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Public Protector Launches Public Hearings

Subpoenas Being Issued

Public Protector, Adv Busisiwe Mkhwebane (Photo: Flickr)

Public Protector, Adv Busisiwe Mkhwebane (Photo: Flickr)

The Public Protector, Busisiwe Mkhwebane, has initiated a public hearing into the maladministration of horse racing in Gauteng and the role played by the industry’s biggest player, Markus Jooste, a key shareholder in the Province’s betting operator, the public company Phumelela Gaming and Leisure Limited.

The matter arises out of a complaint initiated by Ms Phindi Kema against the Gauteng Provincial Government, which set up Phumelela in 1998 in a reorganisation of racing’s traditional structures, but exceeded its authority by transferring 5 racetracks located in other Provinces into the ownership of the public company without adhering to appropriate procedures.

Ms Kema argued that the process that formed Phumelela was “questionable and unlawful” and as a consequence, Phumelela had unfairly enriched a handful of its shareholders at the expense of other participants in the industry.

As the Gauteng Provincial Government has agreed that this transaction has failed to benefit the horse racing sector and South Africa, the Public Protector had written to Phumelela to advise them that they would be negatively affected by the outcome and the call for remedial action.

Key Player

Markus Jooste (photo: hamishNIVENPhotography)

Markus Jooste (photo: hamishNIVENPhotography)

Markus Jooste joined the board of the Racing Association within months of the listing of Phumelela in 2002 and was subsequently appointed by them to serve as a Trustee of the Horseracing Trust Pty Ltd, a non profit body, which assigned all the assets of horse racing into Phumelela in exchange for a 35% shareholding, and which was charged with protecting the ethos of the sport as well as being responsible for transformation.

He served on the board of Phumelela with the voting right of the Trust as well as being a substantial shareholder in his own name and in another company called Kalamojo Pty Ltd, which he owned with Bernard Kantor, a director of Phumelela since inception and now Chairman of the Phumelela Board.

Markus Jooste, Mayfair Speculators, silks (photo: hamishNIVENPhotography)

Famous silks (photo: hamishNIVENPhotography)

A pivotal role was played by Markus Jooste and his closest allies in the racing industry, not only in the betting company and racing organiser Phumelela, but also on the Trust responsible for the protection of the Sport, and its counterpart, the Racing Association. In addition, his array of companies also included being the biggest owner of racehorses, the biggest breeder of racehorses, the biggest buyer of thoroughbreds, the biggest employer in racing and also the ownership of the auction sales company CTS Pty Ltd, the biggest seller of horses in South Africa. In addition, Phumelela executives served on the board of the regulator, the National Horseracing Authority.

Criticism of such an alignment of interests raised speculation of ‘racings capture’ and has focused attention on the Gauteng Provincial Government, which created both the vehicle as well as the opportunity.

Captured?

Since listing in 2002, Phumelela has controlled the sport and has sold off a number of racetracks, causing a shrinkage within the industry – and according to an Economic Impact Study, the consequence has been the loss of 85,000 jobs and a failure to provide transformation, whilst the public company share price has risen from 50 cents at listing to a peak of R26 in 2016, currently trading at R17,00 giving it a market capitalisation of R1,6 billion.

A number of prominent people within the horse racing industry, including six current or former directors, have been asked to testify in the public hearings as well as representatives of many branches of the sport and industry in order to outline the impact.

Prominent players in the industry have welcomed the Public Protector’s probe, stating that both the sport and the industry have deteriorated under the Phumelela regime, and that ascertaining the causes – and if necessary, breaches – of legalities is the first step to arrest the decline and find a more appropriate model for the future.

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29 comments on “Public Protector Launches Public Hearings

  1. Chris Swart says:

    Forensic audit please.

    Public funds

  2. Steve Reid says:

    Great news.

  3. Barry Irwin says:

    Kind of pathetic that after all that has transpired in the last several years it took this small outsider to shake things up. Where are the folks who have a large financial and emotion investment in the game?

    1. Charles Savage says:

      Barry we tried some time ago, had some good support but the inner circle were happy to lie on stand in their defensemay the Competition Commission and racing members were to intimated to vote against the ruling party. However now that the ring leader is gone it’s a very different story. Congrats to Phindi in seeing it through, I certainly ran out of energy.

  4. Frances says:

    The NHA need a forensic audit of ALL its accounts, especially expenses claimed by those at the top.

  5. Peter G says:

    Cant wait to send her flowers in the morning , best news ever –

  6. Sean says:

    I hate to think what skulduggery has gone on behind closed doors. Leave no stone, unturned!!!

