Entain investors seeking £100m compensation in Turkish corruption case

A group claim is set to be filed against Entain on behalf of several investors, alleging that Entain did not communicate knowledge of the historical offences it committed in Turkey to investors.

On Wednesday (11 June) law firm Fox Williams announced it was seeking to recover more than £100m in compensation for the operator’s institutional investors.

The claim, which will be filed by autumn 2024, is in connection to the final Deferred Prosecution Agreement (DPA) Entain made with the Crown Prosecution Service (CPS) regarding bribery and corruption offences committed in Turkey in December 2023. The terms of the DPA were initially outlined in August.

At the time the company agreed to pay a financial penalty – plus disgorgement of profits – of £585.0m (€694.2m/$752.2m). It was also ordered to make a charitable donation of £20.0m and contribute £10.0m to CPS and HMRC costs.

Responding to questions from iGB, Fox Williams said it was anticipating the compensation to total more than £100m (€118.3m/$127.9m).

Fox Williams said it is submitting the claim on the basis that Entain failed to communicate knowledge to investors regarding the investigation. The claim period is 1 July 2011 to 31 December 2023.

“We believe senior executives of Entain knew at the time that its Turkish subsidiary was involved in bribery and did not disclose this to its shareholders, in breach of its disclosure obligations and standards of good governance,” the firm told iGB.

Fox Williams is alleging that the business breached Sections 90 and 90A of the Financial Services & Market Act 2000. These sections refer to compensation for those that have suffered a loss due to misleading or delayed statements regarding securities.

“The claim represents an opportunity for investors in Entain to recover compensation,” Fox Williams said in a statement on its website. “We urge any eligible investors to participate on this basis.”

What triggered the investigation?

The HMRC investigation kicked off in November 2019. This is when the Entain Holdings UK Limited subsidiary received an order from HMRC requesting information about Headlong Ltd, its former Turkish-facing online gaming business.

Headlong Ltd was under Entain’s ownership from 2011 to 2017, when it was sold. Entain refuted claims that it had continued to benefit from Headlong Ltd after the sale.

In July 2020, Entain – then GVC – confirmed that HMRC was expanding its investigation to cover “potential corporate offending”. This included section 7 of the Bribery Act 2010.

It wasn’t until May 2023 that Entain confirmed that it was working to resolve the probe. At the time, Entain also warned that it might face a “substantial” penalty from HMRC.

iGB has reached out to Entain for comment.

Following the resolution of the DPA in December, Entain released a statement confirming that it had reviewed its anti-bribery policies.

“This is the final step in a process that has hung over our business since HMRC launched its investigation into a business that was sold by a former management team six years ago,” said Barry Gibson, then-chairman of Entain.

“We have cooperated extensively and proactively at every stage of the process which, I am pleased to say, has been recognised by the court. Entain has now fundamentally and profoundly changed.”