Gambling board loses to the house

2014-11-09 17:00

Ahead of a disciplinary hearing, the acting CEO of the National Gambling Board left in July after sharing confidential information relating to an eight-year contract, worth millions, with a potential bidder.

And now the board, suspended in September by Trade and Industry Minister Rob Davies, has implied in court papers it was pushed aside over the same tender so the department’s administrators could “seize control of the project”.

In June, the board withdrew an invitation to submit proposals for the National Central Electronic Monitoring Systems tender. It had issued a draft request for proposals to obtain input from interested parties earlier this year.

Competition for the tender is fierce: it is potentially worth R1?billion over eight years, due to begin in July. The operator of the tender ensures casinos fairly pay punters who play on slot machines that pay out a maximum of R500.

Two weeks after the withdrawal of the invitation for proposals, acting chief executive Barry Mashigo was summoned to a disciplinary hearing to face charges he had passed on confidential and sensitive information relating to the board’s project documents for the tender to a potential bidder.

But before the hearing could go ahead, his contract was terminated by mutual agreement.

Mashigo declined to comment.

The monitoring system is currently being operated by Zonke Monitoring Systems, which first won the tender in 2001 while a subsidiary of Mvelaphanda Group.

It is now part of Bidvest.

Davies suspended the board in September following findings by the Auditor-General that it had breached public finance rules, resulting in irregular expenditure of R3.9?million, and that some board members had acted for the board beyond the expiry of their terms.

But last month, trade and industry director-general Lionel October told Parliament the minister had received whistle-blower allegations against the members, including “apparent corrupt activities regarding the National Central Electronic Monitoring System”.

In court papers, October elaborated on the whistle-blower’s claims:

»?The monitoring contract was “unlawfully” outsourced to Zonke, which board chairperson Linda de Vries and her deputy are alleged to be directors or shareholders of. But a company search conducted by City Press found no records of either De Vries or her deputy;

»?The state lost money – last year it received R172?000 in licence fees from the contract;

»?The specifications and monetary value relating to the request for proposal for the tender were altered.

Professional services firm Grant Thornton is investigating the allegations as part of its forensic audit.

The whistle-blower, whose name is known to City Press, referred questions to the former chief executive of the gambling board, Baby Tyawa, who said she left the board before the tender process began.

De Vries argued that members of the board served beyond their terms because of delays on Davies’ part in confirming their terms or appointing new board members. She attached correspondence showing she alerted Davies to the expiry in November last year – a month before the terms were due to expire.

Davies only sent a response in May.

“It was on the commencement of the project that the [board] began experiencing challenges with [Davies] in the renewal of the terms of its members,” said De Vries.

But when Tumelo Baleni and Caroline Kongwa, the two administrators installed by Davies, stepped in during September, one of the first things they asked the new acting chief executive about was the tender and how to help with it. They also asked for the documents necessary to continue.

Kongwa said she was unable to comment on anything relating to the suspensions or the administration.

October denied the board’s suspension had anything to do with the contract. Trade and industry spokesperson Sidwell Medupe said the forensic investigation was under way.

It is unclear why the administrators are pushing ahead with a new tender before the conclusion of the investigation.

But in his affidavit, October said the finalisation of the tender was in the public interest.

R1bn tender at the centre of power struggle

The game and the players

What the provincial gambling industry was worth in the year to March, according to provincial licensing statistics


The government-funded entity that regulates casinos, gambling and betting


Minister of trade and industry. The National Gambling Board falls under his department


The former acting CEO of the gambling board


Current operator of the National Central Electronic Monitoring Systems contract


Trade and industry director-general


Chairperson of the suspended board


Professional services company probing the whistle-blower’s allegations


Former chief executive of the Gambling Board. She resigned in May last year


Joint administrators running the Gambling Board since the board’s suspension on September 9

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