Public Protector Probes MOU

Thuli Madonsela To Issue Report

Thuli Madonsela

Public Protector Thuli Madonsela

THE Office of the Public Protector is finalising its report on the conduct of the Gauteng government when it transferred state property into private ownership in the late 1990s.

The probe followed a complaint by a commercial horse breeder and CEO of Africa Race Group, Phindi Kema, in January 2012. Ms Kema claims the conduct of the Gauteng government was improper and she wants the process reversed.

Public protector spokeswoman Kgalalelo Masibi said this week the scope of the probe was to establish whether the provincial government had the authority to sell the horse racing properties, and whether due process was followed in privatising the industry.

When the complaint was lodged, Public Protector Thuli Madonsela found a prima facie case of malpractice and improper conduct that warranted a probe.  However, Ms Masibi said the findings would not be disclosed until the public protector officially issued her final report at the end of the month.


In a memorandum of understanding signed in 1997 between the provincial government and the horse racing industry, the parties agreed to reorganise and restructure the racing industry into a single corporate structure that would be listed on the JSE.  According to the memorandum, it was decided that the assets of the Totalisator Agency Board (TAB), the Highveld Racing Authority and the existing clubs in the province would be incorporated into the new company.

Phindi Kema. Battle lost?

Phindi Kema – claims Gauteng acted improperly

The three racing clubs that had run racing in the region until then transferred their assets to the new company, Phumelela Gaming and Leisure, which took over managing the sport in the province.  Phumelela was listed on the JSE in June 2002 with a black economic empowerment shareholding of 27.5%.

Ms Kema said although her complaint has been with the public protector for more than two years, it was important that the matter was dealt with effectively.  She said: “The remedial action I have requested from the public protector is to undo the wrongdoings of the memorandum of understanding that corporatised the industry, and to make recommendations that will lead to the review and proper regulation of the sector as prescribed by law.”


Phumelela said on its website corporatisation came about at the behest of the Gauteng government to make horse racing in the region competitive in a rapidly developing gambling market.

Ms Kema has been persistent in her fight against Phumelela and the dominant position it holds in horse racing. She presented herself as a witness to testify against the merger that led to Phumelela administering Gold Circle’s Western Cape operations.

The Competition Commission prohibited the transaction, but the Competition Tribunal overturned that decision after a review.

Ms Kema turned to the Competition Appeal Court and then the Constitutional Court to stop the merger. When the Constitutional Court dismissed her application, she said she had taken the matter to the limit.

(source:  Business Day)

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