EDITORIAL: An unnecessary taint to the lottery process

The award of the fourth licence to operate the national lottery was always going to be controversial. But the involvement of politicians in the process has tainted the impending award and may cause unprecedented disruption to the lottery.

Over the past months, this newspaper has chronicled the controversies dogging the multibillion-rand tender to run the national lottery, which supports arts, sports and other noble causes.

The licence of the current operator, Ithuba, expires at month-end, and trade, industry & competition minister Parks Tau does not seem ready to announce the preferred bidder.

He has been dragged before the courts for his tardiness and attempts to remedy the situation. Tau has expressed concerns about the evaluation process. He says he wants to make sure that the preferred bidder doesn’t benefit politicians and political officeholders.

This is an understandable concern. His predecessor and fellow ANC leader, Ebrahim Patel, had ample time to raise and address this concern.

Faced with the real prospect that the lottery may be interrupted, Tau has formulated plan B: a temporary licence for the duration of one year.

He has asked all the bidders to bid for this temporary licence. In reality, however, only Ithuba stands a chance. The others will take months to get ready. It will also not make sense to invest significant resources without knowing for sure that they will be confirmed for eight years.

Understandably, this temporary licence issue has opened him up to accusations of bias.

As for who the ultimate beneficiaries are, this newspaper has reported how a number of bidders are linked to the ANC. It is hard to see how this perceived defect can be cured at this late stage.

Litigation has become a regular feature of state tenders. Losers of the previous lotteries have ended up in courts. So too have the banks, which disburse social grants on the state’s behalf.

This taints state procurement and makes doing business with the state unattractive. Regrettably, it doesn’t seem as if the state has learnt anything.

Not all the blame should be placed at Tau’s door.

He was appointed in June last year. The transition from Patel to Tau remarkably slowed down the process of bid evaluation and adjudication.

In a way, Tau is also a victim of a bad process. As a politician, his role should be limited to formulating policy. The current lottery licensing process, however, grants him extraordinary powers. This shouldn’t be the case.

Also, he has been less than forthcoming about his concerns. This raises even more concerns and opens him up to further litigation.

Courts are there to adjudicate disputes between parties. Having them effectively re-adjudicate bids should not be their responsibility.

A disruption of the lottery operations will cause damage to thousands of nonprofit organisations that rely on grants for survival.

Though he is new to the national cabinet, Tau is a skilled politician.

He should not allow this process to tarnish his reputation. For a start, he needs to play open cards with the bidders and the country. He needs to communicate a credible timetable that he is working towards, and allay fears about disruption.

A disruption to the lottery’s operations would damage the country’s image as an investment destination. This should not happen.

In the long term, he needs to improve the process of selecting the operator. Politicians must not be involved in tenders.

There are good examples to follow. Barbara Creecy, Tau’s colleague in transport, is piloting some innovative solutions in getting the private sector to participate in Transnet’s rail and ports operations. She has set up a unit in the Development Bank of Southern Africa.

The private sector and some state-owned enterprises routinely appoint transaction advisers to run major transactions. This limits the role of shareholders to setting out parameters and principles and approving successful bidders. Tau should explore this path.