Date: 12.06.2024

by Adam Dworak

Legal Firm Claims Entain Failed to Inform Shareholders on Bribery Issues

Investors may seek over £100 million in compensation from Entain, the owner of Ladbrokes and Coral, due to allegations of failure to disclose significant issues related to bribery and corruption in its former Turkish operation. The legal firm Fox Williams leads this action, following a major financial settlement with HM Revenue and Customs (HMRC).

Background of the Issue

In December 2023, Entain agreed to pay nearly £600 million, one of the largest financial penalties ever imposed in the UK, after an investigation into alleged bribery. This investigation revealed serious misconduct in the company’s Turkish-facing online betting and gaming business, which Entain owned between 2011 and 2017.

Shares in Entain have nearly halved since the company disclosed in May 2023 that it anticipated a substantial penalty to settle with HMRC. This significant drop in share value has spurred investors to seek compensation, claiming they were not adequately informed about the brewing issues.

Entain had set aside £585 million for the investigation settlement, which was finalized in November 2023. This settlement included a financial penalty and a “disgorgement of profits,” where funds from illegal activities are surrendered. Additionally, the company agreed to make a £20 million charitable donation and contribute £10 million towards the costs incurred by HMRC and the Crown Prosecution Service.

Historical Context and HMRC Investigation

The investigation began in 2019, focusing on potential corporate offending by Entain’s Turkish operations, third-party suppliers, and former employees. Entain, formerly known as GVC, was accused of lacking proper procedures to prevent bribery within its business operations.

In July 2020, HMRC’s revelation of “potential corporate offending” by Ladbrokes’ former Turkish subsidiary caused Entain’s shares to fall by 12%. This significant drop highlighted the severe impact of the allegations on investor confidence.

Statements from Involved Parties

A spokesperson for Entain stated, “We are currently unaware of any action of this kind against the company, and have not received an issued claim. We would defend any such action robustly.” This indicates Entain’s readiness to contest any claims brought against it.

Andrew Hill, a partner and head of the securities litigation team at Fox Williams, emphasized the broader implications of the claim, stating: “This claim will offer institutional investors the opportunity to recover substantial losses but more importantly serve to improve transparency and governance within the UK’s gambling sector, reminding public companies that they need to take their disclosure obligations seriously.”

Similar Cases and Previous Experience

Hill is also leading a £100 million claim for investors in Boohoo, following reports in 2020 alleging worker mistreatment by its suppliers in Leicester. This claim arose after the company’s share price plummeted due to the negative publicity.

Boohoo responded to the claim, saying, “We have been made aware of a claim that is being brought by certain shareholders. The company strongly contests the allegations and will vigorously defend any claim.”

Hill has a track record of leading successful shareholder claims, including two against Tesco, which were settled out of court after the supermarket group admitted to overstating profits in 2014.