Entain PLC (LSE:ENT) has set aside over half a billion for its ongoing Turkish bribery case, blowing out of the water analysts’ predictions of a £200 million hit and leaving investors wondering why such a large fine is being dished out.
Should the betting firm be forced to pay the full £580 million it has set aside, it would be the second-largest fine for a deferred prosecution agreement (DPA) ever dished out by the Serious Fraud Office (SFO).
SFO fines dwarf the penalties issued by other regulators such as the FCA and ICO, with a £285 million charge to Barclays in 2015 being the maximum either of the two has levied.
The probe was launched in 2019, relating to a Turkish online betting and gaming business, Sportingbet, that Entain (then called GVC Holdings) owned between 2011 and 2017.
Source Shutterstock
Entain is accused of failing to implement correct procedures to stop bribery, which in turn helped the business, which the SFO sees as a breach of section 7 of the bribery act.
Matt Britzman, equity analyst at Hargreaves Lansdown said: “The business in question was sold over 6 years ago by a former management team, so drawing a line under this and moving on is something the new team, and investors, have been keen to do.”
With all old management involved in the issue being replaced, Entain’s chair Barry Gibson expressed a strong desire to move away from the issue.
“Following a complete overhaul of our business model, strategy and culture in the past few years, the Entain of today bears no resemblance to the GVC of yesterday,” he said.
The History of DPA
Introducing DPAs in 2014, the regime suspends any criminal offence proceedings involving companies as long as the group fully cooperates with investigations and future prosecutions of individuals, all of which can result in fines or paying compensation.
Since its launch only 12 plea deals have been reached, with numerous blue-chip firms forced to pay hefty fines over the last decade.
In 2020, Airbus Group (EPA:AIR) was fined more than €990 million – the most ever by the SFO - and more than €2.6 billion by regulators overseas, for issuing bribes for land contracts in over 20 countries.
Source Financial Times
Tesco PLC (LSE:TSCO) was forced to pay £235 million in 2017 after it was accused of false accounting at Tesco Stores Limited, one of the group's subsidies, between February and September of 2014.
A court case involving two Tesco directors ensued; however, both were acquitted in 2018 following a Crown Court trial.
Rolls-Royce Holdings PLC (LSE:RR.) was fined close to £500 million that same year after an investigation was launched into bribery, false accounting and corruption at the aerospace manufacturer, with 12 claims being made over three decades involving the sale of aero engines, energy systems and related services.