Date: 11.03.2024

by Kajetan Sawicz

Financial Ties Unveiled: National Lottery Operator’s Loans from Kremlin Banks

In light of recent revelations, Allwyn, the newly appointed operator of the UK National Lottery, was financed by Kremlin-affiliated banks. This information casts new light on the ethical and transparent management of public contracts and the complex geopolitical dependencies influencing significant agreements.

National Lottery’s Financial Backing

In a startling revelation, the entity steering the helm of the UK’s National Lottery, Allwyn, was found to have secured substantial financial backing from banks associated with the Kremlin during its bid for the UK’s most significant public-sector contract. The Guardian’s investigative reporting has uncovered that VTB and Sberbank, Russia’s leading financial institutions, were integral to a syndicate that extended a loan up to €640m to Allwyn back in 2020, a critical juncture two years prior to Allwyn being designated as the “preferred bidder” for the lucrative £6.5bn lottery contract.

Despite Allwyn settling the loan portion linked to the Russian banks in the wake of the Ukrainian invasion, it’s evident that these funds played a pivotal role in bolstering the group’s position during the intensive lottery bidding process. Notably, the financial arrangements with Sberbank and VTB’s European branches persisted nearly a month post their inclusion under UK sanctions, only to be repaid in late March 2022. This repayment timeline coincided closely with the Gambling Commission’s selection of Allwyn over incumbent Camelot and Richard Desmond’s bid.

While there are no indications of sanctions violations or Russian influence over the bidding process, the involvement of Russian loans does not directly tie to the financing of the lottery bid. Allwyn, under Czech billionaire Karel Komárek’s ownership, clarified its proactive communication with the Gambling Commission regarding the loans and adherence to Treasury sanctions guidelines.

The disclosure of these loans has sparked significant concern among MPs, questioning the Gambling Commission’s transparency during select committee inquiries into Komárek’s Russian connections. Labour MP Clive Efford and Conservative MP Iain Duncan Smith have both voiced their unease over the nondisclosure of these financial ties, emphasizing the need for utmost transparency in public sector contracts of such magnitude.

Allwyn’s European Footprint and Funding Strategy

Allwyn’s financial strategy, encompassing loans from Sberbank and VTB, was aimed at supporting its broader European lottery and gambling ventures. Despite rebranding efforts and public denouncements of the Ukrainian invasion by Komárek, Allwyn has struggled to fully dissociate from its Russian financial ties, particularly given Komárek’s historical business engagements with Gazprom.

The revelation of these loans, coupled with the intense competition and substantial expenditures associated with the bidding process, underscores the complex financial and geopolitical landscapes within which the UK’s National Lottery operates.

Our Comment on the Article

The intricate web of financial arrangements unveiled in this investigation highlights not only the complexities inherent in securing and maintaining public-sector contracts but also the broader implications of geopolitical tensions on international business operations. As the Gambling Commission prepares for further scrutiny, the industry and its observers are reminded of the critical importance of transparency, due diligence, and ethical considerations in the stewardship of national institutions like the lottery. This case serves as a poignant reminder of the multifaceted challenges faced by entities operating at the intersection of commerce and public service in an increasingly interconnected world.