The costly fallout of Entain’s £600m settlement with HMRC due to the bribery investigation of its former business in Turkey has escalated following legal action from former executives.
Former Chief Executive Kenny Alexander and Chair Lee Feldman launched legal action last week, suing Entain and its law firm Addleshaw Goddard and accusing them of sharing ‘privileged information’ with investigators during the Turkish bribery case that the operator faced in 2019.
The former Entain employees are seeking a court order in hopes of discovering what information was shared with prosecutors during the Turkish bribery case, which saw the firm receive a £585m penalty.
Turkish case breakdown
Dating back to 2019, the case in Turkey saw GVC Holdings – Entain’s former branding – accused of benefitting from an online betting and gaming business that it had previously owned but divested two years prior.
HMRC launched an investigation into Entain after Ropso Malta Limited had acquired the operator’s Turkish business in 2017 while the group was found to still be profiting from it in 2019.
Following the investigation into Entain’s ‘potential corporate offending’ and breaches of Section 7 of the Bribery Act 2010, the operator reached a voluntary Deferred Prosecution Agreement with the Crown Protection Service (CPS) in November 2023.
This led to the operator agreeing to pay £585m as a financial penalty, plus disgorgement of profits, a £20m donation to charity and £10m in CPS and HMRC expenses.
Booking over £600m in legal costs related to the deposition, Entain was forced to declare an operating loss of £900m for FY2023, as investors demanded that the company enter a strategic transformation in 2024.
Negotiating the settlement, former Chair Barry Gibson cited that bribery infringements were related to a former business sold under the tenure of Alexander and Feldman.
Gibson noted that Entain had “fundamentally changed as a business”, in which HMRC had deemed it helpful and reliable in assisting its investigation.
Alexander and Feldman’s claim
Alexander was CEO of Entain between 2007 and 2020, making him a key figure in the Turkish bribery case. In the former CEO’s joint legal claim with Feldman, the pair have asked that information given to Entain during the Turkey case ought to be made available to them.
The pair claim that as they were both clients of Addleshaw Goddard during the case, any information the law firm gave to Entain should also be made available to them, while also seeking other information on legal advice given to Entain throughout the procedure.
The legal claim stated: “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.”
Speaking to the Financial Times, another former Entain employee provided comment on the case in support of Alexander and Feldman, claiming they relied on legal advice given by Entain’s law firm throughout the procedure.
They stated: “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 has responded to the legal claim by suggesting that it is “without merit” and that it will “contest it robustly”, while Addleshaw Goddard said it was “unable to comment due to the client confidentiality obligations we are subject to”.
