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War of words looms over control of gaming firm SPORTPESA

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By Steve Umidha

War of words over the control of SPORTPESA brand is looming large at Nairobi – based betting and gaming company as fresh details emerge of an existing rift and eminent fallout among its shareholders.

Billionaire Paul Wanderi Ndung’u – one of the shareholders at the betting company has come out denying any knowledge of the impeding resumption of Sportpesa business in Kenya – just days after Betting Control and Licensing Board (BCLB) – the industry regulator suspended the license of Milestone Gaming Ltd, which was to operate the SportPesa brand.

“Due to my association with Sportpesa, I have received numerous calls from local and international media seeking my comments on these developments. I wish to state that just like the rest of the Kenyan public, I came to learn of the resumption of Sportpesa business through the social media at 9 p.m. on Friday,” he said.

Further adding, “That the company Milestone Games Limited, its shareholding ownership whether through proxies, trustees or otherwise is unknown to me. The shareholders of Pevans East Africa Limited who are the owners of the Sportpesa Brand intellectual properties, its short codes, and assorted Mpesa paybill numbers at both Safaricom and Airtel have never been informed of any impeding resumption of Sportpesa business in Kenya as stated in the press release by Sportpesa chief executive officer Ronald Karauri,” said Mr. Ndung’u – the former Chairman and director at Sportpesa, who has repeatedly claimed to be the legitimate owner of Sportpesa brand.

The current Sportpesa chief executive Ronald Karauri through his social media platforms announced on Friday that the gaming company had been allowed to recommence Kenyan operations through Milestone – about which little is yet known – saying the new operator had gained the rights to use the brand locally.

“SportPesa is back. I am happy to announce that the SportPesa brand is back under a new Betting Control and Licensing Board (BCLB) license holder. As market leaders, SportPesa will focus on upholding the highest standards of service and responsible gaming. We look forward to working closely with BCLB and all other stakeholders,” said Karauri – a former pilot with Kenya Airways (KQ) who quit the airline in 2014 to help build the Sportpesa brand.

But that bliss would only last few hours before BCLB Chairman Cyrus Maina said Milestone had violated regulatory protocols as it lacked the rights and regulatory nod to utilize the various domains, paybills and short codes previously used by SportPesa – arguing that the trade name SportPesa belonged to Pevans East Africa Ltd hence Milestone could not use it to trade.

“According to information in our possession, the trade name ‘SportPesa’ belongs to M/s Pevans East Africa Ltd. The said company has filed an appeal in the Court of Appeal in Nairobi no. 471 of 2019. The matter before the Court of Appeal contests the issuance of the gaming license to Pevans East Africa trading as SportPesa,” Maina wrote to Milestone on Friday.

Pevans East Africa Limited ceased business in July 2019 following revocation of its license by BCLB arising from a huge tax arrears dispute with Kenya Revenue Authority (KRA).

As of June 2019, Pevans had 53 per cent Kenyan shareholding. The company according to business tycoon Ndung’u who surrendered the chairmanship in December last year, has since 2017 been beset with problems after the executive directors, who are also shareholders, resorted to running the company without reference to the board.

This he says, is after the non-Kenyan shareholders and Executive Directors allied themselves with the CEO thus frustrating efforts to hold board meetings despite persistent requests in writing from the three local Kenyan Non-Executive Directors.

However, during the first quarter of 2019, Ndung’u claims a board meeting was held at which one of the directors Mrs. Asenath Maina as per the Articles of Association demanded a forensic audit of the books of the company since 2015 to date starting with management reports – which he says has never been obtained to date.

“Within this period he says, the company received very negative coverage from mainstream UK newspapers The Guardian, The Mirror and Financial Times and even a documentary on the BBC. In addition, there were sensational issues raised in British Parliament about Sportpesa,” he said.

After the revocation of the company’s license and subsequent deportation of the executive directors, Ndung’u claimed today that efforts to have a forensic audit have continued to be frustrated.

He says after persistent push the management report indicated that within three years Pevans East Africa Ltd (Sportpesa) has transferred over US$250,000,000 to various offshore accounts in Isle of Man, Dubai and Las Palmas/Canary Islands and the UK. Again, numerous email requests from the Non-Executive Directors seeking evidence of Board approvals, contracts and details of beneficiaries went unanswered over the years.

The intended forensic Audit, he says is supposed to indicate and reveal the actual amounts and the ultimate beneficiaries including any backdating of contracts or falsification of board minutes.

According to Mr. Ndungu’ who owns an impressive 17 per cent in the company says that shareholders have also come to learn that subsequent to ceasing operations, US$500,000 has been transferred from Pevans to Sportpesa South Africa while within the two years $17,500,000 has been transferred to Sportpesa Tanzania.

“We will request the relevant Authorities CBK, KRA, BLCB and Financial Reporting Centre to also assist in establishing where the funds were ultimately destined. As a result of these suspicious transactions, the corporate governance problems and the handling of a tax dispute with KRA, PriwaterhouseCoopers resigned as the auditor of the Kenyan business,” he says.

In the UK, banks requested Pevans’ sister company Sportpesa Global Holdings to close its accounts while KPMG and Deloitte & Touche resigned as auditors and tax advisers respectively.

Officers from UK’s Serious Fraud Office (SFO) also visited Sportpesa Nairobi office –the source of the funds

From Friday’s press release by BCLB, he says that he together with other shareholders also came to learn the claim that the Sportpesa brand is owned by Sportpesa Global Holdings Limited – SGHL which is contrary to the fact that Sportpesa brand started trading long before SGHL formation.

SPHL is the holding company that owns the trading licenses and businesses of Sportpesa Tanzania, Sportpesa UK, Sportpesa Italy and Sportpesa Russia. SPHL ownership was a mirror of Pevans EA Limited.

“Within this year the foreign shareholders have fraudulently transferred the shareholding to themselves along with their associates and the matter will be handled by UK Authorities,” he said on Monday morning.

Sportpesa was founded in February 2014 and was owned and operated by Pevans East Africa, a company with shareholders from mostly Kenya, Bulgaria, and the United States. Sportpesa in Italy is jointly owned with RCS Media, the largest media company in Italy.

Besides Ronald Karauri, the other shareholders of SportPesa include Bulgarian Guerassim Nikolov, Gene Grand and Wacera Maina of the ‘Shinda Smart Sh90 million in 90 days’ betting craze who all hold 21 per cent shareholding each, serial investor Paul Wanderi Ndung’u, the first Kenyan to acquire a forex trading license via Taipan Forex Bureau has 17 per cent stake.

The other investors are Cellini Holdings with five per cent, Valentina Nikolaeva and Robert Kenneth Wanyoike Macharia each with three percent while Ivan Kalpakchiev and Francis Waweru Kiarie own two and one per cent each respectively.

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