Lotto debacle leaves public high and dry

By Time of article published Apr 1, 2007

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By Wendy Jasson da Costa and Chiara Carter

Saturday night's turn of the Lotto wheel was the last for at least a month, and possibly longer, and the government has been roundly criticised for the debacle.

The stay of the wheel was announced at the 11th hour on Saturday by Mandisi Mpahlwa, the minister of trade and industry, who said it had proved impossible to make an informed decision before the expiry at midnight on Saturday night of Uthingo's licence.

This meant that Saturday night's Lotto draw would be the last for at least a month.

The news was met with outrage from opposition parties, who said it was a disgraceful situation and that someone had to take the blame. The official opposition intends calling for a debate in parliament on what they termed "a debacle".

Mpahlwa said charities who benefited from lottery payouts would not go empty-handed because there was a year's worth of reserve funding available.

Winners were also assured of being paid out, despite Uthingo no longer being licensed.

On Saturday afternoon, he met each of the four groups who had originally bid for a chance to run the Lotto and were still interested in doing so.

The hiatus in the Lotto follows a ruling by the Pretoria High Court this month that the process of choosing the preferred bidder, Gidani, as the new Lotto operator was flawed.

Mpahlwa said this had forced the government to go back to the drawing board.

"The sheer volume of work that has had to be undertaken, which includes extensive probity checks that need to be conducted nationally and internationally, makes it impossible to conclude this work in time for me to make a new decision before the expiry of the current licence," Mpahlwa said.

He said Uthingo had not applied to extend its licence and the government was exploring whether the Lotto could be run legally in the interim by an unlicensed operator. He added that, at this stage, there was no way one could talk about reimbursing Gidani for the money it had already spent on preparing to run the Lotto.

The situation has left retailers across the country bewildered, because Uthingo's contracts with them also ended on Saturday. Some, such as Shoprite, the largest chain paying out the Lotto, have already negotiated with Gidani and new equipment is standing alongside the old Uthingo Lotto machines in many stores.

Gidani was preferred by the government over Igwija, another BEE consortium then led by Danisa Baloyi, now linked to the Fidentia investigation, and Uthingo.

But Gidani's victory became controversial after revelations that the consortium included prominent ANC members Chris Nissen and Max Sisulu.

It later emerged, in turn, that Naledi Pandor, the education minister, also had links to the incumbent operator, Uthingo. Also controversial was its foreign partner, Intralot, which is owned by the billionaire Socrates Kokkalis.

Patricia de Lille, the leader of the Independent Democrats, said the whole situation was problematic from the beginning and the government should have conducted better probity checks.

"There were too many questions from the start," she said. "Aside from the ANC figures linked to the preferred operator, there are serious questions about Gidani's foreign partner."

Pierre Rabie, the Democratic Alliance spokesperson on trade and industry, said it was simply not good enough and his party would be calling for a debate on the matter in parliament.

"It's unacceptable. The public will now suffer and there will be a dip in funds for charity. Someone must stand up and be blamed," he said.

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