Phumelela unjustifiably benefited from public funds-Mkhwebane

THE PUBLIC Protector has ordered an audit of all state-owned assets that were transferred to Phumelela Gaming and Leisure. Supplied
JOHANNESBURG – Business Report can today reveal some of the key role-players who were behind the privatisation of the horse racing industry in the 1990s and ended up on the board of Phumelela, a company that owes its existence to the corporatisation process.

The public protector, in her report into horse racing in South Africa, said the decision to restructure the horse racing industry in Gauteng in the late 1990s saw the sport handed on a “silver platter” to Phumelela. “It appears that the Gauteng Provincial Government’s intention was to protect the new entity that was later called Phumelela Gaming and Leisure at all costs and ensured it succeeded,” Mkhwebane said. “So many role-players and architects of the corporatisation of the horse racing industry subsequently became directors of a private company, Phumelela Gaming and Leisure. The shareholders of Phumelela unjustifiably benefited from public funds in the form of 50percent of the 6percent levy on bookmakers.”

Business Report has seen a letter written in March 1996 to then Gauteng MEC for Finance and Economic Affairs Jabu Moleketi by the then chairperson of the Highveld Racing Authority Barry Walters, presenting the organisation’s business plan for the privatisation of the sport.

Walters has been Phumelela director since the JSE listing of 2002 and is currently listed as an independent director, despite being on the board for 17 years. In June 1997 a memorandum of understanding was signed with Gauteng provincial government to privatise the industry, with Phumelela commencing operations in 1999 and listing on the JSE in 2002.

Peter Jaeger, and Brian Mehl, who were key industry representatives in the corporatisation of the industry, also became directors and personnel of Phumelela. Mehl served as the first chief executive of Phumelela – a position he filled from May 1998 until March 2005. Jaeger and Mehl were directors of Phumelela at the same time they were on the board of the regulator, with Jaeger being the chairperson of the National Horseracing Authority.

Mpho Ramafolo was employed by the Gauteng government and responsible for project managing corporatisation. He reported to Moleketi and later became the executive director and shareholder of Phumelela, until he resigned in 2017.