‘Business as usual’: Sizekhaya responds to National Lottery licence ruling

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JIMMY MOYAHA: The High Court in Pretoria yesterday ruled, upon review, that the licence granted to Sizekhaya Holdings by the Minister of the Department of Trade, Industry and Competition for operation of the National Lottery has been declared invalid.

We are going to be unpacking this in a bit more detail with the chief operating officer at Sizekhaya Holdings, Fundi Sithebe, who joins us on the line now to see what we make of this. Fundi, lovely having you on the show. Thanks so much for taking the time.

Let’s perhaps start the conversation with an understanding of the implications of this particular ruling – both implications for Sizekhaya Holdings and also implications for the National Lottery itself.

FUNDI SITHEBE: You know, Jimmy, I think maybe [we should] just reiterate that [as] the national operator, the National Lottery, from the 1st of June, we made a very strong commitment to South Africans around integrity, and transparency in running all lottery operations.

And we believe that this is a fundamental promise that we made to South Africans and that remains unchanged.

So, I think what we need to be very clear about is that there’ll be no interruption to the National Lottery’s [or] any of our products at this point in time. We continue still fully committed.

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However, like you rightly said, there was a judgment, and the judgment simply says the court has set aside the licence award … and largely because of, let’s call it, its technical procedural irregularity in that the decision that the minister took by bringing in an evaluation committee – which, by the way, he can – just needed to be an externally appointed evaluation committee instead of an internal one.

I think what underpins this judgment as well, and we have to be very clear, is the court found no fault whatsoever with the award of the licence [or] with Sizekhaya’s bid at all.

And, because of where we’ve been in the last year, Jimmy, it’s important to really emphasize that the court found no dispute whatsoever in our financial capacity as Sizekhaya to be able to carry this operation and licence through, absolutely no political connections that were linked, and we’ll fight from a probity perspective.

The minister acted in good faith.

I think the judge outlines that a couple of times, and says that it just is this technical irregularity that needs to go back to be fixed.

It just means that Sizekhaya’s suitability as an operator remains unchanged.

The minister needs to then take this decision back, and reconsider and then make the award of the licence again.

JIMMY MOYAHA: Fundi, I want to take a look at that take-back or walk-back procedure. I want to get a sense of what those next steps look like.

You mentioned, of course, that the technical ruling from the judge’s perspective means that there is more work to be done by the dtic [Department of Trade, Industry and Competition] in line with the awarding of this.

Are we saying that, once that process has been rectified, the licence awarding will be as it was before – that we’re not restarting the process, that Sizekhaya doesn’t need to rebid against other bidders?

FUNDI SITHEBE: That’s a very good question, Jimmy. There is absolutely no reopening of that bid submission. So bids remain valid as they were submitted and, to the extent that there were three, let’s call it, shortlisted entities, I suspect that that’s how we’d go.

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And literally, what the minister needs to walk back with the dtic is to, within the next six months, Mr Minister, please come back with a reconsideration of the licence award, remove this ministerial committee that you had advised or, if you so wish, because you’ve got the mandate to ensure that it’s an external, fully external, committee, come back and give us the reconsideration of the licence award.

And in the event that you need to then renegotiate a licence, we’ll give you another six months.

But what’s important in that – let’s call it the six months of revaluation, six months of negotiation – is that full year, the court was also very clear, Jimmy, that the causes, the funding for the NLTF [The National Lottery Trust Fund] and the good causes cannot be compromised whatsoever, and has emphasised that that must continue.

Hence I say that we continue. We’re still very much eligible for the licence.

We still believe very strongly in our value proposition and we’re obviously still hoping for a similar outcome, a fair process that still recognises that our bid was the best performing bid that was submitted.

JIMMY MOYAHA: Fundi, before I let you go, I want to take a look at that reconsideration and the bid aspect of it. In the event that the minister comes back and has re-evaluated this, and revisited the process, is it possible that we could have a different outcome as a result?

You mentioned, of course, we’re not reopening the bidding process, we’re just moving one step back in terms of what is being assessed.

Could this in any event, in any likelihood, result in a different outcome from the Department of Trade, Industry and Competition? I don’t expect you, of course, to comment on what that outcome could be, but is that a possibility?

FUNDI SITHEBE: I think we shouldn’t remove it – that it may not be a possibility. Anything is possible. Like I said, the minister has basically been asked to go back and and review the process, and we are still positive that the minister, within that ambit of what the judge said, will come back and say Sizekhaya, you are still the winners of the licence.

Hence I say that we have not been disqualified.

What’s interesting is he has to take the process as far. There was initially a bid evaluation committee that was put together by the NLC to the process. There was then a bid and adjudicating committee. So those two committee recommendations still stand.

The part where he then takes over or where the department then takes over is for that final recommendation or the final award.

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So the recommendation still stands from the BEC, the Bid Evaluation Committee and from the BAC, the Bids and Awards Committee. And what the minister then needs to satisfy in terms of the process is that he is comfortable that the final  award is given to the right entity in the correct manner.

So we’re comfortable that not too much is going to be reject[ed]. Like I said, we’re still very much in the run, and we feel positive. We’re still quite clearly excited about the prospects.

But, like you said, we have to let the process unfold, we have to allow the minister to do what the court has mandated the minister to do, and we look forward to what happens then in the six months after that.

But I must also caution that in the event, let’s say it goes, you know, completely in a different direction, we’ve been down this road. This is now the fourth licence operator to take over.

It takes a long period for any operator to be ready to run and put together lottery operations.

So, I think the minister would have to have a serious consideration around that, and we feel that it is going to take time if there’s somebody else or if there’s another successful award given to somebody else.

It is going to take time and we really think that, for the the benefit of South Africans and for the continuation and the certainty of the lottery, it’s definitely as Sizekhaya not  favourable for us, but we would follow and abide by any decision.

But, like I said, Jimmy, we are really still positive that we put together a compelling bid. South Africans have seen what we’ve put forward in the last three months.

We’ve lived our promise, and we have no doubt that we’ll continue living out the promise and fulfilling it for the eight-year period that was initially awarded – which will be reset once the 12-month process has come to an end.

JIMMY MOYAHA: Fundi, just to confirm that, before I let you go, the lottery from a Sizekhaya operational perspective at the moment continues as it has until we are given further direction from the Department of Trade, Industry and Competition?

FUNDI SITHEBE: Absolutely, we’ve got the Powerball running tonight, Jimmy.

We’ve spoken to all our retailers, all our banks, all our partners that it is business as usual.

And I think it’s important because the judge took time to specifically mention that we cannot have any compromise or any pause whatsoever for those good causes in the funding.

There are so many of NGOs, NPOs that rely on the grants, as well as there are beneficiaries that rely on this. It really would be an injustice if that had to suddenly be stopped.

So, I think the one thing that that the judge was very mindful of was to make sure that that is not interrupted and that can only continue as long as operations remain operational and continue to operate as we intend and as we continue to on a daily basis.

JIMMY MOYAHA: The National Lottery continues as planned, despite the Pretoria High Court ruling, declaring that licence invalid by way of a court judgment. We’ll see how this unfolds.

We’ll keep an eye on it, of course, we’ll speak to the Department of Trade, Industry and Competition once they’ve had a chance to review their side of things.

For now, we’ll leave the conversation on that note. Sizekhaya Holdings’ chief operating officer Fundi Sithebe joined us to take a look at the implications of the recent court ruling against Sizekhaya Holdings.