Masa Centre to get casino licence against all odds
by Bashi Letsididi
Against all odds (an unfavourable High Court ruling, an active Directorate on Corruption and Economic Crime probe as well as opposition from the area MP, a church and an HIV/AIDS organisation) the casino at Masa Centre seems well on the way to acquiring a licence to operate.
Speaking to Sunday Standard on Friday, the chairperson of the Casino Control Board, Thabiso Tafila, said that the casino’s application has been approved and that a licence would be issued once the casino satisfies certain requirements. Those of the latter he could mention off the top of his head because he did not have the relevant documents on hand include a security deposit and licence for the hotel where the casino will operate.
“The licence has not been issued yet and if the casino doesn’t satisfy those requirements, it will not be issued,” Tafila said.
However, a source familiar with casino operations says that an application’s approval is as good as issuance of a licence and that in Botswana’s case, no operator has ever been denied a licence after their application was approved. What that means is that the casino that from Wednesdays to Saturdays would operate around the clock will soon be opening its doors to patrons. Or not.
In December last year, the High Court revoked the casino’s licence following an application made by Gaborone Sun, Grand Palm and Gaborone Hotel who already operate casinos in the city. The applicants cited a number of irregularities in the awarding of the licence. The licence had been given to a company called Workman Holdings, made up of Gold Reef Resorts of South Africa, Aspera Holdings of Italy and a local, Moitsheki Lekalake. Sunday Standard learns that should the casino be given the licence, its competitors will once more approach the High Court and restate their case. Meanwhile, Sealema which has 117 employees it has retained throughout this saga, is said to have incurred a loss of P5.7 million as at April this year.
After the High Court ruling, the partners in the project restarted the process this year when, on March 21, they changed the company name from Workman Holdings to Sealema Holdings. When the latter applied for a licence, the CCB initially ruled that the change of name necessitated the restarting of the quite tortuous application process. Unhappy with this decision, the company appealed to the minister of trade and industry, Dorcas Makgato-Malesu, who agreed with its position that starting the process over would, in the language of documents that Sunday Standard has had access to, be “unjustified” and directed that the board deal with Sealema’s application. The partners’ invoked a provision in the Companies Act (Section 34:5) which they interpreted to mean that a fresh application was not necessary in their particular case.
Masa Centre casino operation is a huge P38 million project. In terms of the business plan, half of the required funding was sourced from outside and the other half from the three shareholders. GRR was to contribute P9.5 million while Aspera and Lekalake were to fork out P4.75 million each. The original contract between the three parties says that Workman Holdings and Lekalake shall use their “best endeavours” to procure a casino licence. The latter was to play a key role in that endeavour. Lekalake was to settle P3.75 million in cash and the remainder (P1 million) was to be attributed to him securing the casino licence. The licence was to have “no limitation on the number of gaming positions and issued on such terms and conditions as are reasonably acceptable to the [contracting] parties.”
In the language of the agreement between the contracting parties, Workman Holdings was to be the “special purpose vehicle” that would hold and operate the casino licence and operate the casino business. GRR, a huge gambling operation in its land of origin, was to have full management as well as technical control for both Workman Holdings and the casino business itself. The latter was to also engage GRR as the casino’s design consultants and be paid 1.5 percent of the project cost for providing such service.
From the assessment of CCB, the shareholding figures didn’t exactly tell the real story. GRR stake was 50 percent while the remainder was evenly split between Aspera and Lekalake. However, the calculations of the CCB’s secretariat showed that 97 percent of actual participation in the venture would be by foreigners and only 3 percent by Lekalake. Initially, CCB rejected the application and put a condition that shareholding in the proposed venture be 100 percent citizen-owned. In order to satisfy that condition, Workman Holdings proposed through a letter to CCB that a new company it was forming, INDOL (Pty) LTD, would lease out all assets and that either GRR or Workman Holdings itself would second staff. Some CCB members felt that this arrangement basically amounted to fronting.
The process of getting a casino licence is protracted and begins with an applicant advertising intent to operate a casino in a particular area, twice in the Government Gazette and in a local newspaper. The application has to be submitted with detailed plans. The CCB then allows 60 days for any objections from the public and existing casino operators to be made. Subsequently, the secretariat of the CCB assesses the application and makes recommendations to the Board itself.
Besides the court case, the issuance of the casino licence attracted the attention of the DCEC which is said to be investigating the matter.
What is supposed to have happened in the first application (Workman Holdings’) is that two days before the 60-day waiting period elapsed, a re-application was submitted and approval given within a week.
The CCB holds quarterly meetings at which it assesses applications. In the event there are any, the Board forwards them to the applicant to tender response. In the case of Workman Holdings’ application, there were objections from area MP, Dumelang Saleshando, Tebelopele and at least one church. Saleshando’s objection was that another casino operation in the city would impoverish people because the casino business model is to take more money from people than give to them.
Casino operators already in business argued that the casino market was already saturated, pointing to an independent survey (that apparently was endorsed at a CCB stakeholder meeting) that said much the same thing in much the same words. Tebelopele was concerned about the gambling environment defeating its effort to fight HIV/AIDS while the church expressed similar and many more moral-based concerns.
If the applicant meets all requirements, CCB approves the application, clearing the way for the applicant to construct the building where the casino will operate and installing the machines within 15 months. When the casino is ready for operation, a team of experts in the gaming industry is engaged to assess the casino, test the machines and the surveillance system as well as make a determination of whether the new casino meets the right standards. This work is normally done by a South African company called BMM Test Labs. After a casino is given a clean bill of business health by the experts, the applicant has to pay a security deposit of P300 000 to the ministry of trade and industry. Only then is the licence issued and can a casino begin operating.
It is unclear whether in the first application the security deposit was ever paid or casino premises were inspected and certified by the experts. What is clear though is that a day before the approval of the proposed operational structure, CCB issued a casino licence to Workman Holdings. It is being alleged that the issuance of the licence (which was later revoked) was done even though construction of the hotel at which the casino was to operate was not yet complete.
A parallel has been drawn between Workman Holdings’ application and that submitted by BANS Group in Maun on May 3, 2011. The Group was given an approval letter but denied a licence until the hotel in which the casino would be operated in Maun was ready, the machine and the surveillance devices had been inspected by experts and a security deposit of P300 000 is made in favour of the ministry.
A week after Workman Holdings was given a licence and following a face-to-face meeting with the Minister Makgato-Malesu, then CCB chairman, Lekwalo Mosienyane, who runs an architectural firm, tendered a resignation letter in which he cited possible conflict of interest in the future. He states in the letter: “My resignation comes as my practice would be taking an appointment outside the country which will involve coordination, planning and design of resorts that will include casinos among others. You have concurred with me that to take such assignments while I am still in the Board would pose conflict of interest.”
A year later, DCEC began investigating the matter.