The battle for the control of betting giant SportPesa between its billionaire shareholders has intensified.
In a letter to the Betting Control and Licensing Board (BCLB), former chairman Paul Wanderi Ndung’u has accused Chief Executive Ronald Karuari of grabbing the company and tax evasion.
SportPesa, which is seeking a comeback into the Kenyan market, is locked in a bitter ownership and tax row with the Kenya Revenue Authority (KRA).
In the letter to BCLB, Ndung’u claims Karauri and current SportPesa Chairman Francis Kiarie have registered a new betting firm in a scheme to defraud other local shareholders and deny KRA taxes running into billions of shillings.
Ndung’u further alleges that the decision to approve the registration of a new betting outfit, Milestone Gaming Ltd, would leave other local shareholders with a raw deal.
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Milestone Gaming was registered on October 4 to run a betting business, with Karauri and Kiarie holding a stake in it.
“This is meant to deprive the Kenyan shareholders their long-term investment in PEAL (Pevans East African Ltd) by Milestone taking over and stripping off the assets of PEAL,” accused Ndung’u, writing to BCLB CEO Peter Mbugi.
The registration of the new company, Ndung’u added, was also meant to circumvent a tax settlement agreement that Pevans East Africa had reached with KRA in August 2019.
Pevans, through Karauri, had promised to pay Sh15.1 billion in 18 equal monthly instalments.
Ndung’u further questioned why BCLB allowed the CEO and Kiarie to own 95 per cent of Milestone Games despite ongoing investigations on tax evasion and money laundering against SportPesa. Some of Ndung’u’s accusations have seen Pevans move to court, claiming that the former shareholder had been sued on claims of fabricating statements and other falsehoods.
SportPesa has maintained that its tax liability ended after KRA lost a case in court, noting that the taxman had wrongfully taxed a gamer’s stake instead of only the winnings.
“The issue of tax evasion is neither here nor there,” said the firm’s spokesperson Lola Okulo.
Some of the claims Ndung’u repeated in his letter to BCLB around the transfer of funds, partnerships and audits have attracted the lawsuit.
Ndung’u owned 17 per cent of Pevans, making him the fourth-largest shareholder. Guerassim Nikolov, a Bulgarian, is said to hold an equal stake.
The company claims Ndung’u’s statement released on November 1 ruined its reputation as a sports betting firm and a sponsor of top international football clubs and sporting events.
Pevans argued that the former chairman was in a privileged position where he could access information or clarification on dealings.
The firm further argued that Ndung’u was at the helm of the firm when all the issues he has raised were dealt with.
The investigation into Pevans’ dealings had also roped in two Bulgarian shareholders who have since been deported, said Ndung’u.
On November 1, Karauri announced that the giant sports betting company SportPesa had made a comeback after closing shop last year, and would resumed operations under a new BCLB licence.
“As SportPesa plans to return to the market armed with a court order, SportPesa is back! I’m happy to announce that the SportPesa brand is back under a new BCLB licence holder,” said Karauri at the time.
The CEO said the betting firm would promote responsible gaming.
Under the agreement to pay up its tax obligations, Pevans would pay KRA Sh830 million in monthly instalments, putting it back into the government’s good books.
Being a different company, it is highly unlikely that Milestone can take up the tax obligations of the brand they have adopted.
In a letter to the former Commissioner of Domestic Taxes Elizabeth Meyo on September 15, Karauri confirmed that Pevans would pay Sh838 million on or before the 20th day of each month.
“We confirm that we are willing to pay the said sum of Sh15.1 billion on the terms and understanding set out in our letter of August 27, 2019,” he said.
“As you are aware, we are currently not in business and, therefore, it would be difficult for us to commence making payment in the month of September 2019.”
He proposed that the payments begin from October, when they had hoped to be back in business. However, by October 10, 2019, the company had yet to resume operations.
Karauri wrote back to KRA, alerting the taxman of his firm’s inability to pay following a delay in the issuance of an operating licence from BCLB.