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SportPesa’s grand comeback frozen as CS Matiangi reads riot act

Last updated 1 month ago | By Kamore Maina and Dominic Omondi

Interior CS Fred Matiangi [Edward Kiplimo, Standard]

SportPesa’s comeback plan has hit a snag after the betting regulator annulled the license for Milestone Gaming Limited.

Milestone, a new betting company that resurfaced with the SportPesa brand, had their license cancelled after they breached procedural requirements on change of shareholding structure.

On Thursday, Ronald Karauri, the CEO of SportPesa, was among those who appeared at the offices of BCLB to show cause.

“Having considered the foregoing, the Board was not satisfied with the explanations proffered by your and accordingly arrived at the decision to cancel to cancel your company’s Bookmakers’ off-the-course license number 00205 dated 6th October 2020,” read a letter by BCLB Chairman Cyrus Maina.

Meanwhile, Interior Cabinet Secretary Dr Fred Matiangi ruled out the return of gaming companies whose licenses the Government had revoked.

The CS has at the same time directed the BCLB to furnish the Inspector General of Police Hilary Mutyambai and DCI chief George Kinoti with details of all licensed gaming companies operating in the country.

The DCI and the IG will conduct due diligence on the directors of those companies in what appears to be a renewed attack on gaming companies by the Government.

SportPesa’s comeback has met several hitches, including an unending legal bout between the shareholders of Pevans East Africa, which originally owned the SportPesa brand.

Also at stake is the Sh15 billion tax obligation that Pevans had agreed to pay the taxman, as questions arise on whether the new entity to operate the SportPesa brand assets can shoulder the tax obligations of the former.

Local shareholders have been complaining of their stakes at SportPesa Global Holdings, noting that is being diluted in favour of Karauri and his Bulgarian associates. They also insist that SportPesa trademark moved from Pevans East Africa to SportPesa Global Holdings at a price of Sh14 million without their approval.

SportPesa CEO Ronald Karauri when he appeared before the Senate Justice and Legal Affairs Committee over the halting of Licences and permits of betting and gaming firms at County Hall, Nairobi on Wednesday 31/07/19. [Boniface Okendo, Standard]

On November 24, BCLB accused Milestone of “blatantly” changing its shareholding structure.

This, said the regulator, was in breach of requirements that before any change of ownership, directorship and/or shareholding is made, the company has to seek the approval of the regulator in writing.

The shareholding structure that had been submitted to the regulator showed that the majority of the shares – 9,950 – were held by Nob Five Limited while another 50 belonged to Wilson Ngatia Karungaru.

In turn, Nob Five was owned by John Nderitu who had 250 shares, Jackline Kungu 500 shares and Joseph Mutua 250 shares.

However, after investigations, BCLB found the company had changed its ownership, directorship and shareholding structures without notifying it.

Nob Five was owned by Selenium which had 96 per cent of the shares while the remaining four per cent were owned by Jackline Nyambura Kungu.

Francis Kiarie, the chairman of Pevans and its CEO Ronald Karauri, owned Selenium with 300 and 400 shares respectively.

BCLB said that this was in breach of the applicable operating requirements for which its licence may be varied and or/cancelled.

It thus asked the shareholders of Milestone to appear before BCLB on December 3 to show cause why its licence should not be cancelled.

At the hearing where Karauri, Wilson Ngatia and advocate Robert Macharia appeared, BCLB said that Milestone did not acknowledge the changes.

On November 4, Milestone Gaming Limited moved to the High Court seeking judicial review of an earlier decision by BCLB barring it from using the name SportPesa, its domains, shortcodes and pay bill number.

The betting regulator also copied telecommunications companies Safaricom and Airtel as well as the ICT regulator Communications Authority.

The announcement by Matiangi on Friday appeared to be directed to the 19 betting firms that were locked last year out in a raft of stringent measures meant to control gambling.

Interior Ministry in a press statement announced that the Government had withdrawn operating licenses of 19 gaming firms that had not passed security vetting.

The Ministry said the firms would have their licences renewed only after their operations and those of their directors were cleared.

“The board has declined the renewal of licences for 19 firms awaiting security vetting,” the statement read.

Matiangi, who spoke today at the Administration Police training college in Embakasi said: "It will not happen under my watch. It’s a decision that we have taken and we will not go back.”

The CS at the same time announced that the Government would not allow back into the country any of the foreign officials linked to the gaming companies.

“We are not going to rescind the decision on those deported, “said the CS.

Last May, the Interior Ministry announced that it had 17 foreigners who are in the country illegally and were linked to gaming had been deported.

The Ministry said most of those to be kicked out were in betting and casino businesses. The nationalities of those declared prohibited Immigrants were revealed to be Chinese, Spaniards, Turks, Serbian, South Koreans, Bulgarians, Italians and Danes.

Chairman Betting Control and Licensing Board (BCLB) Cyrus Maina (right ) and Director Peter Mbugi at a press conference to clarify on the SportsPesa licensing issue on October 31, 2020. [Samson Wire, Standard]

The CS revealed that he had been under intense pressure from some unnamed individuals to allow some of the blacklisted gaming companies to resume operations.

Matiangi sited calls from different groups that include religious leaders whom he said were battling for some of the banned firms.

The CS claimed that some of the callers had also attempted to intimidate Government officials over the matter.

He said some of those individuals had been telling the top security chiefs of their connections to high offices in an effort to coerce them.

To those he claimed were calling him to push for the return of the gambling firms, his message was simple: “I take instructions from my boss who is the President. And his instructions are crystal clear.“

“My boss has not told me to do those things," Matiangi said.

The Betting Control and Licensing Board last year announced that it had deferred renewal of licences for 13 casinos, six lotteries and eight betting firms.

Matiangi spoke at an event to honour police officers who had been killed in the line of duty.

During the event, he said the Government would continue supporting the families of those officers who die in the line of duty.

“They paid the ultimate price. We must honour and respect them by looking at their families “ the CS pointed out.

He was accompanied by senior Police chiefs among them IG Hilary Mutyambai and his two deputies. DCI chief George Kinoti was also at the event.

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