/ 27 February 2004

Govt was ‘warned’ about massive racetrack losses

Even before the Phakisa racetrack in Welkom was built, the government was officially warned that it could incur massive losses to the taxpayer, it emerged on Friday.

Selwyn Nathan, MD of the Kyalami racetrack at the time, said Judge Mervyn King wrote letters in 1997 in his capacity as chairperson of the Automobile Association, warning of the possibility.

King warned against estimated potential losses of between R350-million and R400-million if government-financed construction of the racetrack went ahead, Nathan said.

Among the recipients of the letter were Free State provincial minister for sport Webster Mfebe and the late sports minister Steve Tshwete.

The controlling body, Motorsport SA, sounded similar alarm at the time, Nathan added.

His comments followed the announcement earlier this week of a probe into Phakisa’s financial affairs.

The Free State legislature accepted on Thursday a decision of its public accounts committee that the Special Investigating Unit must look into the matter.

The Free State government has spent R424-million on Phakisa and its hosting of the annual MotoGP since construction started five years ago. During this time the racetrack earned an operational income of a mere R7,7-million, public accounts chairperson Abrie Oosthuizen confirmed on Friday.

Oosthuizen said among the fruitless expenditure was R27-million the corporation spent to pay interest on outstanding tax.

Phakisa chief executive Bobby Hartslief, who stepped down a few weeks ago, earned an annual salary of R532 000 despite moving to Colorado Springs in the United States in 2000.

The Free State government now faces a potential claim of between R36-million and R40-million in licencing fees for the coming MotoGP in April, Oosthuizen said.

Dorna Sports, international promoter and organiser of motorbike racing, has contracted with Phakisa to host the annual MotoGP. Under this contract the provincial government has paid Dorna annual licencing fees of about $5,3-million (about R35-million) in the past three years.

However, this year the provincial government refused to budget for a Phakisa MotoGP.

Chris Grundy of Racemakers, Dorna’s agent in South Africa, said on Friday that the event would go ahead — from April 16 to 18 — despite an apparent dispute over licencing fees.

It would be the first MotoGP of the global season and Valentino Rossi would show his mettle on a Yamaha after leaving Honda recently.

Grundy said the fees did not have to be paid over before the Phakiso grand prix could be held. The dispute would probably only be settled afterwards.

Beulah Schoeman, head of Motorsport SA, said on Friday the coming event would probably be Africa’s last MotoGP, due to the massive costs of hosting it.

She added that South African support for the sport is not nearly as large as in Europe and Australia. This is in large part due to the fact that South Africans do not compete because it is such an expensive sport. — Sapa