GVC Holdings has announced that Her Majesty’s Revenue and Customs (HMRC), the UK’s tax agency, is investigating the company relating to “potential corporate offending” by a subsidiary that was involved in Turkey.
The HMRC informed GVC on July 20 that investigation is widening in scope after originally launching in November 2019. The tax authority is looking for any evidence of wrongdoing by a yet-to-be-identified “entity or entities” within the GVC group.
GVC is unaware of which subsidiary or subsidiaries could be involved.
When the original investigation was revealed last year, GVC believed that some of its former third-party suppliers were being looked into with regards to payment processing for Turkish online gambling. It did not believe that any GVC entity was subject to investigation at the time. GVC is unaware of which subsidiary or subsidiaries could be involved.
Focus of the investigation
The only details HMRC gave GVC regarding the investigation were that it relates to Section 7 of the 2010 Bribery Act, which encompasses corporate entities failing to prevent bribery.
GVC said it is “disappointed” in the lack of information it has been given by HMRC about exactly what is being examined. A GVC statement said: “In the meantime, the company continues to co-operate fully with HMRC regarding the provision of information.”
By noon on Tuesday, GVC Holdings’ share price had fallen by more than 13%. This news comes just a week after CEO Kenneth Alexander announced that he was stepping down after 13 years.
The GVC division that focused on the Turkish market was Headlong Limited. It was sold back in November 2017 to ROPSO Malta Limited in a deal that was related to performance, with the potential earn-out reaching €150m ($171.7m). These would have been monthly payments over a five-year period.
After GVC successfully agreed to acquire Ladbrokes and Coral in December 2017, it announced the following February that it would be waiving the earn-out for its Turkish business.
GVC said that it did this to avoid any regulatory issues that would delay the completion of its Ladbrokes Coral acquisition, worth £4bn ($5.1bn). The Sunday Times raised questions over the divestment of GVC’s Turkish operations in a July 2019 report.