On Friday the 20th of November it was reported that the Kenyan Betting Control and Licensing board had sent out a warning letter to its permit-holders. The missive detailed with urgency that complete compliance with operating directives and requirements is mandatory. It stated that any deviation from these will result in serious legal ramifications.
Unannounced Changes a No-Go
The BCLB stated that certain brands are disregarding vital operating directives and procedures. It went on to specifically cite changes in directorship and shareholding that have not been properly made known. The board pointed out that it is obligated to conduct due diligence on those seeking licenses as well as any changes in incumbents’ operations. This was particularly true in cases involving mobile pay bill numbers, brands, and domains.
A Reaction to SportPesa’s Return
The BCLB’s letter seems to be a response to the continued dispute about SportPesa restarting its operations in Kenya. This is after an extensive dispute the bookmaker is involved in with the Kenya Revenue Authority which actually saw the business exiting the market in September 2019.
The company’s return in October this year was made possible by it assigning its brand, various intellectual property, and pay bill numbers to Milestone Gaming Ltd., a new BCLB licensee. The news that Ronald Karuari, SportPesa Chief Executive Officer, holds a 54.4% stake in Milestone Gaming Ltd via a string of investment vehicles was only discovered thereafter.
The remaining 40.9% belongs to Francis Waweru Kiarie, who additionally owns a 1% share of Pevans East Africa, parent company to SportPesa. The bookmaker’s return was initially stopped by the BCLB because Pevans owns it. But the Nairobi High Court ruled that the BCLB had not given Milestone Gaming or SportPesa enough of a chance to react to the order stopping the relaunch.
The issue is set to be further discussed at a hearing in January 2021, although SportPesa has not yet resumed its operations in Kenya notwithstanding the favourable directive.
Pevans Sues Former Chairman
Pevans has instituted legal proceedings against the former president of Pevans, Paul Wanderi Ndung’u. This is in response to the latter levelling accusations of fraud at SportPesa. Pevans says that these are fabricated and a blatant attempt to injure the business’ reputation.
Ndung’u has stated that SportPesa Global Holding Ltd, the United Kingdom-based organisation that controls SportPesa’s European and Tanzanian operations, made improper transfers. He claims that more than US$250 million in Kenyan revenue was moved to international accounts in an attempt to avoid taxation and having to share this income with Pevans.
The main SGHL shareholders include Karauri and two Bulgarians who helped found the bookmaker. It is these principles that Ndung’u is alleging obstructed efforts made by himself and another important Pevans shareholder Asenath Wacera Maina to audit these financial transfers. The Pevans lawsuit against the same says that the SGHL board agreed to the official inspection of its accounts but that the inspection has yet to be carried out.
Robert Macharia, Director at Pevans, has filed a sworn statement that says that all payments were made properly, contingent upon the Central Bank of Kenya’s control and the receiving countries’ central bank or similar. Macharia went on to say that the payments were made to recompense SportSoft, Pevans’ software subsidiary based in the United Kingdom and to fund SportPesa’s growing tally of expensive international sports sponsorships.
But an investigative report published in September 2020 found that SportSoft had charged Pevans £42 million for IT and services for 2 years. Over the same period, the business reported profits of £33 million, making it subject to a much lower corporate tax rate in the UK.
Pevans’ lawsuit states that, since he was once the company’s Chairman, Ndung’u was present for each of these financial decisions. It goes on to claim that Ndung’u mission is to defame his previous employer and damage the company’s name in the eyes of not just the general public but Pevans’ business partners and associates as well.
While establishing what Ndung’u’s intentions are is an impossibility, his allegations were enough to convince the Kenyan Financial Reporting Centre to sift through Pevans’ financial transfer history for evidence of criminality. Because of how much tax the company would be obliged to pay on the money supposedly transferred unlawfully it’s been deemed in the public interest to find out what happened for once and for all.