I think you're looking at 2, maybe 3 different things.
First, the lazy student. Rank and competition performance aren't the problem -- motivation is. Address the motivation, and her performance will improve -- or she'll go onto whatever IS motivating to her. Competition and ranking is merely a symptom.
Second, sandbagging in general. It happens, and will continue to happen. Human nature.... Trophies, bragging points, all of that are simply signs about where the focus is -- and if winning more points that way is what's important -- coaches will sandbag. They'll hold off promotions until after a tournament, do it on the podium, or right after... It's game play. If you don't like it, don't do it, and if it bugs you enough, skip the tournaments. To me, a tournament is about a chance to fight someone outside my regular groups, so I don't care about how the club comes out of it -- but I don't like to feel that my students got cheated by baltant sandbagging, either.
Third, especially in BJJ and Judo -- tournaments are part of the ranking process, often. So that tournament might be the last element of a grading. Fred's holding his own like a blue belt in class... but how will he do with people he doesn't know? If he looks good and ready, especially if he places first, you promote him. You can do it on the podium, if time and circumstances allow, and make it a big public show -- or wait until your next class. That gets into the teacher's goals and purposes...