Why Parks Tau awarded Sizekhaya the national lottery licence amid controversy

Trade, Industry and Competition Minister Parks Tau has explained why he awarded the licence to operate the R180 billion, five-year national lottery contract to Sizekhaya, saying there was no indication before the award that the consortium had political connections.

In a filing to the North Gauteng High Court in a case brought by runner-up bidder Ithuba Lottery, Tau said no concerns were raised during the evaluation process about any bidder’s political connections, except in the case of Ringeta.

Tau noted, however, that media reports later indicated that the Deputy President Paul Mashatile’s sister-in-law was an indirect shareholder in Sizekhaya.

Two other individuals connected to Sizekhaya, prominent KwaZulu-Natal businesspeople Moses Tembe and Sandile Zungu, were also linked to the Deputy President, Tau said he was told.

Tau added in a footnote that this information came to light after the bid was awarded, and the National Lotteries Commission (NLC) was instructed to investigate on June 24. The investigation seems to be incomplete.

Sizekhaya Holdings dismissed allegations of impropriety and political influence in July, calling the claims baseless. “We, therefore, welcome… Tau’s commitment to investigate any perceived conflicts as Sizekhaya has done absolutely nothing wrong,” the consortium said.

Also in July, Tau said he had “confidently discharged to the best of my abilities” his responsibilities in awarding the licence.

In his conclusion in his papers, Tau said: “This was a close and tight finish. In my view, Sizekhaya pipped the others to the post.”

“Pursuant to the NLC’s advice, I signed the licence agreement and announced that the licence had been awarded to Sizekhaya,” Tau wrote.

Tau cited factors including Sizekhaya’s knowledge, experience, compliance with the Act, financial resources, local economic development, social responsibility, and broad-based black economic empowerment (B-BEE) in ownership and management.

Ithuba Lottery was named as the reserve applicant, with its local technology partner, strong localisation and supplier strategies, and higher empowerment rating seen as advantages.

Tau said he had informed the NLC last December that he lacked sufficient information from its board, leading to delays. Initially, Ringeta was ranked top, followed by Sizekhaya, Wina Njalo, and Ithuba Lottery. The bids were reassessed in January, and in April the NLC was instructed to renegotiate with Sizekhaya or, if not feasible, with Ithuba.

The North Gauteng High Court ordered Tau to make the award by May 28. Shortly before the deadline, he was informed in writing of Sizekhaya’s contractual relationship with Genlot and government shareholding nominees.

Genlot is a Chinese technology company.

In his assessment, Tau considered whether the individuals benefiting from the licence were “fit and proper” and whether anyone in politics had any “direct financial interest.” He said the committees evaluating bids did not raise any significant concerns regarding Sizekhaya or Ithuba.

Regarding Ringeta, Tau noted one indirect shareholder, the Batho Batho Trust has ANC MP Dr Sibongiseni Dhlomo as a trustee. Legal counsel advised that Dhlomo had a “direct financial interest in a shareholder of Ringeta.” Tau also mentioned that former finance minister Nhlanhla Nene heads the Thebe Investment Consortium, another Ringeta shareholder.

IOL