Pretoria High Court: Parks Tau Lottery Licence Reconsideration Ordered

• Minister Parks Tau has been ordered to reconsider bids for South Africa's fourth national lottery licence.
• The Pretoria High Court found the minister impermissibly relied on an unauthorized ministerial committee for the initial award.
• The licence agreement awarded to Sizekhaya Holdings in May 2025 has been declared invalid, but this declaration is suspended for 12 months.
• Sizekhaya Holdings will continue to operate the lottery during the 12-month suspension period.
• The minister has six months to decide on a new award and a further six months to finalize a new agreement.

This ruling underscores the critical importance of adhering strictly to established procurement processes and Request for Proposal (RFP) terms in public tenders.

South Africa's Minister of Trade, Industry and Competition, Parks Tau, has been directed by the Pretoria High Court to re-evaluate bids for the country's fourth national lottery licence. This directive, issued by Judge Norman Davis on Monday, mandates the minister to exclude any input from a specific ministerial committee report, which Minister Tau acknowledged had influenced his initial decision. The original award of the licence went to Sizekhaya Holdings in May 2025, a decision now under judicial scrutiny.

While the court has set aside the minister's award and declared the licence agreement invalid, this declaration has been suspended for a period of 12 months. This means that Sizekhaya Holdings will continue to operate the lottery for the time being, ensuring the continuity of the national lottery. Minister Tau has been given a strict timeline: six months to make a fresh decision on the licence award, and an additional six months to finalize a new agreement, should he opt not to re-award it to Sizekhaya. The total period for this reconsideration and potential re-award is thus 12 months.

The legal challenge against the minister's decision was initiated by two unsuccessful bidders, Ithuba Lottery and Ringeta Consortium, whose applications were heard concurrently with a separate constitutional challenge by the Economic Freedom Fighters (EFF) in July this year. Judge Davis meticulously outlined the established Request for Proposals (RFP) process, which is fundamental to a fair evaluation. This process stipulated a three-stage approach: an initial evaluation of bids, followed by an adjudication phase, and culminating in the minister's final decision after consultation with the National Lotteries Commission (NLC).

A significant deviation from this prescribed procedure occurred when, following consultations, the minister initially delayed his decision, stating he was not prepared to make an award. At this point, the official evaluation committee had ranked Ringeta first, and the NLC adjudication committee had recommended Ringeta as the preferred bidder, with Sizekhaya designated as the reserve. However, the minister subsequently established an ad hoc ministerial committee to re-assess the bids and propose preferred and reserve bidders. This new committee ultimately recommended Sizekhaya as the preferred bidder and Ithuba as the reserve, a recommendation that diverged from the official process. Judge Davis found that the minister's reliance on this unauthorized committee, which conducted a "parallel process" of re-evaluation without the bidders' knowledge, was impermissible under the RFP terms.

In his ruling, Judge Davis explicitly stated that, based on a "pure linguistic evaluation of the provisions of the RFP," the minister lacked the authority to create an additional committee that effectively ran a separate evaluation process. The minister had argued that this committee merely assisted him in addressing concerns arising from existing material and that its recommendations were not determinative. However, the court found that new evaluations were performed by this committee, undermining the integrity of the established procurement framework. Ithuba Lottery filed its review application just one month after the licence was awarded to Sizekhaya.

Further complicating the matter were reports in June 2025 by amaBhungane, alleging family connections between individuals within Sizekhaya and Deputy President Paul Mashatile. Minister Tau had instructed the NLC to investigate these claims, but Judge Davis noted that no report from such an investigation had been presented in the court papers by the time of the hearing. The EFF's separate challenge, heard alongside the bidders' applications, focused on the constitutionality of certain provisions within the Lotteries Act pertaining to the financial interests of political office bearers in entities bidding for lottery licences. This ruling underscores the critical importance of adhering strictly to established procurement processes and Request for Proposal (RFP) terms in public tenders.

This ruling emphasizes the critical importance of adhering strictly to established procurement processes and Request for Proposal (RFP) terms in public tenders. Lawyers advising clients involved in government bids or administrative decision-making should note that reliance on unauthorized committees or deviation from prescribed procedures can lead to judicial review and the setting aside of awards, even if the current contract remains temporarily operational.

Source: Original reporting via GroundUp