Between September 21 and 22, 2019, President Uhuru Kenyatta was attending a summit in Singapore and after the two-day meeting held at the Shangri-La Hotel, he was driven to the Formula 1 Singapore Grand Prix 2019 which was coinciding with his trip.
Kenyatta loves grand prix races.
Those accompanying the president at the Marina Bay Street Circuit recall he was in a jovial mood until the Silverstone-based UK team, well-known as BWT Racing Point F1 Team, showed up. For that season, it had been rebranded “SportPesa Racing Point F1 Team”, acknowledging SportPesa as the lead sponsor.
“Is this our money?” He posed.
Extravagant bookmaker
It was this event that would finally sink the fate of SportPesa, showcasing it as an extravagant bookmaker, and a tax dodger.
Back in Nairobi, President Kenyatta wanted to see action taken against the betting companies and their tax arrears. His earlier attempts to have SportPesa and other betting companies pay the taxes had been ignored. For instance, the July 2017 law, which had slapped a 30 per cent tax on gross gaming revenue, had been ignored – and yet, SportPesa was still sponsoring multi-million dollar projects abroad.
Kenyan board made redundant
Inside SportPesa, the Kenyan board had been turned redundant and the now deported Bulgarians had taken over the decision making process.
Investor Paul Ndung’u, a known friend of President Kenyatta and Jubilee fundraiser, started complaining about SportPesa’s money transfers and in December 2019, frustrated, he quit as its chairman. During Anne Waiguru’s wedding, both Ndung’u and Uhuru shared the same table – and Uhuru insisted, and in public, that SportPesa had to pay up the tax arrears.
Major shareholder
The deportation of the Bulgarians meant that they would lose control of Pevan East Africa Limited which was generating 97 per cent of all the SportPesa revenue. Besides Pevan East Africa Limited, which owned the SportPesa trademark, several subsidiaries had later on been registered abroad under SportPesa Global Holdings Limited; in UK, Italy, South Africa, Russia and Tanzania. Ndung’u was a major shareholder with 17 per cent.
Records indicate that shortly after the revocation of the licence, a non-executive director, Assenath Maina, demanded for a forensic audit of the company since 2015 starting with management reports, which had never been tabled at the board.
By then, the Kenya Revenue Authority had claimed that their preliminary investigations had established that SportPesa was involved in an intricate “web of tax evasion, money laundering syndicates and violation of tax laws”. More so, President Kenyatta was personally following them to pay.
Funds transfer
“The management report indicated that within three years Pevans East Africa Ltd (SportPesa) has transferred over $250 million (Sh25 billion) to various offshore accounts in Isle of Man, Dubai and Las Palmas/Canary Islands and the UK,” Ndung’u would later reveal in a press statement.
He also requested Central Bank, KRA and BCLB and Financial Reporting Centre “to assist in establishing where the funds were ultimately destined”.
After the deportation of the Bulgarians, records now indicate, their next plot was on how to sustain the Kenyan business and the SportPesa trademark, which was in the hands of Pevan East Africa, wholly controlled by Kenyan shareholders.
On June 2, 2020, a secret meeting was held without the knowledge of majority of Kenyan shareholders in which Pevans East Africa was to enter into a deed of assignment with the UK-registered SportPesa Global Holdings Limited. Only Ndung’u is a director, but he was not invited into this meeting.
For only £100,000, SportPesa Global Holdings was to acquire the SportPesa trademark from Pevans East Africa. Under clause 22, the deed indicated that no money would change hands and that “any payments to be made to (SportPesa Global) shall be set off against any amounts owed by Pevans…”
Website blocked
In Nairobi, SportPesa’s website had been blocked and the Bulgarians were desperate to seek a way out.
In a bid to beat the system, and after the Communications Authority of Kenya wrote a technical report dated July 16, 2020 to the National Kenya Computer Incident Response Team (KE-CIRT) informing them that the domain name Sportpesa.co.ke was operating illegally, Pevans registered another domain name ke.sportpesa.com which, apparently, is still offering online gambling services despite the government’s insistence that it had blocked it.
While the deed of assignment had been signed in June 2020, it was only presented in September 14, 2020. Despite the entire hullabaloo generated over SportPesa’s mischief, a certificate was issued on September 15, 2020 meaning that the trademark had now changed hands. It was a coup against the shareholders – and the most valuable brand name was now gone.
In Form TM1 SportPesa Global Holdings Limited appointed Robert Macharia as its trademark agent, yet, he was also a director, shareholder and legal officer for Pevans. Karauri was also a shareholder and CEO for Pevans and the bid to take over the most valuable asset of Pevans East Africa had started in earnest.
The form was dated September 9, 2020 and a stamp duty paid before it was filed with the Kenya Industrial Property, the local trademarks custodian.
The next plot was to happen in the corridors of Betting Control and Licensing Board (BCLB) – the playground of the gambling fraternity.
Ever since he was picked to head the Betting Licensing and Control Board, former provincial commissioner Cyrus Maina had been out of the limelight. That was until a notification arrived that a new company, Milestone Games Limited, had acquired the SportPesa trademark from SportPesa Global Holdings.
It is now known that shortly after SportPesa Global Holdings managed to register its newly acquired trademark with Kenya Industrial Property, Milestone Games Limited on September 17, 2020 paid Sh200,000 to BCLB to carry out due diligence on its shareholders in order to get a betting licence. The shareholders were Nob Five Limited and Wilson Karungaru. Nob Five was owned by John Nderitu, Jackline Kung’u and Joseph Mutua.
The next move was to have SportPesa Global Holding pass on the SportPesa trading rights to Milestone, which was now in Karauri’s control. On October 30, Milestone wrote to Cyrus Maina saying that they would start trading as SportPesa and within two hours of that letter, the trading resumed without BCLB’s approval.
Karauri’s Twitter post
That evening, Karauri wrote on his Twitter handle: “SportPesa is back under a new BCLB license holder ke.sportspesa.com. #sportPesaIsBack”.
It was the first time that other shareholders were learning of these changes.
“Being a director of SportPesa Global Holdings at what board meeting was the use of SportPesa brand approved by the Board or was it approved only at a board attended by Ms Kalina Karadzhova and Mr Ivalyo Bozoukov only without Director Paul Ndung’u?” posed Mr Ndung’u in a letter sent to Kalina.
“In the light of the foregoing, the Board is of the opinion that Milestone Games Limited will create confusion to the general public to which trade name the company wishes to adopt,” said Maina, while prohibiting the company from using the SportPesa domain names and short codes 29050 and 79079.
The show cause meeting was set for December 3, 2020 at the BCLB boardroom. Those summoned included Karauri, Wilson Ngatia and Robert Macharia and after the meeting, BCLB cancelled Milestones licence. The other shareholder, Jackline Kung’u sent an apology.
Court case
The meeting had taken place at a time Milestone had filed a case in court seeking orders to stop BCLB from cancelling its licence on the strength that they had legally acquired the SportPesa trademark. Documents filed in court indicate that the court was shown a World Intellectual Property Organisation (Wipo) registration with SportPesa Holding Limited of Isle of Man as the owner of the SportPesa trademark and not SportPesa Global Holding.
Meanwhile, Milestone got stay orders on the cancelation of their licence but there is fear that they are still using Pevans offices and employees to operate.
“Why would Milestone be allowed to use offices of Pevans East Africa, furniture, computers, and infrastructure?” Ndung’u protested in a letter to BCLB.
Also, and in a new twist, Pevan’s lawyer Robert Macharia has threatened to sue BCLB for “claiming” that Pevans owns the SportPesa trademark as the twists and turns deepen.
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