Entain Investors Pursue £100m Compensation in Turkish Corruption Scandal

A group of investors is preparing to file a claim against Entain, alleging that the company failed to inform them of historical offences committed in Turkey. On Wednesday, June 11, law firm Fox Williams announced its intention to recover over £100 million in compensation for Entain's institutional investors.

The claim, set to be filed by autumn 2024, relates to a Deferred Prosecution Agreement (DPA) that Entain finalized with the Crown Prosecution Service (CPS) in December 2023.

This DPA concerned bribery and corruption offences in Turkey. The initial terms of the DPA were outlined in August, requiring Entain to pay a financial penalty and disgorgement of profits amounting to £585 million (€694.2 million/$752.2 million). Additionally, Entain was ordered to make a charitable donation of £20 million and contribute £10 million towards CPS and HMRC costs.

Fox Williams stated that they anticipate the compensation claim to exceed £100 million (€118.3 million/$127.9 million). The claim is based on the assertion that Entain did not disclose the investigation to investors, breaching its disclosure obligations. The claim period covers from July 1, 2011, to December 31, 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,” said Fox Williams.

The law firm alleges that Entain violated Sections 90 and 90A of the Financial Services & Markets Act 2000, which pertain to compensation for losses 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."

The investigation by HMRC began in November 2019 when Entain Holdings UK Limited received an order requesting information about Headlong Ltd, its former Turkish-facing online gaming business. Entain owned Headlong Ltd from 2011 until it was sold in 2017 and denied any continued benefit from the business post-sale.

In July 2020, Entain, then known as GVC, confirmed that HMRC had expanded its investigation to cover "potential corporate offending," including section 7 of the Bribery Act 2010. By May 2023, Entain acknowledged it was working to resolve the probe and warned of a potential "substantial" penalty from HMRC.

Following the resolution of the DPA in December, Entain issued a statement affirming its review of 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."

By fLEXI tEAM