Entain Facingmonumental £100M Class Action Lawsuit due to Turkish Bribery Investigation
Major British online gambling corporation Entain stands accused of withholding crucial information from investors and faces a possible £100 million (US$118 million) payout as a result.
Law firm Fox Williams has declared its intention to file a class-action lawsuit against the company, alleging Entain failed to inform investors about an HMRC (UK tax authority) probe into alleged bribery and corruption within its former Turkish division.
The company agreed to pay a record-breaking £600 million (US$760 million) settlement in November 2023, one of the largest corporate fines ever imposed in the UK.
Since the company disclosed the anticipated financial penalty in May 2023, its share value has plummeted, dropping nearly by half.
This week, Fox Williams asserted that Entain neglected to inform investors about "misdeeds," among them bribery and corruption, within its subsidiary Headlong, between 2011 and December 2017.
Greased Palms
Headlong was once responsible for a third of Entain’s earnings. Given that online gambling is illegal in Turkey, Headlong was employing sketchy cash-collection networks and payment processors to conceal its activities from Turkish financial institutions. Allegations suggest that it was also giving bribes to Turkish officials to turn a blind eye to its operations.
Entain, previously known as GVC, handed over Headlong for free in December 2017 to expedite its acquisition of Ladbrokes-Coral, completed in March 2018. It appeared that Entain’s Turkish operations were not deemed acceptable by UK regulators reviewing the Ladbrokes deal or potential investors.
HMRC revealed in July 2020 that it was investigating "potential criminal offenses" by the Turkish subsidiary, causing Entain's shares to plummet by 12%.
Eventually, Entain was accused by HMRC of lacking appropriate safeguards to prevent Headlong employees from engaging in bribery. In fact, the division was so poorly managed that some of its staff were accused of misappropriating funds.
Questionable Business Practices
Entain was potentially subject to the UK Bribery Act, but concerns arose that a prosecution could result in the company losing its licenses worldwide, potentially jeopardizing thousands of jobs.
The lawsuit will offer institutional investors the opportunity to recoup substantial losses and promote transparency and governance within the UK's gambling sector, according to Andrew Hill, a partner at Fox Williams.
"Hopefully, this will contribute to an overall improvement in corporate behavior, as public companies should understand that their shareholders won’t tolerate misconduct," Hill added.
Entain stated it was unaware of any legal action but vowed to vigorously defend any such claims.
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