South Africa: Gayton McKenzie Blu Label Ticketpro Sale Sparks Ethics Probe

• Sports Minister Gayton McKenzie visited Blu Label multiple times before its Ticketpro subsidiary was sold.
• Ticketpro was acquired by a consortium linked to McKenzie's Patriotic Alliance party.
• McKenzie's former chief of staff, Bakang Lethoko, became Ticketpro's new CEO after the sale.
• Ticketpro is the exclusive ticketing vendor for Cricket South Africa and the South African Football Association, both under McKenzie's oversight.
• McKenzie denies any role in the transaction or ability to influence Ticketpro's contracts.

The entire episode serves as a critical reminder for compliance officers and legal counsel to diligently scrutinize transactions involving politically exposed persons (PEPs) and their affiliates, especially when state-linked entities or public contracts are part of the equation, to effectively mitigate risks associated with conflicts of interest, undue influence, and potential regulatory investigations.

Minister of Sport, Arts and Culture, Gayton McKenzie, reportedly made multiple visits to the Sandton headquarters of Blu Label, a technology group listed on the JSE. These visits took place during the period when Blu Label was in the process of finalizing the sale of its ticketing subsidiary, Ticketpro. The subsequent transaction involved the acquisition of Ticketpro by a consortium that has been identified as having strong affiliations with Minister McKenzie and his political organization, the Patriotic Alliance (PA).

This deal, which saw the "women-owned broad-based black economic empowerment consortium" take ownership, also led to a significant change in leadership at Ticketpro. Bakang Lethoko, who previously served as Minister McKenzie's chief of staff, was appointed as the new Chief Executive Officer of the ticketing company. The timing of the minister's visits and the nature of the acquiring consortium have collectively raised significant questions regarding the integrity and potential influence surrounding the controversial sale.

The sale of Ticketpro has garnered considerable attention primarily because of the company's critical role within South African sports. Ticketpro currently holds exclusive vendor agreements for ticketing services with both Cricket South Africa (CSA) and the South African Football Association (Safa). These two major sporting bodies operate under the direct ministerial oversight of the Department of Sport, Arts and Culture, headed by Minister McKenzie. This arrangement immediately presents a scenario where a company with direct links to the minister's political party is a key service provider to entities under his governmental control.

Beyond its current contracts, industry insiders have expressed apprehension about the potential for Ticketpro to secure further lucrative opportunities. There is a specific concern that the company could benefit from future high-profile sporting events that Minister McKenzie and his department are actively working to attract to South Africa. For instance, if the Department of Sport, Arts and Culture were successful in its efforts to bring a Formula One race to the country, the PA-linked Ticketpro would be strategically positioned to potentially secure the highly sought-after ticketing rights for such a major international event.

The series of events surrounding the Gayton McKenzie Blu Label Ticketpro sale has inevitably brought the issue of South Africa sports minister ethics into sharp focus. The repeated presence of Minister McKenzie at Blu Label's offices while the JSE Ticketpro transaction was being prepared, combined with the subsequent Patriotic Alliance ownership links of the acquiring consortium, has fueled suspicions of a potential conflict of interest. This situation is particularly sensitive given Ticketpro's exclusive contracts with major sports federations that fall directly under the minister's governmental portfolio.

Despite the mounting questions, Minister McKenzie has issued strong denials regarding his involvement. He explicitly stated that he played no role in the Ticketpro transaction itself and further asserted that he is unable to influence any of Ticketpro's ticketing contracts, whether current or prospective. This denial aims to counter allegations of undue influence or impropriety. The entire episode serves as a critical reminder for compliance officers and legal counsel to diligently scrutinize transactions involving politically exposed persons (PEPs) and their affiliates, especially when state-linked entities or public contracts are part of the equation, to effectively mitigate risks associated with conflicts of interest, undue influence, and potential regulatory investigations.

Compliance officers and legal counsel should scrutinize transactions involving politically exposed persons (PEPs) and their affiliates, particularly when state-linked entities or public contracts are involved, to mitigate risks of conflict of interest, undue influence, and potential regulatory investigations.

Source: Original reporting via Daily Maverick