Johannesburg - A protracted battle by top businessman Zolani Kgosietsile Matthews with the national lottery operator Ithuba Holdings over a 1% stake, estimated to be worth more than R1 billion, appears to have reached a dead end.
Matthews hauled Ithuba, its directors and shareholders Charmaine and Erick Mabuza to the North Gauteng High Court over their alleged failure to deliver on the 1% stake in the company that he was promised.
The application was dismissed with costs on August 22 by Judge Nelisa Mali. The Mabuzas identified Matthews, through the VK Family Trust, as a potential shareholder in Ithuba. This was in the early stages of their bid to operate the country’s national lottery, which is reported to be valued at R150 billion and R200bn.
However, during the pre-screening process and various disclosures required in terms of the tender specifications in 2013 it was discovered that Matthews could not qualify, the Mabuzas told him, because he was politically connected. Matthews is the son of Joe Matthews, deputy safety and security minister in former president Nelson Mandela’s first executive in 1994.
He is also the grandson of Professor ZK Matthews, who was ANC president in the Cape Province in the 1940s and 1950s. His sister is International Relations and Cooperation Minister Dr Naledi Pandor. Matthews was until recently the chief executive of the Passenger Rail Agency of SA (Prasa) until he was axed by its board in December for having dual South African and UK citizenship and failing to obtain a top-secret security clearance from the State Security Agency (SSA).
Matthews’s wife Vimtha Amichand Rajbansi is the daughter of late Minority Front leader and MP Amichand Rajbansi. The couple is both trustees of the VK Family Trust. The Mabuzas, who were respondents in the matter, are shareholders in Ithuba through two of their companies Zamani Gaming and Paytronix.
Submissions made on behalf of the respondents to the court were that: “All shareholders of Ithuba should have been in place by 31 August 2013, as part of the tender pre-screening process. Secondly, Ithuba was announced by the (Trade, Industry and Competition Minister Ebrahim Patel) as a successful applicant on 23 October 2014.
“Furthermore, the Mabuzas do not dispute that they had identified Mr Matthews as a potential shareholder in Ithuba among various other persons. During early August 2013 due to the pre-screening process and various disclosures per tender requirements, Mr Matthews could qualify."
"The reason advanced by the respondents for his disqualification is because he was politically connected. The trust was also politically connected as Mr Matthews and Ms Rajabansi’s parents and were once Parliamentarians as a result of their membership of political parties.”
Before a licence is granted, Trade, Industry and Competition Minister Ebrahim Patel must be satisfied that none of the political parties in the country or political office-bearers has any direct financial interest in the companies applying for a licence or a shareholder.
In court, Matthews described the Mabuzas as family friends. He said he was verbally offered a 1% shareholding in Ithuba by the Mabuzas in 2013 based on the diligent work, endeavours and efforts he undertook. This was in addition to the future assistance he promised to provide to Ithuba to obtain the licence and operate the national lottery.
Ithuba was granted the licence in 2015, taking over from Gidani. According to Matthews, he used his extensive international network with potential technical service providers in the bid process to facilitate the granting of the licence to Ithuba to operate the national lottery. However, Ithuba and Mabuzas failed to deliver the promised 1% shareholding to Matthews and the trust.
Matthews then launched his bid to access the 1% stake in 2017 after Ithuba was given the green light to operate the national lottery. Matthews also argued that his entitlement to the 1% share was confirmed by Charmaine Mabuza through a WhatsApp message sent in October 2014 when she told him he deserved the shareholding but he did not seek to enforce his claim at that stage.
He maintained that he had acquitted himself very well in assisting Ithuba to win the licence. Judge Mali found that of significance in the matter was that Mathews’ entitlement to the share was confirmed by the second respondent when she told him he deserved it, and he did not seek to enforce his claim at that stage.
“From the above, it is apparent that the applicants and Mr Matthews had no legal basis to wait for conclusions of the (Gidani) court case concerning the challenge of the issue of licence. It is therefore concluded that the applicant's claim had already been prescribed at the time of launching this application,” Judge Mali ruled.
Prescription occurs when a debtor's obligation to pay a specific debt is extinguished by the passing of a prescribed period. Once the debt is prescribed, debtors are not required to pay the debt. Matthews declined to comment: “Unfortunately, I have no comment at this time,” he told the Sunday Independent when asked if he intended to challenge Judge Mali’s ruling.
The National Lotteries Commission, regulators of the lotteries industry, has indicated that in 2021 its proceeds from Ithuba or its share of ticket sales stood at nearly R1.5bn, down from over R1.63bn in 2020. The commission had approved a budget of R1.64bn last year and the difference between the final budget and actual revenue was almost R155 million.