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An angry
president and
how the
SportPesa
takeover was
plotted
Monday, January 25, 2021

File | Nation Media Group

By John Kamau

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.

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“The President was furious,” recalls a member of the presidential

team.
“Is this our money?” He posed.

Extravagant bookmaker
It was this event that would nally sink the fate of SportPesa,
showcasing it as an extravagant bookmaker, and a tax dodger.
For SportPesa, the Singapore Circuit was jinxed – not only that the
President had seen where they had put their money – despite an
earlier warning – but that one of the SportPesa-backed Mercedes
AMG High Performance Powertrain driven by Sergio Perez had
retired with an oil leak. His team mate, Lance Stroll, nished at
number 13.
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.
While Ndung’u’s resignation revealed the in ghting within
SportPesa, more was to follow after the deportation of the
Bulgarians, who still had access to the billions of shillings in
separate bank accounts in Kenya. Like Dick Wathika, the chairman
who died while ghting to have his space restored, Ndung’u was
starting to realise that the gambling industry was not for the faint
hearted.

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.
The revocation of the Kenyan licence was bound to hurt. And it did.
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.
The push by Assenath Maina to have the management report
tabled came as a shocker to all the shareholders.

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…”
The persons behind this transfer were Kalina Karadzhova, a
director with no shares in SportPesa Global, Pevan’s CEO Ronald
Karauri and Nikolay Karadzhou (Kalina’s husband), whose address
is given as 17 Suppress Apartments, Douglas, Isle of Man. The other
signatory was Mwirigi Imungi, Pevan’s Finance Director.
Ms Kalina is a sister of Gene Grande, who was late Wathika’s friend
in Nairobi, while Ivalyo Bouzokov was the other director
representing Nikolov Guerasim – the other Bulgarian operative in
Nairobi. Why Ndung’u, who was a director, was not invited into
this takeover is not clear.

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 certi cate 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.
“There was neither AGM nor a board meeting to approve the
transfer,” Ndung’u would later claim. The aim of that transfer was to
allow SportPesa to continue trading.
In Form TM1 SportPesa Global Holdings Limited appointed Robert
Macharia as its trademark agent, yet, he was also a director,
shareholder and legal of cer 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 led 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 noti cation arrived that a new
company, Milestone Games Limited, had acquired the SportPesa
trademark from SportPesa Global Holdings.

Due diligence
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.
After vetting, the board gave Milestone a licence number
0000205; after all these were ordinary Kenyans – or so they
thought. But shortly after acquiring the licence, Nob Five
shareholding changed hands and a new company Selenium
Limited purchased majority shares. This company was owned by
SportPesa CEO, Ronald Karauri (400 shares) and Francis Kiarie
(300 shares). In turn, Nob Five Limited owned 9,950 shares of
Milestone Games Limited while Wilson Karungaru owned 50
shares.
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 rst 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.
Back in Nairobi, Maina wrote back saying that BCLB had only
authorised Milestone to use the trading name ‘Milestone Bet’ and
that SportPesa belongs to Pevans East Africa.
“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.
By this time, Maina had not known that he was actually dealing with
an out t controlled by SportPesa’s Karauri. It was in November
2020 that BCLB got wind of the changes and summoned the
Milestone directors to “show cause” why their licence should not be
cancelled.
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 led 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 led 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.
Whether employees of SportPesa had rights to transfer the
trademark without a full board approval is now a battle that is in
court. Within Wipo, the registered trademark is still under Pevans
East Africa and this will create a new nightmare as the court starts
to navigate through this tricky case.
Meanwhile, Milestone got stay orders on the cancelation of their
licence but there is fear that they are still using Pevans of ces and
employees to operate.
“Why would Milestone be allowed to use of ces 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.

Jkamau@ke.nationmedia.com

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