SportPesa targeted in Kenyan financial crime probe
Financial Reporting Centre to investigate offshore money laundering allegations made by former chair of holding company
SportPesa is set to be investigated by Kenya’s top financial watchdog over alleged money-laundering claims concerning KES30bn (£206m) in funds transferred from local accounts to offshore banks.
In its investigation, the Financial Reporting Centre (FRC) will aim to establish if these funds were transferred illegally to tax havens including the Isle of Man, the Canary Islands and Dubai over a three-year period.
The inquiry follows a bitter row between current and former shareholders in the business, which erupted after the sports betting operator attempted to relaunch its brand in the Kenyan market – a relaunch denied by the country’s Betting Control and Licensing Board (BCLB).
The BCLB ruled the SportPesa brand name could not be transferred from current owners Pevans East Africa to a second firm, Milestone Games.
Earlier this month, Pevans East Africa Limited shareholder and former chair Paul Wanderi Ndung’u attacked the relaunch, claiming he and other shareholders were not informed.
Ndung’u alleged SportPesa CEO Ronald Karauri and international shareholders had been running SportPesa without consulting the Pevans board while partaking in financial misconduct.
SportPesa responded to Ndung’u by threatening legal action, citing the “gravity and defamatory nature of the serious and utterly false allegations” and denied any wrongdoing.
However, these allegations appear to have struck a chord with the FRC, which will also investigate if SportPesa declared all sports betting revenue to the BCLB.
“The matter is of public interest, and we will investigate to establish if there was criminality in the movement of the billions offshore,” FRC director-general Saitoti Maika said.
SportPesa’s Kenyan operations imploded in 2019 when the Kenyan Revenue Agency (KRA) claimed the sports betting firm had only paid KES4bn in taxes during 2018, a claim which SportPesa strenuously denied.
SportPesa was stripped of its BCLB licence and ordered to pay the correct amount of taxes, which it contested.
After months of claim and counterclaim between the firm and Kenyan authorities, SportPesa ceased trading in Kenya in October 2019.
The introduction of a 20% turnover tax on all sports bets was also cited as a factor for the withdrawal.
In February, SportPesa saw sponsorship deals with Football Association Ireland and Everton FC terminated early after both groups cited the need for a more socially responsible sponsorship.
A spokesperson for SportPesa said “SportPesa is fully compliant with all legal and tax requirements in the jurisdictions in which we operate and always cooperates with requests from regulatory authorities.
“In addition, SportPesa has ongoing and regular working arrangements with leading auditing and tax advisory companies.
“We always act in full compliance with our company bylaws and local regulatory guidance, and we are very confident that all allegations will be quashed following the FRC investigation,” SportPesa added.