Entain’s legal labyrinth of bribery allegations and investor claims

Lea Hogg 1 month ago
Entain’s legal labyrinth of bribery allegations and investor claims

Entain has found itself at the centre of a substantial legal dispute. Investors are set to demand compensation exceeding £100 million due to the company’s inadequate disclosure of bribery and corruption incidents within its past Turkish division.

Entain is currently in discussions for a deferred prosecution agreement with the Crown Prosecution Service. This is in relation to an ongoing investigation by HM Revenue & Customs into potential corporate offenses tied to Entain’s past online betting and gaming business in Turkey, which was under its ownership from 2011 until its divestment in 2017.

The investigation by HMRC is comprehensive, delving into possible violations of the Bribery Act 2010, specifically section 7, and scrutinizing past actions of former third-party suppliers and past employees of Entain. The company has recognized the possibility of such misconduct and is actively cooperating with both HMRC and the Crown Prosecution Service.

Although the final results of the investigation and any consequent financial penalties are not yet finalized, Entain has proactively reviewed and fortified its anti-bribery policies and procedures, enhancing its overall compliance framework.

Given that the situation is fluid and subject to change, those interested in the most current developments should stay attuned to the latest statements from Entain and the pertinent regulatory authorities for updates.

Following Entain’s substantial settlement with HM Revenue and Customs (HMRC), which ranks among the heftiest financial sanctions in UK history, the legal firm Fox Williams has initiated legal action. In the closing month of 2023, Entain consented to a payment approaching £600 million subsequent to an inquiry into suspected bribery.

The market valuation of Entain has seen a precipitous fall, with its shares dwindling by nearly half since the initial announcement in May 2023 of an expected significant fine from HMRC. The accord, concluded in November, encompassed a monetary fine and the forfeiture of illicit profits. Entain also pledged a charitable contribution of £20 million and an additional £10 million to defray the expenses of HMRC and the Crown Prosecution Service.

The investigation’s roots trace back to 2019, scrutinizing potential corporate transgressions by Entain’s Turkish online betting and gaming enterprise, held from 2011 to 2017, and the actions of third-party vendors and erstwhile group employees. Formerly operating as GVC Holdings, Entain faced criticism for lacking adequate safeguards against bribery that could advantage the corporation.

The disclosure of this probe in July 2020, particularly targeting the erstwhile Turkish subsidiary of Ladbrokes, led to a notable 12 percent plunge in Entain’s stock value. Nonetheless, an Entain representative has conveyed that the firm is presently not cognizant of any such legal proceedings and has not been served with any formal claim, affirming their readiness to contest any such allegations vigorously.

Andrew Hill, a partner at Fox Williams and leader of the securities litigation team, has stressed that the lawsuit aims not just to recoup investor losses but also to fortify transparency and governance within the UK gambling industry. Hill aspires for this case to catalyze enhanced corporate conduct, reminding publicly traded companies of their imperative to honour disclosure duties.

Hill’s involvement in significant shareholder claims is not unprecedented. He is currently managing a £100 million lawsuit against the online fashion retailer Boohoo, stemming from 2020 accusations of supplier malpractice, and has previously overseen out-of-court settlements of claims against Tesco.

The Entain case reflects the wider ramifications for corporate governance and the accountability of publicly listed firms to their shareholders. It relates to the necessity of transparency and ethical behaviour, not merely as legal mandates but as essential elements for sustaining investor confidence and market integrity. The resolution of this lawsuit may establish a benchmark for future similar legal challenges and potentially shape corporate conduct industry-wide.

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