SportPesa CEO Ronald Karauri (centre) and other members of the Association of Gaming Operators-Kenya during a media briefing on the 35 per cent tax levied on betting companies at the Intercontinental Hotel in Nairobi on June 23, 2017.
Business
Premium
The continuing battle for the SportPesa brand
What you need to know:
- Pevans East Africa lost its licence to operate in Kenya and that meant that the cash cow was running on empty.
- The Kenyan shareholders had used more that Sh40 billion, within five years, to promote the brand locally and internationally.
As the Kenya Revenue Authority digs in to demand more than Sh92 billion from SportPesa, the battle for the multi-billion shilling brand name is taking a toll on the shareholders’ pride as their global associates starts to flee.
Beneath the bid by SportPesa CEO Ronald Karauri to cheekily take over the brand name through his new entity, Milestone Games Limited, is a series of gambles that reveal the intrigues that took place behind the scenes and which have now seen a series of resignations from service providers.
Two weeks ago, Sportpesa Global Holdings Limited, which is registered in the UK, received a letter from their company secretary, Ince GD Corporate Services Limited, notifying them that they had terminated their service.
That means that companies are starting to shy away from SportPesa at a time it is facing global scrutiny over its billions bilked from the Kenyan enterprise, and in the hands of Pevans East Africa Limited. Before that, Deloitte had also quit as auditors.
On December 2, 2020, Equiom, the registered agent of the SportPesa Holding Limited, a shell company registered in the Isle of Man, wrote to Adam Beighton, the 45-year-old director who introduced the company to the tax haven, notifying him of their intention to quit as agents. That has now left both companies without an administrator who would ensures that all regulatory and mandatory documents are timely filed.
Beighton has for years been the face of SportPesa within the island, with an office in Ridgeway Street, Douglas. From here, and with the millions of dollars flowing from Kenya, they sponsored the high profile events including the F1 Simulator at the Isle of Man Motor Museum. Beighton had apparently met the SportPesa team in Berlin and, as he said later, they were looking to find themselves a hub for online gambling — spoilt for choice on which tax haven they can hide their loot. There were four suggestions: Isle of Man, the Channel Islands or Malta, or Gibraltar.
Regulatory hub
“They were in the process of finding a home that was the best place for them. So I brought them over to the Isle of Man. And we set them up as a business over here and we now have our own regulatory hub here in the island,” he told IOM Today, an Isle of Man newspaper. They also had an office in the Liver Building in Liverpool.
Back in Nairobi, and under pressure from his family, another director, Mr Wilson Karungaru, resigned as a director of Milestone Limited. A former Central Bank of Kenya employee, Mr Karungaru had been out of the limelight until he put his savings into the gambling industry. Soon, he was arrested for running an unlicensed betting platform. In his letter dated December 7, 2020, Mr Karungaru said that, after consulting his family and seeking legal counsel, “I would like to relinquish my shares in consideration of an agreeable financial settlement.”
His letter was not surprising and came four weeks after his November appearance in court where he was charged with operating a betting firm without a licence. He had apparently found himself trapped between shareholder fights over the future of the SportPesa trademark. While SportPesa Global Holdings was the parent company of SportPesa (UK), SportPesa (Italy), SportPesa (Tanzania) and SportPesa (South Africa), these entities could not match Pevans East Africa Limited whose SportPesa Kenya brand was contributing 97 percent of all the global revenue.
The Kenyan shareholders had used more that Sh40 billion, within five years, to promote the brand locally and internationally. This was what worried the denizens of Harambee House — and it became a subject at National Security meetings chaired by President Kenyatta.
Soon, Pevans East Africa lost its licence to operate in Kenya and that meant that the cash cow was running on empty. A meeting, attended by the Bulgarians, was then called in London and since the trademark Sportpesa was registered at the international registry at the World Intellectual Property Organisation (WIPO) under Pevans East Africa, a plot was hatched to keep the business alive. That is when the deed of transfer was done behind the backs of some directors.
Trade mark
After Interior Cabinet Secretary Fred Matiang’i told a press conference that Pevans would not resume business. Mr Karauri and his legal officer, Robert Macharia, sent a letter dated September 9, 2020 to the registrar of trademarks notifying him that SportPesa Global Holdings Limited, the UK entity, had taken over the SportPesa trademark.
“At the time of assignment, was the trademark used in a business in the goods or services which the trade mark relates?” was one of the questions. They answered “yes” which was a misrepresentation since by this time; their license had been withdrawn by Betting Control and Licensing Board (BCLB).
Another anomaly in the document was that it gave the address of SportPesa Global as First Floor, Jubilee Buildings Victoria Street, Isle of Man. But this was actually the address of SportPesa Holdings, which was a different legal entity. Despite that, on September 14, 2020, the Registrar of Trade Marks in Nairobi assigned the Trademark Sportpesa to Sportpesa Global Holdings Limited, and its address was given as Gordon Dadds Corporate Services situated on 2 Leman Street, London separate from the one in the original letter of notification.
When Karauri tweeted that SportPesa is back, he had just tested the waters — and made a mistake. In a letter dated Friday October 30, 2020, he was told by the BCLB chairman, Mr Cyrus Maina, that Milestone Games was only authorised to use ‘Milestone Bet’ as its trading name and that Sportpesa belongs to Pevans East Africa Limited. On the same day, he had told BCLB that Milestone had acquired SportPesa trademark from SportPesa Global Holdings.
But by that time, Milestone had started trading using the SportPesa shortcodes and Maina was under pressure to stop the betting. Then, Mr Maina received a threat from Pevans East Africa which said it no longer owns Sportpesa trade name and the BCLB should retract and withdraw its statement.
He didn’t. And now, the fight for the SportPesa might be escalating to new levels.
