Ithuba's lottery license invalid: judge

Judge Neil Tuchten granted an order to Gidani declaring Davies's decision to award the third lottery license to Ithuba unconstitutional and invalid.

He set aside the license which was issued by the minister to Ithuba on November 24 last year.

Judge Tuchten also suspended the operation of the order for a month and the awarding of the licence has been referred back to the minister.

However, Tuchten could find no fault with the minister’s preference for Ithuba as the preferred bidder for the lottery licence and only took issue with the manner in which the tender was awarded.

"It is in the public interest that a flawed decision, defended in this manner, should not be allowed to stand. There is a risk that the full picture has even now not emerged," he said.

Judge Tuchten made it clear that the minister had "damage control powers" to limit or eliminate the risk that the lottery would cease to function.

"The minister may, in a proper case, decide not to issue a license at all, in which case he may appoint an organ of state to run the lottery. Where the licensee is for any reason whatsoever unable to conduct the National Lottery, the minister may under certain circumstances issue a temporary license.”

Judge Tuchten went on to say the purpose of the lottery was to provide funds for good causes.

"Any interruption in the conduct of the lottery will have severely detrimental consequences for those institutions that rely, or have a reasonable expectation of relying, on funding generated by the lottery,” he said, adding that while he was aware that Ithuba had committed a substantial amount of money to the venture, those were “inherent in a tender environment which is subject to the rule of law”.

"The minister, with the support and co-operation of both Ithuba and the [Lotteries] Board, entered into the license agreement while litigation to prevent their doing so was pending. Now that all the evidence is in, I cannot see any reason for the haste with which this happened, "he said.

Judge Tuchten found that Davies had awarded the license without Ithuba putting up the required performance bond of R125-million before the license was issued.

Ithuba only provided the bond during the course of legal argument in the application.

He also found that the minister's decision was irrational because he failed to take into consideration that certain provisions of the license agreement, if implemented, could result in Ithuba's insolvency.

(File photo: Gallo Images)