Public Protector loses Phumelela case, preventing action against horse racing industry
By Sandile Mchunu 
Aug 1, 2019
Phumelela said that it was pleased to announce that a court order was granted in favour of the company on Tuesday, preventing Mkhwebane’s remedial action on the horse racing industry from being implemented until the review process has been finalised.
The public protector did not oppose the urgent interdict application in the North Gauteng High Court.
Phumelela chief executive John Stuart said although they were obviously pleased with the ruling, Phumelela wished to reiterate that the review process was still far from finalised.
“We maintain our stance that the company will not be giving further comment, issuing any statements, or participating in public debates detailing the ongoing review process until such time as the legal proceedings have been finalised,” Stuart said.
The group’s share price has also been hurt by the report, tumbling by more than 72 percent since the report was published.
On Wednesday, the share was 16.67 percent lower at R2.
In May, Phumelela went to court in an effort to set aside Mkhwebane’s report.
This comes after the public protector ordered the Gauteng Gambling Board to take urgent steps to conduct an audit of all state-owned assets that were transferred to Phumelela with a view to establishing their origin, value on transfer and ownership prior to transfer, as well as to establish whether they were utilised for the benefit of the horse-racing industry and citizens who are affectionate about the sport of horse racing.
Mkhwebane also wanted the 50 percent bookmakers’ levy, paid to Phumelela by the Gauteng Gambling Board, to be stopped and channelled to a new entity that will serve as the regulator for thoroughbred horse racing.
The public protector's investigation found that more than R700 million from 1997 to 2009 emanating from bookmaker’s tax and levies had been passed on to Phumelela by the gambling board.
Early last month, Phumelela said that the removal of the group's 50 percent share of the 6 percent levy on punters’ winnings on fixed-odds bets on horse racing was threatening its profitability for the year to the end of July, depriving it of income of more than R6m a month, on average.
Phumelela expected this to negatively impact its profits to the tune of R75m a year.
Stuart said that the matter was now before the courts and that the company felt it would be inappropriate to pre-empt the proceedings, as the final outcome could have a material effect on the company.
“We have complete faith in the judiciary and trust that the courts will deliver the correct verdicts,” Stuart said.
BUSINESS REPORT