Kgafela’s Headache

Investors await multi million pula decision

Gambling Authority, Ithuba fight from same corner

Ithuba Solutions want negotiations with GA to start

Growmine wants GA termination nullified, reversed

DITIRO MOTLHABANE

ditiro@thepatriot.co.bw

Almost two months after minister of Investment, Trade and Industry (MITI), Mmusi Kgafela was scheduled to rule on an appeal to his office in the tussle for the issuance of a licence to operate a multi million pula lottery in Botswana, parties still wait with baited breath.

GrowMine t/a Dineo tsa Pula is challenging a decision by the Gambling Authority (GA) to revoke their status (announced on 4th June 2020) as the Preferred Bidder for the award of Botswana’s first lottery licence. The appeal to the minister was filed on 03 September 2021 in line with provisions of section 48 of the Gambling Act of 2012. A decision on the appeal was due in December 2021.

Gambling Authority CEO Thulisizwe Johnson, through an answering affidavit dated 02 November 2021, said the decision to terminate negotiations with Growmine was taken because of their inability to provide proof that they had secured committed funding despite being afforded adequate time to do so as contemplated in clause 3.4.1.3 of the RFA.

The Gambling Authority is adamant that failure to provide proof of irrevocable committed funding by GrowMine is the main reason for termination of negotiations as it constitutes non-compliance with the requirements of the request for applications (RFA). “The Bid Evaluation Manual which is at Annexure B of the RFA clearly provided that “the Preferred Bidder will be required to obtain fully committed financing from its sponsors before the Authority can award the licence. Once an Applicant has been announced as the ” Prefened Bidder, the GA was entitled to seek proof of committed funding. Growmine was therefore wrong to suggest otherwise,” said Johnson.

GrowMine Appeal

In an affidavit to support the GrowMine appeal dated 25 August 2021, Board Chairman Carthage Matlhaga argued that the GA acted arbitrarily throughout the negotiations, in breach of the duty to negotiate fairly and in good faith, by imposing terms not provided for by the Gambling Act or in the Request for Applications. “These terms include, inter alia, the hitherto non – existent requirement to provide an “irrevocable commitment to funding” at the pre-signature stage,” he said.

Matlhaga said despite this conduct on the part of GA and in the attempt to progress the negotiations concerning the License, Grow Mine provided several undertakings from entities like the Botswana Development Corporation and Stanbic Bank Botswana, which undertakings fully demonstrated that they have the necessary financial and other resources to conduct the national lottery as required by the Act. But the GA dismissed the documents from both BDC and Stanbic bank saying clearly they were merely expressions of interest and had not been approved to be

considered as financial instruments.

Further, Growmine insist that it was not yet the Successful Applicant as defined in the RFA, and therefore proof of “fully committed fundingf’ from its funders was not yet due and would only become due when the lottery license is issued, because a Successful Applicant is one who successfully concludes licence negotiations with the GA.  The GA argues to the contrary, saying there is not such explicit provision in the RFA.

“The Authority’s attitude in this regard, regrettably, demonstrates that the decision taken to terminate the negotiations was not driven by any rational mncern, but rather by other – unlawful – considerations which, may even have sinister origins,” said Matlhaga.

GrowMine are also playing the citizen empowerment card, arguing that the Minister’s decision should be guided by this critical requirement as one of the major aims of Government as espoused in several legislations, policy documents and vision statements.

Insolvent

GrowMine have submmitted that Ithuba Botswana Chairman, Todd Mangadi should be disqualified as a fit and proper person because he is insolvent and cannot pay his credtors, as shown by the notice of sale in execution published in local media.

GrowMine also argue that Gambling Authority engaged a questionable service provider in Neo Solutions to serve as transaction advisors and to conduct the evaluation of national lottery applications which by their nature are highly technical and complex. The GA reasoned that the decision was taken given the fact that the national lottery project is of significance to the Botswana economy, which requires a team of experienced experts like Neo Solutions. Neo Solutions were appointed because of their prior experience, having assisted the South African national lottery in its selection of Applicants for the South African national lottery.

GrowMine have submitted documents showing that in 2019 Vivien Natasen of Neo Solutions appeared before the State Capture Commission in South Africa accused of receiving R9 million from the SA Express Commercial Manager Brian Van Wyk.

In response, the GA said such matters will only come under scrutiny when they finally start negotiations with Ithuba Botswana- the Reserve Bidder.

Ithuba replies

The Patriot on Sunday has also seen an answering affidavit from Todd Mhenyadira Mangadi, the Board Chairman of Ithuba Solutions.

GrowMine has had more than adequate opportunity to negotiate with GA and provide the requisite proof of funding. It failed to do so. GrowMine cannot be ermitted to halt or unreasonably delay the process.

Supporting arguments by the GA, Mangadi said based on his experience from their sister company, which operates the lottery in neighbouring South Africa, substantial capital investment is necessary to set up and oprate a succesful operation.

He said consideration should also be had to the fact that the licence operator will liley not generate a profit at the outset because it takes time to build a steady generation of incomer. “There is accordingly a high risk that a company withouyt adequate and secured funding will collapse and shut down shortly after the start of the national lottery, should it even get off the ground. It is fundamental that the lottery operator is financially stable and able to honour prize payments to players on time. It is essential that GA and the Minister ensures that the [prospective licence operator has sufficent and irrevocable funding,” argued Mangadi.

Further, Mangadi said Section 48, under which the appeal was brought before the Minister, does not apply and is not appropriate for national lottery which renders the appeal incompetent.  He said the minister is part of the decision making process and the award of a lottery licence and therefore does not have authority to hear and adjudicate GrowMine’s appeal against the decision to terminate negotiations. “This is an untenable proposition. It would render the minister both the primary decision maker and the appeal tribunal.