Friday, December 4, 2020

Botswana, South Africa’s business elite clash in lottery suit

The who is who of Botswana and South Africa’s business world are set to lock horns in a marathon case in which South African lottery operator Ithuba is challenging the Gambling Authority’s decision to select local conglomerate Grow Mine as the preferred bidder for the national lottery. Ithuba has filed a case before Gaborone High Court Judge Omphemetse Motumise, seeking a review of the Gambling Authority’s decision and a temporary interdiction of negotiations between the Authority and Grow Mine – which could culminate in the local conglomerate being awarded a lottery license. Ithuba also accuses the Authority of failing to comply with the Gambling Act and the Procurement Act. It also wants the Authority’s decision to be reviewed because its confidential information was accessed during a crucial stage of negotiations; while one of the bidders plagiarized its intellectual property. 

In May 2017, the Gambling Authority set up an electronic facility called a virtual data room (VDR), through which it could administer the national lottery tender process. Gambling Authority Chief Executive Officer (CEO) Thuli Johnson describes the VDR as a secure, password-accessed, online platform that has full audit trail logs of access.He adds: “It further contains records of all communication with the applicants; and is thus an important part of the governance process.”A few days after the Authority announced Grow Mine as the preferred bidder for the national lottery, some of the bids were erroneously uploaded into a folder on the VDR, to which everyone had access for approximately two hours.

Thuli Johnson

This breach is at the center of the lawsuit brought by Ithuba, which is not happy that its confidential information and intellectual property was exposed to competitors at a critical stage of negotiations between the Gambling Authority and Grow Mine. Ithuba is worried that such information may give Grow Mine an advantage during negotiations, considering that Ithuba has experience in rolling out a lottery, having operated one in South Africa.When responding to the allegations, Johnson said: “The confidentiality of all applications was never compromised by this breach, despite Ithuba’s repeated and groundless assertions to the contrary.”He added that the breach was corrected as soon as the Transaction Advisor became aware of it. In response to allegations that the Authority failed to disclose log records of all the files accessed and viewed during the breach, Johnson maintains that all applicants were kept abreast of every development.

“The Authority issued a notice on 12th June informing all applicants about the incident and indicating that three persons had logged onto the VDR during that period. It is important to note that merely logging into the VDR is different from accessing confidential files,” he said.He added that the Authority wrote again to the bidders after receiving confirmation from the VDR service provider that no one had accessed, viewed, printed, saved, renamed, or moved the application files. Ithuba also accuses the Authority of failing to thoroughly investigate clear incidences of plagiarism, after it emerged that two of the bidding companies had submitted similar technical proposals. Ithuba revealed that it was alerted by the Evaluation Committee in January that Chapter 9 of its bid was similar to that of another applicant.

According to Ithuba, this was a confirmation by the Evaluation Committee that a competing bidder had accessed and plagiarized their bid. The said Chapter, said Ithuba, was an excerpt from its bid for the South African lottery.Ithuba faulted the Authority for failing to take firm steps to address the plagiarism and denying it an opportunity to conduct own investigations, which would have protected its intellectual property and minimize commercial harm. In response, Johnson said that Ithuba itself failed to account for the similarity in applications when queried by the Transaction Advisor. While both applicants claimed original ownership of their submissions, Ithuba did indicate that it had been involved in litigation in South Africa and that some of its information could have found its way into the public domain.“The applicants further indicated that they had submitted applications in multiple countries and could not rule out the possibility that some of their information may have entered the public domain,” said Johnson. Unable to determine which of the two applicants owned the overlapping content, the Transaction Advisor decided to treat each application on its own merits.

Johnson explained that the decision was communicated to both applicants. In the light of this, Johnson argued that there is no basis for Ithuba’s allegation that its confidential information was being used by the Authority or Grow Mine.“Ithuba attempts to impugn the integrity of the Authority and Grow Mine without providing any factual evidence” said Johnson.He also dismissed Ithuba’s application for negotiations with Grow Mine to be interdicted as premature, saying the Authority has not made any final decision on who will be awarded the national lottery license.“Ithuba is trying to use an interdict application to protect its naked commercial interests. It is too early to claim that continuing negotiations would result in irreparable harm to Ithuba,” he said.

He accused Ithuba of rushing to court before exhausting internal remedies that include appealing to the Minister in the event that the lottery license is awarded to Grow Mine. Johnson further warned that an interim interdict would compromise the interests of both the Gambling Authority and Batswana.

THE WHO IS WHOAt the helm of Ithuba is businesswoman extraordinaire Charmaine Mabuza, whose company is currently operating the South African lottery. Mabuza is also Director of WIPHOLD, the first black female-owned company to list on the JSE. She also founded Empilweni Payout Services, a company that distributes social grants in South Africa. Her local partners are Todd Mangadi and G4S CEO Mokgethi Magapa.The local conglomerate, Grow Mine is also powered by Botswana’s corporate elite. At the helm are Chandra Chauhan and Mohamed Osman – the brains behind Sefalana Group. Then there are, among others, Carthage Majaga- owner of Pula Consultants and sole shareholder of Carthlee; attorney Parks Tafa; BFA President Maclean Letshwiti, BDC Chief Investment Officer Moatlhodi Lekaukau; Puma Energy Managing Director Mahube Mpungwa; the Khama nephews Dale and Marcus Ter Haar; former G4S CEO Percy Raditladi and Chinese business magnate Bing Liu. In the midst of it all is Thuli Johnson, a clergyman and a street brawler. For Johnson this is a legacy challenge.

THE TOP LAWYERSProbably indicative of the high stakes in the case, all the players have roped in one of the top three corporate law firms in Botswana. Parks Tafa represents Grow Mine while Rizwan Desai represents Ithuba. The Gambling Authority has roped in Sipho Ziga of Armstrongs Attorneys.

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The Telegraph December 2

Digital edition of The Telegraph, December 2, 2020.