- The original bidding process had three evaluation stages, but the Minister added another committee to look at the applications again.
- The new committee reviewed the bidders even though the required evaluation, adjudication and quality assurance steps had already been completed.
- The Minister relied on the extra committee’s recommendations, without following the process in the original Request for Proposals.
The Minister of Trade, Industry and Competition’s decision to appoint a new committee to review applications for the Fourth National Lottery Licence has raised serious questions about the fairness and legality of the licensing process.
Judge N Davis of the High Court in Pretoria looked at whether Minister Parks Tau was allowed to introduce another evaluation process after the National Lotteries Commission (NLC) had already finished its assessment of applications.
The dispute started with the Request for Proposals (RFP) released by the NLC on 7 August 2023, which invited parties to apply for the Fourth National Lottery Licence. After the evaluation, the Minister announced on 28 May 2025 that the licence would go to Sizekhaya Holdings RF (Pty) Ltd, with Ithuba Lottery RF (Pty) Ltd as the reserve applicant.
This decision led to review applications by unsuccessful bidders, including Ithuba and Ringeta Consortium RF (Pty) Ltd. The Economic Freedom Fighters (EFF) also stepped in, challenging the Minister’s decision on constitutional grounds related to financial interests held by political office-bearers.
The additional committee was not part of the bidding rules
A key issue was the Minister’s decision to appoint a Ministerial Committee on 26 January 2025 to advise him on the licensing decision.
The original RFP set out a three-stage evaluation process. An Evaluation Committee would assess applications and prepare a report. The NLC’s Adjudication Committee would then look at that report, followed by an independent Quality Assurance Committee appointed by the Minister to check the consistency and fairness of the process.
Only after these steps would the Minister, together with the NLC, make the final decision. But after getting a second quality assurance report, the Minister decided he was not ready to make a final decision. He raised concerns about how the applications had been evaluated and whether all the requirements had been properly considered.
He then appointed the Ministerial Committee, made up of members from the quality assurance committee, except for its senior advocate, one attorney, and the Chief Director of Legal Services in the Department of Trade and Industry.
The committee was asked to review the bids for the Fourth National Lottery and Sports Pools Licence and recommend the preferred and reserve bidders to the Minister. Its recommendations were different from those of the earlier committees. It put forward Sizekhaya as the preferred bidder and Ithuba as the reserve applicant.
Judge Davis found that this extra process was not part of the RFP and that the Minister had let a new committee carry out an evaluation that had already been finished. The judgment said that the RFP did not allow for the creation of a Ministerial Committee or a new evaluation of applications after the set stages had been completed.
Judge Davis found that relying on advisers did not give the Minister the power to introduce a new evaluation process or let another committee review applications using criteria that had already been used. The judgment called this a “parallel process” that was not just an evaluation and adjudication, but a complete re-evaluation of the applications using criteria decided by the Minister alone.
Quality assurance became another evaluation exercise
The court also looked at the timing and purpose of the two quality assurance checks, which became important to understanding how the process played out. The NLC hired MMB Consulting to do the first quality assurance assessment. But the report was only delivered after the NLC’s adjudication committee had already sent its findings to the Minister.
The Minister then appointed a second quality assurance committee. Judge Davis noted that this committee’s review was more thorough and found several problems in the earlier evaluation, including incomplete checks about fitness and propriety and the lack of a proper B-BBEE analysis.
The NLC said that quality assurance was not meant to confirm rankings or recommend who should get the licence. Instead, it was supposed to make sure all applicants were assessed fairly and consistently. But the court found that the Minister went further than just getting advice on the evaluation process when he appointed the Ministerial Committee to review the applications.
The Minister argued that the RFP let him get advice from consultants and that the committee helped him carry out his legal duties. He said he was allowed to consider concerns raised during the evaluation before making his final decision.
Judge Davis agreed that the Minister was allowed to get advice, but found that the extra committee was not the kind of advisory group the RFP had in mind. The judgment made a distinction between getting advice to help the Minister make a decision and bringing in a new group to do another evaluation of the bidders.
It found that the Ministerial Committee had taken over functions that belonged to the Evaluation and Adjudication Committees, moving away from the process set out in the RFP. Judge Davis concluded that the Minister’s decision-making process was unfair in procedure and did not meet the rules for the licensing process.
Political financial interests and the EFF’s challenge
The EFF also challenged how Section 13(2)(b)(iv) of the Lotteries Act was interpreted. They argued that the ban on political office-bearers having financial interests in lottery licence applicants should include not just direct interests, but indirect ones too.
This challenge came from concerns about Ringeta’s ownership structure and the involvement of Dr Sibongiseni Maxwell Dhlomo, an ANC member of Parliament and trustee of the Batho Batho Trust, which had an interest in the consortium’s ownership.
The Minister got legal advice on whether this arrangement counted as a prohibited financial interest. The court noted that the law referred to direct financial interests, but the RFP had also included indirect interests.
But Judge Davis found that the EFF’s request was really trying to broaden the law through interpretation, rather than through changing the legislation.
The judgment said that the kind of relief the EFF wanted could not be granted through these review proceedings, and that any ban on indirect financial interests should be done through changes to the law.
Licence award set aside, but Sizekhaya remains operator
The court set aside the decision to award the Fourth National Lottery Licence to Sizekhaya Holdings and suspended the effect of its order for 12 months to allow the Minister to reconsider the competing bids through a lawful process. During the first six months, the Minister must make a fresh decision on the preferred and reserve applicants without relying on the report or recommendations of the additional Ministerial Committee.
If Sizekhaya Holdings is not selected again, the Minister must use the remaining six months to negotiate and conclude a new licence agreement and put transitional arrangements in place for a change of operator. In the meantime, Sizekhaya will continue operating the national lottery to ensure there is no disruption to lottery operations.
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