Thread by @mmnjug

Drama.on SportPesa 🧵 no.2:

With the billions flowing into @SportPesa, Pevans East Africa Ltd, the cash cow of the Nikolov empire, embarked on an expansion phase. It opened companies or offices in Tanzania, SA, the Isle of Man, the UK, the Canary Islands, Russia and Italy.

But it is the local subsidiary, Bradley, that shows that despite Nikolov’s high perch, the notoriety of his past hung on him like white on rice.

Bradley, whose main brand was the @pambazukake lottery, was launched in May 2016 and, by the time it closed shop slightly less than two years later, had accumulated losses of more than Sh1.5B, which were written off in the books of Pevans in its 2018 accounts.

An insider, however, says that the main reason for its closure was unethical practices.

For example, the spouse or fiancée of one of the employees in the IT department, which was the heart of its operations, somehow on November 1, 2017 won a lottery of Sh20 million, making her one of the first people to win.

However, CEO Paul Kinuthia, on learning of this win, got suspicious of the coincidence that the lover of a senior staff in the IT department was the winner and had the employee immediately arrested.

However, before charging him in court, the company pressured Kinuthia to release the employee to avert a hostile reporting crisis. The money was paid.

In July 2017, a man named John Friendrich claimed that he had won the Jackpot of Sh109M and the media went to town with the story. When the money was not forthcoming, he sued SportPesa and Bradley. It is not clear what became of the case.

Link: bit.ly/3oKRhl4

After Bradley was hurriedly shut down to avoid any more liability on the directors, it appears that top executives at SportPesa forgot there were funds in its accounts, until two cases came up against the company.

Bradley’s accounts, it appeared, were now being used for other purposes, including wiring money to entities abroad.

Now, the Bulgarians at @SportPesa are generous people. Suggesting they shipped out all the billions they minted in Kenya would be unfair. But their generosity was not for everyone.

Nikolov, who had worked himself up from a croupier in a casino in the Bulgarian capital of Sofia, to a billionaire in Kenya, understood just what money in the right pockets could do.

If he failed to get his way through the front door, he would open his purse strings and shower whoever mattered with kindness, and the back door would be swung open for him.

On his website he lists one of his successes as working closely with the disadvantaged and boasts employing 10 per cent of his workforce at First Lotto Ltd from the disabled community.

Away from charity, however, the deep pockets of the man wanted in Sofia were felt by the right people in the right places in Nairobi. Politicians. CSs. Principal Secretaries. Key figures in Parliamentary leadership committees. A section of the State Law Office. Name it.

There was also enough money to get lawyers who would get judges to grant them favourable injunctions whenever it got to that.

He, however, ran out of luck when the government woke up one day and decided to tighten its controls on the betting industry. @SportPesa protested and threatened to close shop, citing an unfavourable operating environment.

The government stayed put, and the fortunes of the betting giant that had taken over the country and was splashing billions of shillings in big football and motoring sports abroad started falling.

Nikolov, sensing defeat, decided to sell the perception that he was connected to the First Family.

Whether he was or wasn’t remains unknown, but what we know is that, in the middle of the crackdown against betting companies, he transferred one share of the empire he had built to Peter Kihanya, a cousin of President Uhuru Kenyatta, hoping to get some reprieve by association.

The reprieve did not come, and his decision only generated more friction in the board. Nikolov defended it through a series of emails, but it was clear that no name-dropping would get him back his licence to operate in Kenya.

This year, as @SportPesa prepared to come back through Milestones Games, he went for James Muigai Ngengi, a nephew of Kenyattas, who reportedly owned a significant stake in Milestones before the firm was handed over to SportPesa CEO Ronald Karauri & allies. This, too, didn't work

But more drama had happened behind the scenes before the entry of Milestones. Of particular interest were happenings in Parliament around the same time the government cracked down on foreigners in the betting industry.

.@Senate_KE's Justice and Legal Affairs Committee dropped everything before it and hurriedly called a meeting during which it faulted the Ministry of Interior and Coordination of National Government for frustrating foreign investors.

The legislators lamented that the government was unfairly treating owners of Nanovas K Limited, trading as @betPawaKE, and @SportPesa, among others

But it's @NAssemblyKE dept committee on Finance and National Planning that was the boldest. Somebody in the Finance Committee secretly sneaked in a last-minute amendment into Finance Bill that effectively dropped a 20% excise duty on bets staked, and caught Treasury CS unawares

.@NationAfrica can now reveal that an obscure group identified only by a non-existent URL (shade.co.ke) was the secret architect of the scheme to tinker with the betting taxes.

The committee said it had received submissions from Shade on May 15, around the same time the country was focussed on combating the Covid-19 pandemic.

The taxed had “made many betting firms cash-strapped, hence cutting down on their sponsorships to local sports clubs”, the group argued in its submissions to Parliament. The Finance Bill was then quickly forwarded to President Kenyatta, who, pressed for time, signed it.

.@NationAfrica exposed the scheme, forcing Treasury CS Yatani to disown the amendment at a press conference where he stood shoulder-to-shoulder with a furious Interior CS Matiang’i.

Yatani promised to reverse the law in six months while Matiang’i condemned Parliament for working against the government in cleaning up the sector.

How the amendment escaped the hawk-eyed bureaucrats at @KeTreasury and the office of the President remains as puzzling as it is intriguing.

Shortly afterwards, the Finance Committee’s chairman Joseph Limo was dropped. It is not clear to date whether this was linked to the sneaked-in amendment. Reversing the tax law would require at least six months, which expire at the end of this month.

Shade, the obscure group, had also asked for more amendments, which included a reduction in withholding tax on players’ winnings from 20 per cent to 10 per cent and exempting the betting industry from digital services tax. These did not see the light of day.

The betting companies fight against GoK and how they literally poured money into the pockets of the right people in Nairobi to have their way bit.ly/3oKRhl4