Johannesburg — THE controversial decision by the National Lotteries Board (NLB) to award the national lottery licence to the Gidani consortium is heading for a showdown in court, after losing bidder Uthingo said yesterday that it is pursuing the matter legally.

"We can confirm that we have taken legal advice and that we have served legal papers on the relevant parties," Uthingo CE Oupa Monamodi said in an interview yesterday.

Uthingo, which has been operating the lottery for the past seven years, lost when the licence came up for tender again and newcomer Gidani won the lucrative licence in October last year.

Gidani is set to take over lottery operations at the start of April but the looming court battle has cast a shadow over the smooth transfer of operations.

Monamodi confirmed that Uthingo had had extensive correspondence with the NLB on the matter but he would not comment on the details of the court action.

The NLB also would not comment yesterday but it is understood that it has already responded to Uthingo's queries about the award process. It is understood that the matter will be heard in court in a matter of weeks. If a judge finds that Uthingo has a case, it could throw the whole lottery process into disarray and with the period during which government could legally extend Uthingo's licence having expired, SA might find itself without a lottery, an observer has said.

Controversy has surrounded government's decision to award Gidani the licence almost from the start, with the chequered past of the consortium's foreign partner, Athens-based Intralot, surfacing almost at the same time as it emerged that high-profile individuals with connections to the African National Congress (ANC) were shareholders.

The Lotteries Act prohibits the award of the lucrative licence if it is found that a political party or political office-bearer had any direct interest in the consortium.

ANC executive committee members Max Sisulu and Chris Nissen, Independent Electoral Commission (IEC) chairwoman Brigalia Bam and former IEC commissioner and businesswoman Dawn Mokhobo, are all shareholders in the consortium.

At the time of the announcement of Gidani as the preferred bidder last year, NLB chairman Joe Forster, however, denied any irregularity in the tender procedure and said no ANC office- bearers stood to benefit.

At the end of last year another bidder, the Igwija consortium headed by businesswoman Danisa Baloyi, also threatened legal action to force the NLB to explain how it made its decision.

A request by Igwija for information on the award process was turned down by the NLB because it said the information was "private and confidential", Baloyi said at the time. Baloyi could not be reached yesterday to ascertain whether her consortium was also pressing ahead with legal action.

Apart from controversy surrounding Gidani's shareholding structure, other irregularities that have been alleged include that the shareholding of the consortium was finalised at the last minute, with its directors appointed just days before the final bid was due.

It has also been claimed that a high-ranking member of the NLB was excluded from talks due to close links to Gidani, an allegation the board refused to confirm or deny.

Trade and Industry Minister Mandisi Mpahlwa has maintained that he is confident of the integrity of the process by which Gidani was chosen.