Pretoria - Department of Trade and Industry (dti) Deputy Minister Mzwandile Masina has assured South Africans that the Pretoria High Court’s decision will not lead to the suspension of the national lottery and that the lotto will continue.
“As the Department of Trade and Industry we want to assure all South Africans that nowhere in the judgement [does it] refer to temporally suspend the operation,” Deputy Minister Masina told media at a briefing on Thursday.
On Wednesday, the Pretoria High Court upheld Minister Rob Davies’ decision to appoint Ithuba Holdings as the preferred lotto operation. However, Judge Neil Tuchten set aside the license terms relating to the guarantee and performance bond that was found to be invalid. The Judge suspended the operation of this decision for a month.
The previous lotto operator, Gidani, brought a review application in which it sought to set aside the decision of Minister Davies to license Ithuba as the third operator of the lottery.
Gidani said the Deputy Minister challenged Minister Davies’ two decisions with the first being the Minister’s decision to negotiate the terms of a license agreement with Ithuba in preference to Gidani.
“In respect of this challenge, the court found that the Minister’s decision to prefer Ithuba above Gidani could not be faulted. It found that his decision was neither irrational nor unreasonable. The court refused to set aside the decision of the Minister to select Ithuba as the preferred applicant,” explained Deputy Minister Masina.
The second decision that former lotto operator Gidani challenged was Minister Davies’ decision to conclude the license agreement with Ithuba.
The Pretoria High Court found that this decision was flawed for two reasons with the first being that the court found that the Minister was not free to defer Ithuba’s obligation to put up a R125 million performance bond to a date later than the date of the license agreement itself.
The requirement that a performance bond was put in place when the agreement was signed was material and the Minister did not have the power to defer this obligation to a later date. “The court acknowledged that Ithuba has put up its performance bond prior to 1 June 2015 when it commenced as the operator,” said the Deputy Minister.
The second reason the license agreement was flawed was because in the view of the Judge, Minister Davies failed to consider the consequences of imposing a minimum fixed rand undertaking on Ithuba regardless of revenue that Ithuba may generate.
The court found that the Minister had failed to properly consider whether this contractual obligation could undermine Ithuba’s financial stability.
“On the basis of the two reasons, the deferral of the performance bond and the imposition of a fixed rand undertaking in the license agreement, the court found that the Minister’s decision to conclude the license agreement with Ithuba was unlawful. The court set aside that decision and referred it back to the Minister for reconsideration,” said the Deputy Minister.
The court decided to suspend the effect of its decision for a 31 day period.
This means that since the court upheld Minister Davies’ decision to negotiate the license agreement, the Minister and Board have a month to renegotiate the terms of the license in order to bring it in line with the principles articulated in the judgement.
The Deputy Minister emphasised that the department will comply with the court judgement.
The Deputy Minister further added that the country ought to consider issuing the license over a longer period of time.
“At some point we have to learn as South Africans that we must take a radical decision about how and when we issue lottery licenses. We now have to really start to consider issuing this license once-off because we are spending a lot of money in legal fees instead of taking this money to good causes.
“This is the license of the department. We issue it for someone to run it so that we are able to maximise and contribute to good causes. We will have to relook into the legislation whether or not its time, because internationally lottery licenses are issued between 15 and 20 years once off. I think that could be the solution,” said the Deputy Minister.
The dti further encouraged lotto players to continue playing thereby contributing to good causes. – SAnews.gov.za
