The South African horseracing industry’s unimpressive report card in repect of a lack of transformation looks set to potentially complicate issues in the Phumelela Business Rescue unbundling process after the SA Grooms Association apparently made representations earlier this week to the Gauteng Gambling Board.
The catalyst of the SAGA petition is pending applications to transfer licences held by Phumelela Gaming & Leisure Limited to a company called 4 Racing (Pty) Ltd.
The petition states that in early May 2020, Phumelela was induced by Mary Oppenheimer Daughters Pty Ltd to invoke the business rescue provisions of the Companies Act, as opposed to filing for liquidation.
The inducement apparently included a Post Commencement Finance loan of R100 million from MOD to Phumelela, and golden handshakes for ex-CEO John Stuart and Executive, Rob Scott.
According to the SAGA petition, the gambling licence applicant 4 Racing was incorporated on 20 February 2020 with Emma Callister (British) and Charles Henry Savage as Directors. The last mentioned is also a member of the Racing Task Team and recently resigned as a Director of the Racing Association.
Charles Savage
The Sporting Post has learnt that SAGA has asked the GGB to investigate whether the conduct of the ‘five white males’ who advised MOD / 4 Racing in compiling the bid to acquire the assets of Phumelela constitutes ‘racing capture.’
The five gentleman referred to are the Racing Task Team appointed at the time of Phumelela going into business rescue.
Wehahn Smith, Brian Riley, Charles Savage, Mike de Kock and David Abery had offered their skills as it was stated that ‘they are fully aligned and committed to the objectives of rebuilding the industry’.
SAGA states that the five, who were directors of the Racing Association, had a conflict of interest, but accepted the appointment from MOD / 4 Racing to advise on compiling their bid to acquire assets of Phumelela while in business rescue.
They note that Savage and the other four were integral in providing advice on the structuring, arranging and advancing of the PCF loan by MOD to Phumelela.
Observations are made that no black and no female advisors formed part of the advisory team of MOD / 4 Racing.
The Sporting Post can confirm from reliable sources that the RTT actually emanated from a Structuring Committee consisting of the Chairmen and CEO’s of the Operators, Racing Association, National Horseracing Authority and the Thoroughbred Horseracing Trust, together with a few other directors from the same bodies.
But an industry leader cautioned at the time that it was disingenuous to suggest that the RTT was tasked with ‘safeguarding, re-capitalising and restructuring the racing industry,’ and that they were representing Mary Oppenheimer Daughters (Pty) Ltd (MOD), and were strictly focused on the Phumelela issues.
The SAGA petition of this week also questions the involvement of the task team in sourcing and approving the appointment of Business Rescue Practitioner John Evans.
John Evans
It suggests that Evans’ conduct has been widely criticised on media platforms as he appears to lack independence and has conducted himself in a biased manner in his evaluation of the bids submitted by MOD / 4 Racing versus the bid submitted by Betfred / LightCatch Limited.
Allegations are made that Evans also failed to advertise the sale of Phumelela or its assets publicly, and did not guide an open, transparent and fair divestiture process.
It is suggested that the licences applied for by 4 Racing are key to the sustainability of the Horseracing industry, but that the mechanics to ensure a fair, open and transparent tender process that would result in the highest bidder acquiring such assets, were in question.
The statement contends that Evans has also shown a bias in favour of the provider of the PCF Loan by not applying his professional judgement and conduct in considering any alternative capital raising initiatives to save Phumelela – but rather defaulted to accepting the offer by MOD / 4 Racing to acquire the Horseracing assets of Phumelela.
SAGA also raised the contents of the Public Protectors Report No. 11 of 2019/2020 which highlights the ‘transformational indiscretions’ of Phumelela and the Horseracing industry leadership at large.
The report confirms that Phumelela acknowledged their original indebtedness to SAGA that dates back to 1996 and the findings of the Public Protector are in favour of SAGA.
SAGA calls on the GGB to consider endorsing all licences issued to Phumelela to evidence their indebtedness of the stated R572,8 million to SAGA.
It calls on the GGB to not allow any transfer of Phumelela licences to 4 Racing or any other parties until SAGA’s claim, which appears to date back to the HRDF grant of R17,5 million for Grooms accommodation, until the matter is settled in full.
The late Ian Jayes wrote in an editorial in the Sporting Post in 2011 that who in horseracing, other than Phumelela shareholders and certain privileged well-paid officials, could argue that corporatization has not been an unmitigated disaster. Read more here
