The fallout from Entain’s £600m ($765m) settlement with HMRC over a bribery case related to the company’s former Turkish business has escalated due to a legal action filed by former executives.
Former Chief Executive Kenny Alexander and Chair Lee Feldman filed a lawsuit last week against Entain and its law firm Addleshaw Goddard, accusing them of disclosing “privileged information” to investigators during the bribery investigation the operator faced in 2019.
The former Entain employees are seeking a court order to determine what information was shared with prosecutors during the investigation, which resulted in a £585m ($746m) fine for the company.
The Turkish Case
The investigation, which began in 2019, involved GVC Holdings (now Entain), accused of benefiting from an online betting and gaming business it had previously owned but sold two years prior.
HMRC launched an investigation into Entain after Ropso Malta Limited acquired its Turkish business in 2017, but by 2019, it was found that the group continued to profit from the business.
As a result of the investigation into potential corporate offenses and breaches of Section 7 of the Bribery Act 2010, Entain reached a voluntary Deferred Prosecution Agreement with the Crown Prosecution Service (CPS) in November 2023.
Under the agreement, the company agreed to pay a £585m ($746m) fine, return the unlawfully obtained profits, donate £20m ($25.5m) to charity, and cover £10m ($12.75m) in CPS and HMRC expenses.
Due to over £600m ($765m) in legal costs related to the deposition, Entain was forced to report an operating loss of £900m ($1.147bn) for FY2023, as investors demanded that the company initiate a strategic transformation in 2024.
In negotiating the settlement, former Chair Barry Gibson stated that the bribery violations were related to a former business sold during the tenure of Alexander and Feldman.
Gibson also noted that Entain had “fundamentally changed as a business,” and HMRC had deemed the company helpful and reliable in assisting with the investigation.
Alexander and Feldman’s claim
Alexander, who served as CEO of Entain from 2007 to 2020, became a key figure in the Turkish bribery case. In a joint lawsuit with Feldman, they are demanding the disclosure of information provided to Entain during the investigation into the case.
According to them, since both were clients of the law firm Addleshaw Goddard during the investigation, any information passed by the firm to Entain should also be available to them. Furthermore, they insist on receiving additional information about the legal advice Entain received throughout the proceedings.
The lawsuit states: “The claimants understand that the company and/or AG may have disclosed, in the course of the investigation and/or in the course of the Deferred Prosecution Agreement or otherwise, privileged materials to HMRC, the CPS…”.
“Where the privilege in those materials was a joint privilege shared by the claimants, the company was not entitled to waive privilege without the consent of the claimants.”
In an interview with the Financial Times, another former Entain employee supported Alexander and Feldman, stating that they relied on legal advice from Entain’s law firm throughout the process.
He noted: “They trusted throughout this time that their personal interests were properly protected and have therefore repeatedly sought unfettered access to all of that legal advice, which has so far been denied to them, by both AG and Entain, leaving them with no option but to bring this claim.”
Entain responded, stating that the lawsuit “has no merit” and will be “vigorously contested,” while Addleshaw Goddard stated that they “cannot comment due to client confidentiality obligations.”
Don’t forget to subscribe to our Telegram channel!
