The crisis facing the national lottery could take longer than expected to resolve — the first meeting between Trade and Industry Minister Mandisi Mpahlwa and the four bidders failed to bear fruit this week.
Sources close to the bidding process told the Mail & Guardian that the four consortiums competing for the running of the national lottery, a R40-million a year business, rejected Mpahlwa’s proposal that they operate the lottery together.
A source who attended the meeting said the minister’s proposal ‘is not viable, because each consortium has its own shareholders. It is just not possible for the consortiums to run the national lottery togetherâ€.
Tshediso Matona, director general of the department of trade and industry, said other proposals being considered as possible short-term solutions include asking the National Lottery Board to run the operation.
The other possibility, he said, would be to amend the current regulations to allow the minister to address the crisis. He would not say whether this might include extending Uthingo’s contract to operate the lottery on a temporary basis.
Mpahlwa has been under huge pressure since the Pretoria High Court set aside his decision to award the licence to empowerment consortium Gidani. He announced the suspension of the national lottery last Saturday after failing to resolve the legal row over who is to run the lucrative business.
Gidani was supposed to have taken over the running of the lottery from Uthingo from last Sunday.
But Pretoria High Court Judge William Seriti ruled last month that the process followed by the National Lottery Board in awarding the licence was flawed, as it failed to investigate whether politicians were shareholders in the bidding consortiums.
A number of senior ANC members, including Cyril Ramaphosa, Max Sisulu and Chris Nissen, are Gidani shareholders. One of Uthingo’s shareholders was Education Minister Naledi Pandor. Pandor has since sold her shares.
The National Lottery Act prevents politicians from participating in the lottery business.
On Monday, Mpahlwa met representatives from all four consortiums in an attempt to find a way forward.
He proposed that they should consider running the lottery together.
Mpahlwa recently said the reason Uthingo was chosen as the second preferred bidder was to ensure that he would be in the best possible position to ensure the lottery continued if negotiations were not successfully concluded.
The difficulty with the minister extending Uthingo’s contract is that the provision in the National Lotteries Act allowing for this expired a year ago.
Matona said that, if the minister asked the board to operate the lottery in the interim, it would have to ask one of the bidders for assistance.
He ruled out the suggestion that the department would be liable to compensate losing bidders.
Business Day this week estimated the costs arising from the temporary suspension of the lottery to more than R340-million.
Gidani has already spent R500-million in setting up lottery infrastructure.