GVC Holdings Denies Reports HMRC’s Tax Investigation Is Linked to Wirecard Scandal
One of the world’s biggest gambling firms, GVC Holdings, is embroiled in a potentially massive tax scandal with the UK government’s tax collection arm HMRC.
Although the specific details of the investigation into the Ladbrokes-Coral owners have not yet been made public by Her Majesty’s Revenue and Customs, many investors and journalists have speculated that it could be linked to the collapse and subsequent fraud inquiry around the German payment provider Wirecard that we reported on two weeks ago.
GVC previously owned Kalixa Payments, which it purchased as part of its deal to buy BWin in 2015. Kalixa was then offloaded to Senjō Group Pte Ltd, and nothing much was heard about the deal.
However, Senjō Group is now being investigated by Singaporean authorities as one of the payment operators connected to the Wirecard scandal.
To top it all off, GVC’s CEO, Kenny Alexander, abruptly resigned two weeks ago—just a day before the initial HMRC announcement.
GVC has released an official statement on the matter. They deny any link between this HMRC investigation and the “payment services providers mentioned” in the unverified Times newspaper report that came out last week.
Widening the Scope
The press and investor speculation comes off the back of a 9% share fall for GVC over the past few weeks.
It all began with an announcement from HMRC two weeks ago. It revealed that it was investigating third-party payment providers that worked with Headlong Limited, the Turkish arm of GVC holdings.
GVC sold that Turkish arm of its business in 2017 as part of the agreement with regulators regarding its merger with Ladbrokes Coral.
This investigation was quietly plodding along and mostly overshadowed by the Wirecard mystery. However, HMRC loudly announced last week that it would be “widening the scope of the inquiry to include potential corporate offending.”
GVC responded that it was “disappointed by the lack of clarity provided by HMRC as to the scope of its investigation.”
However, the company should be getting used to such pressures, as this isn’t the first time the sale of its Turkish arm has come under scrutiny.
In 2018, investigative journalists revealed that not only was Headlong Limited sold for zero percent of its previously estimated $168 million value, but the recipient of the free deal, Rospo Malta, was owned by a long-time friend of GVC CEO Kenny Alexander.
Rospo Malta owner Ron Watts has known Mr. Alexander for nearly 20 years, according to Times journalists. They even own a stud horse farm together in Mr. Alexander’s native Scotland, which is a matter of public record.
Nevada Grilled
Those are some sketchy details, but the issue goes deeper.
The Turkish division of GVC was an illegal operator. It offered services targeted towards Turkish players despite gambling being illegal in the country.
When GVC applied for a license in the newly legal online market in the state of Nevada, USA, Gaming Control Board members grilled Mr. Alexander relentlessly on the issue.
The interview was so intense that many questioned whether GVC would get a license afterward. In the end, the company obtained the license on a two-year review deal.
However, lawmakers in the US state were not happy about the Turkish deal.
They even publicly accused former GVC employees of siphoning off company money to their own accounts while the company stood by and did nothing.
The operation was described as “badly overseen” and engaging in “active concealment” of its finances.
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