Two members of the North West Gambling Board have resigned over alleged attempts to rush through approval of the proposed empowerment deal between Sun International and a consortium led by former North West premier Popo Molefe.
Khakhane Leballo and Medi Mokuena resigned last week, leaving the board with just four members and thus without a quorum to approve the deal.
Neither of the women was prepared to comment on the matter.
Board chairperson Jay Pema confirmed that the two board members had resigned, but said one was reconsidering.
It is understood that Leballo has come under pressure from the provincial government to withdraw her resignation or provide three month’s notice.
Pema rejected the allegation that he had provided Sun International with “in principle” approval without formal board consent.
In a written statement he said: “The board approved the transaction in principle, subject to certain legislative procedures as the board was satisfied that the transaction met the condition of license imposed by the board on Sun International in relation to empowerment equity.”
Critics of the deal, which will see a slice of the casino group transferred to an empowerment company at a 35% discount, suggest it is an exercise in benefiting the well connected.
Both Molefe and Sun International have defended the empowerment credentials of the deal. Sun International employees, black managers and a community trust will also benefit.
Last week Molefe told the Mail & Guardian there were no ethical issues related to the deal as he had left the government and had never been involved in regulating the gambling industry in the province while he was premier.
Documents obtained by the M&G suggest the dispute was a big issue for the provincial government and that an urgent meeting was held in July 2003 between the then-premier Molefe, the provincial minister of finance and the provincial minister of economic development and tourism.
At issue was the gambling board’s view that the gambling regulations provided for a “progressive flat rate” of taxation, while Sun International contended that the regulation provided for a “progressive stepped rate” depending on income bands.
The board’s view in 2003 was that Sun International had underpaid its levies in the amount of R7-million, which it sought to recover from the casino group.
After an approach by Sun International to the government, the urgent meeting took place, which was followed by a Cabinet decision to adopt the “stepped method” apparently favoured by the casino group.
However, the regulations have not yet been changed and the interpretation issue remains unresolved. It was disclosed as a “material fact” in the board’s 2004/05 annual report.
The report noted: “Sun International continues to pay its levies utilising a progressive stepped method as opposed to the progressive flat method. The revenue implications of this matter have been brought to the attention of the provincial government for consideration and appropriate action.”
Asked specifically about a dispute between the North West Gambling Board and Sun International regarding the method used to calculate gambling levies, Molefe last week said he had never had anything to do with such a dispute.
This week, when provided with more details about the matter, he said he would need to look at the documentation to jog his memory, but might have been present when the responsible provincial minister briefed the Cabinet on it.