In November 2019, the group’s Entain Holdings UK Limited subsidiary received a production order from HMRC to provide information relating to its former Turkish-facing online betting and gaming business. This was held from 2011 until it was sold in 2017.
Before that request for information in 2019, the operator denied claims it continued to benefit from the Turkish business, Headlong Ltd.
At the time, Entain understood the investigation was directed at certain former third-party suppliers, relating to the processing of payments for online betting and gaming in Turkey. Earlier in 2019, it spoke out to deny it continued to benefit from the Turkish business.
However, in July 2020, Entain announced HMRC was widening the scope of its investigation to examine potential corporate offending within the group. These offences include, but are not limited to, section 7 of the Bribery Act 2010.
Entain acknowledges historical misconduct involving former third-party suppliers and employees of the group may have occurred.
Changes at the top
Following the 2020 announcement Entain dismissed media reports of a link between the Turkish business, via former payment processing subsidiary Kalixa, and collapsed payments giant Wirecard.
Days before the investigation was announced, Kenny Alexander stepped down as CEO. Under his replacement Shay Segev, the business rebranded from GVC Group to Entain as part of a repositioning of the business as a socially responsible, sustainable operation.
Possible resolution
The group is now in deferred prosecution agreement (DPA) with the Crown Prosecution Service (CPS), Entain said it is now in and is working towards a resolution. However, Entain added that it is not possible to say how the investigation will conclude.
“Whilst prosecution of a group entity or entities, which may defend the action successfully or be convicted, remains a possibility, the group is seeking to conclude DPA negotiations with the CPS,” Entain added.
“Negotiations remain ongoing and any resolution would be subject to judicial approval.”
Entain expects substantial financial penalty
The group added that it is likely the HMRC investigation will result in a financial penalty for the business.
“While the company cannot say at this stage what the consequences of the investigation will be, it is likely that they will include a substantial financial penalty which is yet to be determined,” Entain said.
“The company cannot identify reliably at this stage the size of any financial penalty.
“Since the investigation first commenced, the group has undertaken a comprehensive review of anti-bribery policies and procedures and has taken action to strengthen its wider compliance programme and related controls.
“Whilst the discussions with the CPS remain ongoing, the board is content with progress to date and looks forward to pursuing an orderly conclusion to this matter.”
Shares in Entain are trading down 1.78% at 1,3550 pence per share in London following the announcement.
Historical issue
In a statement issued following the announcement, Entain chairman Barry Gibson said the group is hoping to achieve a resolution to the matter.
“We are keen to achieve a resolution to what is an historical issue relating principally to a business that was sold by the group nearly six years ago,” Gibson said. “Entain has been through a period of extraordinary transformation since then, and has taken decisive action to be a best-in-class, responsible operator with outstanding corporate governance.
“The board and leadership teams have been overhauled, 100% of our revenue is now from regulated or regulating markets, and our business model, strategy and culture have been reviewed, analysed, and stress-tested.
“We will continue to work closely with both the CPS and HMRC to ensure that this matter can be concluded as soon as is practical.”
Original article: https://igamingbusiness.com/legal-compliance/legal/entain-warns-of-substantial-penalty-from-hmrcs-turkey-investigation/