  7. beatle says:

    Please can you name those 6 individuals as i’m sure the racing owners and trainers of South Africa would like to be informed of this matter

  8. Jess K says:

    Brilliant news, late in the piece (but rather late than never).
    Good on you Phindi Kema and Busisiwe Mkhwebane
    Some of us folk have been harping on about the capture of racing for nigh on a decade, starting with the Concerned Owners group who were betrayed by Wainstein, Jooste and co. at the “White House”. The key is the Racing Trust which holds 35% of the Phumelela shares and belongs to the horseracing industry and it’s stakeholders, (for transformation, upliftment, development and upholding the ethos of horseracing).The Racing Trust has been used and abused by Phumelela (by way of the RA) to its own volition over the years with most of it’s Trustees nothing but Phumelela puppets doing its (PGL’s) bidding.
    Let’s hope the Public Protector does not omit to invite any of the key players to testify, which should include, Ian Jayes, Brett Maselle, Larry Weinstein, Chris van Niekerk, Len Konar, Robyn Louw, Rian du Plessis, Bruce Gardiner, Rob de Kock, Clyde Basel, Attenborough, SASCOC Trustees, Robin Bruss, Simoto plus all the signatories on every non disclosure agree in relation to stakes and all the Board members when Germiston and Newmarket were sold, (among others)..
    The scurrying in the corridors of power are audible already and one can expect resignations and share price dips in the coming weeks as the noose starts to tighten.
    As a previous poster mentioned (and as some have been calling for, for many years ago), a forensic audit of some of these aforementioned institutions is vital, including the North Rand (Randjiesfontein) transfer/shennanigans, the funding of Kenilworth Racing and the Jooste/Barends/NHA nexus is imperative.

  9. Biltong Bertie says:

    Nail them and all of them we the punters make them rich . The guys on the streets fill their and these sindicuts bank balances. I hope they get to go to jail fraudsters

  10. BIGFOOT says:

    The bubble will burst now.. There is going to be many fraud cases and short haircurts….

  11. Bill Jacobs says:

    Racing should have and should still be controlled by a non profit organization and run by the doyens of racing in this country for the sake of racing in this country.

  12. Robin Bruss says:

    Thank you for your comments Jess K which are well made.

    I confirm that I was pleased to be contacted by the Public Protector’s office this week to give evidence in the hearings in respect of industry analysis.
    There is little doubt that racing has been captured and that those responsible must be called to account.

    The Racing Trust and the RA were charged with protecting the ethos of the sport but as the largest shareholders in Phumelela, they appear to have failed the sport. The truth will be found in disecting their compliance or non-compliance with the Objects of the Trust Deed and alterations made to the Stakes Agreement and Intellectual Property which appear to have bolstered the public company at the expense of the sport – and to ask why the Trust never publishes accounts or makes an annual report to the participants and stakeholders who are meant to be the beneficiaries of the Trust.

    Similalrly, the NHA, meant to be the Regulators and governing body of the Sport, were weakened by the removal of independent funding in the dispensation that set up Phumelela and then are forced to apply annually to Phumelela and Gold Circle for their funding – The regulator cannot be dictated to by those it is meant to regulate, and yet it has been and they are much worse off for it. Attempts by the NHA to become a statutory body are opposed by the operators.

    What Phindi Kema had done in charging that the Gauteng Government broke the law in its construct of Phumelela almost 20 years ago, is to highlight the fact that changing the way a 200 year sport was operated in favour of a corporate entity with the lofty ambitions of a) transparency b) transformation and enpowerment and c) equitable development of the Sport, was an incorrect decison. The model has failed spectacularly in all three aspects.
    Her lone struggle against the goliaths she faced is more than commendable.

    It’s one thing to expose manipulators and manipulation of a system in order to understand how we got to where we are. Ultimately it’s going to be more important to consider what dispensation needs to follow the failed model in order to restore the Sport to where it is meant to be. The Public Protector hearings are the first step.

    1. Roderick Mattheyse says:

      Dear Robin, are you participating in your personal capacity or for the NHA?

    2. Ian Jayes says:

      Robin Bruss seems to lose sight of the fact that only two people (I was one of them) voted against corporatization and ceding the assets to Phumelela.

      I fought a lone battle trying to get ethical and moral standards in our racing. I stressed many years ago that the then Jockey Club (now HRA) should place the welfare of the horses above the interests of people and apply the rules fairly and not use discretion, which invariably meant that certain transgressors escaped proper penalties. I called for it to become an independently-funded statutory body.

      I fought a lone battle trying to get Phumelela and the RA to reverse their taking of public money from the HRDF to swell their accumulated profits. I went to the Public Protector and the Competitions Commission in this regard and was given notice by Phumelela to vacate the stables I was occupying at the Vaal and having to give up training.

      I went to Parliament where Robin Bruss was part of the delegation from the NHA and Phumelela. When I was refused permission to rebut what they had said, I gave documents to Minister Rob Davies and walked out.

      I also remember Robin Bruss asking Markus Jooste and Chris Van Niekerk “sweetheart” questions when interviewing them on Teletrack at the time of the Concerned Owners” attempt to call them to account.

      Now that the keystone has been removed and the arch is about to collapse, lots of people who kowtowed to the so-called corporate whiz-kids, are suddenly discovering that the King had no clothes.

