Owner of UK national lottery operator to sever ties with Gazprom

Estimated read time 4 min read

The billionaire owner of Allwyn, the company that runs the national lottery, will sever his last remaining ties with Russia’s state-owned energy company Gazprom by the end of June, more than two years after winning the UK’s largest public sector contract.

The Czech tycoon Karel Komárek, who owns Allwyn via his Switzerland-based holding company KKCG, has faced scrutiny over his links to Russia since wresting control of the 10-year licence to operate the lottery from Camelot in 2022.

Questions from MPs have focused chiefly on KKCG’s Czech business MND, which in turn owns Moravia Gas Storage (MGS), housing the Dambořice underground gas storage facility in the Czech Republic.

Until earlier this year, MGS was a 50/50 partnership with Gazprom, which is state owned and controlled. Gazprom is not sanctioned in the UK but many of its executives are.

In June 2022, months after the full-scale invasion of Ukraine and after Allwyn had been named “preferred bidder” for the £6.5bn lottery contract, Gambling Commission staff told MPs on the culture, media and sport select committee that they expected an announcement about plans to end the Gazprom relationship within “days”.

However, MND was unable to complete a plan to dilute the Russian energy company’s stake, by issuing new shares, until March this year.

Even after the dilution, Gazprom retained a stake of less than 3%.

MND has now agreed to buy Gazprom’s remaining 2.63% of the shares in the gas facility, with the deal already approved and due to complete by the end of June, according to a letter seen by the Guardian.

Iain Duncan Smith, the former Conservative leader who chairs a cross-party parliamentary group examining the gambling industry, said MPs had found it difficult to obtain information about Allwyn’s Russian links from the Gambling Commission.

“This matter has finally been resolved but it is highly questionable as to why it has taken so long and deeply concerning that it has been so difficult to just get transparent information about one of the UK’s largest public sector contracts.”

Komárek publicly condemned Vladimir Putin after the invasion of Ukraine, describing the war as “brutal” in an open letter published in March 2022, as the Gambling Commission was poised to decide whether to grant Allwyn a 10-year licence to operate the lottery.

But the lingering link to Gazprom has seen Komárek struggle to fend off concerns about business ties to Russia.

A spokesperson for KKCG said it was “pleased to confirm that its subsidiary MND will acquire the remaining 3% of shares in Moravia Gas Storage (MGS), previously owned by Gazprom Export. Following a decision taken at the MGS general meeting, MND will become 100% shareholder in MGS by the end of June 2024.

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“The 50/50 MGS joint venture was established in 2013. In the immediate aftermath of Russia’s 2022 invasion of Ukraine, MND worked in partnership with the Czech state to prevent a strategic national energy asset – MGS holds roughly 12% of the Czech Republic’s natural gas – from coming under Russian control.

“This has been achieved after passing through a number of necessary legal and regulatory processes.”

Earlier this year, the Guardian revealed that Allwyn’s parent company was borrowing millionsfrom state-owned banks VTB and Sberbank at the time it won the UK lottery contract, although there is no evidence to indicate the loans were used to finance the bid for the lottery directly.

The Gambling Commission has previously said that it vetted all applicants for the national lottery licence through the government’s UK Security Vetting service.

The regulator said it was satisfied that Allwyn was not in business with any sanctioned entities and that any Russian interests had no bearing on the lottery.

Source: theguardian.com

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