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Phumelela Gaming and Leisure responds to Public Protector’s report

By Mark_K

It has been widely reported that the Public Protector released a report into allegations of maladministration and improper conduct in connection with the corporatisation of the South African thoroughbred horseracing industry.

The report sets out the findings of the Public Protector in respect of 4 issues relating to the corporatisation process. In summary, these issues were:

·         whether the Gauteng MEC for Economic Development had the authority to enter into corporatisation negotiations;

·         whether public participation and parliamentary processes were followed in connection with the corporatisation process;

·         whether a grant by the Horseracing Development Fund to the Newmarket Turf Club was utilised for the purposes which a complainant alleged it was intended; and

·         whether the land on which the Arlington and Bloemfontein racecourses are located, were owned by municipalities or the government at the time of the transfer to Phumelela.

The Public Protector concluded that only the complaint regarding the grant by the Horseracing Development Fund to the Newmarket Turf Club was substantiated. Phumelela, however, disputes this finding.

Despite the fact that the Public Protector concluded that three of the four issues investigated by her were unsubstantiated, she directed President Cyril Ramaphosa, the Premiers of all Provinces, the Minister of Sport, the Minister of Trade and Industry and the Gauteng Gambling Board to take wide-ranging remedial action, the majority of which is entirely unrelated to either her findings or to the only substantiated complaint.

The Public Protector also made numerous observations and findings regarding the transformation and control of the racing industry which are unrelated to the issues investigated by her. These observations and findings have caused Phumelela to suffer reputational harm.

It is pertinent to note that the Public Protector refused, prior to issuing her final report, to give Phumelela access to the evidence upon which her findings were based or to afford Phumelela the opportunity to question witnesses who gave evidence. Phumelela has been advised that this constitutes a breach of the provisions of the Public Protector Act.

The Public Protector’s final report also contained a wide range of material evidence, of which Phumelela was never informed nor called upon to answer.

Whilst purportedly acting as mediator, the Public Protector proposed, in writing, that Phumelela should make payment of R10 million to one of the complainants for “pain, suffering and public humiliation” and for “relinquishing her plans and interests” in respect of the Arlington Racecourse (which is owned by Phumelela). Phumelela rejected this proposal because no legal justification exists for such a payment. The Public Protector stated that the rejection of a payment that, to her knowledge, had no basis in law, was “regrettable”. It is also noteworthy that none of this complainant’s complaints were substantiated.

The Public Protector convened public hearings to hear further evidence which she would reasonably have been aware would be adverse to Phumelela. Although she invited the media to these public hearings, she did not invite Phumelela or give it any notice of the hearings. Phumelela was compelled to approach the High Court for an urgent order postponing the hearings, in order to afford it an opportunity to test the evidence and to make submissions in respect thereof. The Public Protector has constantly misconstrued the High Court’s order as an interdict when it merely postponed the hearings.

Phumelela has cooperated with the Public Protector’s investigation since it commenced in 2013. It submitted large volumes of documents and information to her office. The Public Protector appears to have disregarded most of this relevant information in coming to her conclusions. In addition, she has accused Phumelela of constantly frustrating her investigation. Phumelela denies this.