Another Public Protector report in the bin: Court victory for horse racing industry

A Public Protector report ordering wide-ranging changes to the horse racing industry has been set aside by the North Gauteng High Court.

The court also ordered Public Protector Busisiwe Mkhwebane to pay the costs of the court action.

The report followed a complaint about the legitimacy of corporatisation of the thoroughbred horse racing industry in 1997.

Titled “Allegations of Maladministration and Improper conduct in connection with a Memorandum of Understanding entered into between the Gauteng Provincial Government and the Gauteng Horseracing industry in 1997 which subsequently led to the Corporatisation of the Horseracing Industry”, the Public Protector’s report got widespread media coverage when released in 2019.

Phumelela, the racing operator in most provinces, disputed the findings and remedial action, and approached the court to have it reviewed and set aside.

In a press release on Friday, Phumelela said the parties had entered settlement negotiations prior to the scheduled court hearing.

“The effect of the settlement is that the Public Protector conceded that her findings and remedial action were unsustainable and procedurally unfair and stood to be set aside,” said Phumelela, adding that its review application had been “comprehensively vindicated”.

The settlement provided that the Public Protector pay Phumelela’s costs on a party-and-party scale, including the cost of three counsel. The settlement was made an order of court earlier this week.

The Phumelela release explained: “Mkhwebane’s report set out her findings in respect of four issues relating to the corporatisation process.

In summary, these issues were:

• Whether the Gauteng MEC for Economic Development had the authority to enter into corporatisation negotiations.
• Whether public participation and parliamentary processes were followed in connection with the corporatisation process.
• Whether a grant by the Horseracing Development Fund to the Newmarket Turf Club was utilised for the purposes which a complainant alleged it was intended.
• Whether the lands on which Arlington and Bloemfontein racecourses are located were owned by municipalities or the government at the time of the transfer to Phumelela.

“Although the Public Protector concluded that only the complaint regarding the grant by the Horseracing Development Fund was substantiated, she recommended far-reaching remedial actions, inter alia ordering President Cyril Ramaphosa to take note of the report and to constitute a ministerial committee to establish a statutory and independent body to regulate thoroughbred horseracing in the country.”

Mkhwebane’s report also recommended that the Gauteng Gambling Board cease payment to Phumelela of a 3% levy on winnings from horse racing bets taken by fixed-odds operators in the province.

“The levy was subsequently withdrawn and the resultant loss of revenue to Phumelela was a significant factor in the company being plunged into a financial crisis and later going into business rescue,” said the company.

“Although Phumelela’s objections to Mkhwebane’s report are now fully vindicated, the order comes too late to reverse the devastating effect it has had on Phumelela,” it added.