of the licence of the previous operator. In order to
ensure a continuation of the lottery, this had to be done before the previous
licence had expired. Accordingly, after following a thorough and comprehensive
process to award a new licence, on 4 October 2006, I had announced Gidani as
the new operator to begin operations on 1 April 2007. In this regard we had
concluded the process of awarding the new licence well ahead of the expiry of
the previous licence.
Following my announcement, Uthingo (the previous operator) launched an
application in the High Court, asking that my decision be set aside and for the
licence to be awarded to Uthingo.
On 5 March 2007, the High Court set aside my decision to award the licence
to Gidani. The learned judge found that I had not been provided with all the
information necessary to determine whether any of the shareholders and
shareholders of shareholders in all of the bidders were political
office-bearers. We had in fact determined in the case of Gidani that the
company did not have any political office bearers and that the directors of the
company were fit and proper, as required by the Lotteries Act. We therefore
believed that we had done what was required of us and, this was on the same
basis that the first licence was awarded.
I decided not to appeal to avoid the matter being tied up in the Courts.
In practice, abiding by the decision of the Court meant checking whether any
of the shareholders and shareholders of shareholders in all of the bidding
companies, not only Gidani, had any political office bearers. I decided that
although this was the ruling of the judge, we had of course to go further and
investigate whether all the shareholders were also fit and proper, as defined
by the Lotteries Act. In the circumstances there was not sufficient time to
complete this work before the expiry of the previous licence on 31 March 2007.
Hence the Lottery had to be suspended.
All in all, there were 327 such shareholders and these had to be checked
against a database of 10 628 political office bearers. This was an enormous
task which was also delayed by the fact that the information we required from
the bidders was submitted at different times and in one case, arrived very
late.
In respect of whether all the shareholders were fit and proper,
investigations were conducted on 848 entities and individuals. The
investigations revealed that some of the directors, managers and shareholders
have criminal records or negative credit records. These investigations also
included checks on the international partners of each of the bidders and there
were no negative findings on any of them.
In summary, complying with the ruling of the judge was a massive
undertaking. In this respect, we are pleased that the bidders co-operated with
the process and we thank them for their active participation and co-operation.
It was also necessary to be patient and accommodating to ensure that all
bidders were given a fair chance and the same opportunities to provide the
required information.
After the additional investigative work was completed the Board forwarded a
report to me containing its recommendation on who should be awarded the licence
to operate the Lotto. The investigation conducted by the Board and their
recommendation was thoroughly assessed by the legal advisors of the Board and,
separately by the legal advisors of the Department of Trade and Industry (DTI),
in order to confirm compliance with certain legal aspects and to evaluate the
findings of the investigations.
I believe we have gone beyond the call of duty and ensured that we conducted
the process with rigour, fairness and integrity. I therefore appeal to all the
bidders, in light of the process and in the interests of the National Lottery,
to now accept the outcome of what has been a fiercely competitive process.
I therefore accept the Boardsâ recommendation and accordingly the licence to
operate the National Lottery is awarded to Gidani.
I wish to again thank you for your patience and trust that the new operator
will begin its operations as soon as possible.
Issued by: Department of Trade and Industry
21 September 2007
Source: Department of Trade and Industry (http://www.dti.gov.za)
