FRC Launches Investigation into SportPesa’s Money Transfers

Ever since Milestone Games attempted to restart the SportPesa sports betting brand in Kenya, the name which was once the icon of the country’s betting industry is now a subject of controversy and investigations, the latest one being from the Kenya’s financial crime authority over alleged money laundering.

Money Transfers of Interest

The Financial Reporting Centre (FRC) will look into SportPesa’s financial dealings over claims of company’s funds to the amount of KSH30 billion (£206 million) being transferred from local accounts to banks in offshore zones, among which The Isle of Man, The Canary Islands and Dubai. The financial watchdog will scrutinize whether the money transfers made over a period of 3 years were legal.

The FRC inquiry is coming after allegations from Pevans East Africa major shareholder and former SportPesa chair Paul Ndung’u who claimed the foreign shareholders of SportPesa ordered money transfers to various offshore accounts in several different countries. Ndung’u reacted to the information the rights for the most popular in the country sports betting brand were transferred away from its owner, Pevans East Africa.

“The matter is of public interest, and we will investigate to establish if there was criminality in the movement of the billions offshore.”

Saitoti Maika, Director-General, FRC

After the unsuccessful attempt from Milestone Games to re-launch the SportPesa brand, it became clear the gaming operator entered into a brand agreement with SportPesa Global Holdings, without shareholders at Pevans being informed the brand name was transferred to the UK business entity.

SportPesa’s Re-Launch Unsuccessful

The country’s Betting Control and Licensing Board (BCLB) ruled that the launch under the SportPesa brand was illegal as the operator Milestone Games applied for a license renewal under the trade name “Milestone Bet”. And besides, Pevans East Africa is the rightful owner of the brand rights, which Milestone Games acquired from an entity that does not have them.

Besides looking into the money transfers, the FRC will investigate whether all revenue from sports betting was declared by SportPesa to the BCLB. In 2019, the Kenyan Revenue Agency (KRA) claimed SportPesa underpaid in taxes for 2018, and was the reason for the BCLB to strip the sports betting operator of its license until the correct taxes are paid.

Consequently, SportPesa left the Kenyan market in October 2019, citing the introduction of the new 20% turnover tax as the reason for the withdrawal. Negative publicity was the reason for two sponsorship deals for the operator, with Football Association Ireland and Everton FC from the Premier League in England, to be terminated due to the need for both counterparties to have a more socially-responsible partner.