      All this and more is in my autobiography “Footsteps, Heartbeats and Hoofbeats” published by Amazon.

  13. Tony Mincione says:

    So suddenly Mkhwebane and Phindi Kema (who?) are knights in shining armour coming to rescue horse racing. Seriously? The enemy of my enemy suddenly finds meaning in the sport of kings. Isn’t the irony so rich how we choose our friends? Especially now.

    1. B d steele says:

      Well said100% true

  14. Hannes says:

    The poor disgruntled, the same names repeatedly. They have always been there and will always be there, as it seems they have nothing better to do. They are still investigating what happened 20 years ago. Is there nothing new to be disgruntled about?

  15. jim says:

    whilst this may be a welcome development to some i caution be careful what you wish for. this public protector made recommendations to nationalize the sarb and for absa to pay back the trust bank bail out. given the history between ms phindi and the industry the eventual recommendation could be a whole lot more destructive than constructive.

    1. Pmb says:

      Spot on. This endeavor is not going to be to the benefit of racing, despite the enjoyment of some that certain individuals will be made uncomfortable it’s going to be out of the frying pan into the fire if anything.

  16. Jurgs says:

    How sad it is when people like Tony and Rod focus on the messenger and not the message. When racing was captured the problem we had was nobody was prepared to speak out about it. Jooste and Steinhoff connections through all the structures. Breeding, sales, owners organisations, operator boards, regulator appointments. It isn’t difficult to join the dots. To answer the question, I believe sleeping with the devil to get rid of the problems we have and all associated with Steinhoff, would be justified. The enemy of my enemy is definitely our friend in this case.

  17. Tex says:

    The Hong Kong jockey Club Model is the ideal – Great Marketing – Great Stakes – Uplifting of its people – and run by real professionals in all its sectors

    NON PROFIT ORGANIZATION

  18. Roderick Mattheyse says:

    Jurgs, I am not focusing on any messenger I would just like to know whom he represents. If it is the NHA, of which I am a member, I would like to know what the mandate is. If it is in his personal capacity – then i could hardly give a hoot.

    I’m not sure what the terms of reference are for this enquiry – it may turn out that the NHA invlovement is irrelevant – however Mr Bruss has raised captured and funding in his statement, so lets accept that it is part of the scope and terms of reference.

    I have on many occasions raised issue with the NHA that the funding model is conflicted, as Mr Bruss points out.

    The NHA have allowed themselves to be bullied by the operators, could we even say captured, every board member has been complicit in allowing this bullying to continue. The past and present board and management should not be allowed to use this process to exonerate themselves of that.

    The operators have pushed the boundaries only because they were allowed to do it – the businesses saw an angle and took it – how would one apportion the guilt?

    I would caution people not to bee too optimistic and euphoric about this enquiry – lets wait for the ruling, if any, first

  19. Leon Smuts says:

    The Hong Kong model is certainly one to aspire to. It’s no silver bullet though as they have both a cultural and income advantage as far as equine interests are concerned but they do take racing very seriously and commit ample resources to the exercise. The corporate model held promise at the time of its formation and was done for all the right reasons but has not not fulfilled a number of key obligations that have since slipped into obscurity. Racing has the potential to return to greatness but this would be very difficult under the present structure as the sport is being starved of optimal funding and allocation. As a listed corporate the operator cannot be blamed for looking after shareholders interests and aligning the business accordingly but this is clearly not beneficial to the industry’s long term objectives and the principles it was founded on. A new model is needed that will benefit racing and unburden the operator at the same time.

  20. Pops says:

    Is Mr. Jayes not the man who knows much of what happened in the sale of race tracks and the Phumelela and RA bromance?

    1. Ian Jayes says:

      I was contacted by the Public Protector and spent a good few hours with them. I have given them documentation and insight as well. I hope something comes of this because it is going on sixteen years that I have tried to get justice for the role-players in horseracing. A full Inquiry into all aspects is long overdue.

  21. Rian says:

    I personally hope that Ian Jayes gets all the accolades he so deserves, I would love to hear more from him especially on telly but dont think that the baf–ns at tellytrack will give him the chance

    1. Robin Bruss says:

      I have no mandate to speak on behalf of the NHA – my comments are my personal opinion.

  22. Pops says:

    Remember 2004 when Mr. Robin Bruss gave an interview and was asked
    What problems in your opinion is S.A. Racing currently facing, possible solutions? And he answered:
    We faced major hurdles under the previous turf club structures which posed a death knell for racing. I`m a strong believer that the new model as racing`s saviour. Those who criticize the new structures need to realize that 3 years is nothing in the context of time and have faith that we are on the road to a prosperous industry, beneficial to all. I would prefer Phumelela and Gold Circle to be one united South African company, but understand the reasons why they are not, though I regard integration as eventually inevitable.””
    Have we all jumped ship because the PP is coming knocking?

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