The horse racing industry in South Africa recently celebrated a victory when the Public Protector report of Busisiwe Mkhwebane, which ordered wide-ranging changes to the horse racing industry, was set aside by the North Gauteng High Court. Mkhwebane’s report, which was released in 2019, recommended that the Gauteng Gambling Board cease payment to Phumelela of a 3% levy on winnings from horse racing bets taken by fixed-odds operators in the province. To discuss the setting aside of the report, BizNews founder Alec Hogg spoke to the former CEO of Phumelela, Rian du Plessis, who stated that the implementation of this recommendation cost Phumelela around R80mn per year and ‘pretty much hastened its demise.’ – Nadya SwartÂ
Rian du Plessis on Busisiwe Mkhwebane’s allegations in respect of Phumelela:
Her investigation resulted from a complaint lodged by a lady called Phindiwe Kema, who alleged that a proper public private process was not followed when the Gauteng MEC privatised horse racing in Gauteng, and when he then transferred the Arlington race course to Phumelela without a public process. Now, the sad part is; what’s the likelihood of the Gauteng MEC or the Gauteng government owning any land in Port Elizabeth? I mean, that’s how ridiculous the complaint was. And the fact that the public protector actually decided to take on the matter and investigate it just shows you.
On the repercussions of Mkhwebane’s allegations:
Yeah, it happened after I had left Phumelela, but yeah – she directed that the 3% that Phumelela got from the Gauteng government as a contribution towards the costs of running horse racing needed to be stopped. And that cost Phumelela the best part of about R70, R80m per year and pretty much hastened its demise.
On the status of Phumelela:
Well, it is in business rescue at the moment, and the business rescue practitioner is selling off assets and then, if there is any money left, it will be distributed to shareholders. The company will not continue.
On whether there is a direct link between what the DPP investigated and proposed in 2019 and the travails at Phumelela:
Well, the loss of about R80mn a year, together with continuing to have to fund the sport of horse racing, leads to one conclusion – and that is that you won’t be able to do it. So it was a three way agreement between the racing industry or the racing clubs, the Gauteng government and Phumelela that resulted in the creation of Phumelela in 1997 and the unilateral withdrawal of the 3% without a concomitant reduction in costs leads to only one conclusion.
On whether the withdrawal of the 3% can now be reversed:
I don’t know, Alec, one would hope so. One would hope that the Gauteng government would now pay it back, but that would be a matter for Phumelela’s business rescue practitioner to take up with the Gauteng government.
On whether the setting aside of Mkhwebane’s report suggests that the damage that was done should now be undone:
That would be the logical conclusion, Alec, but we live in illogical times. You know, there are very few governments that have money lying around spare. So I would suspect that the Gauteng government has over the last three years spent that money and where they would find it to be able to give it back to Phumelela is a matter for another day.
On whether it’s necessary to have horse racing in South Africa:
Well, I don’t think it’s necessary, but it’s useful. From a betting point of view, it’s useful to have racing every day of the year except Christmas Day, because you’ve got betting shops that are open every day. And although you can offer betting on international product, it’s by far and away less popular than local racing, which is what punters understand better. So it is a bit of a chicken and egg situation.
You know, in the olden days when there was no betting in betting shops and most of the betting took place on course – well, you’d only offer betting when there was racing taking place. But you’ve now got betting shops all over the country, both bookmaker and tote betting shops, and they pay rent 365 days a year. And you can’t just have them open for betting on Wednesdays and Saturdays and Sundays.
On what he makes of all of this:
It’s bizarre. I’m beyond words. How a public protector who’s supposed to concern herself only with matters that relate to government employees and state-owned enterprises can interfere with a publicly listed quoted company and indirectly cause its demise is just bizarre. It’s absolutely astounding.
On what was behind Mkhwebane’s investigation:
I don’t know, Alec, I don’t know why she would have thought that it was appropriate for her to interfere in a publicly listed company’s affairs. You know, she has a history – or the public protector has a history – in having a go at ABSA in respect of the Reserve Bank, where the Office of the Public Protector was also disciplined and they lost the case. And here is yet another example where she just didn’t understand her powers and what the limits thereof are.
Read Also:
- Departing Phumelela CEO reckons shares now at R13 are worth R50
- Phumelela business rescue plan approved, heralds new dawn for SA horse-racing
- BizNews webinar: Back at the starting blocks – can SA’s horse-racing sector be revived?
