What were the odds on a swift exit and a tax probe?

Boss of Lad­brokes owner times exit well as HMRC widens its in­ves­ti­ga­tion just three days af­ter his de­par­ture ‘Not for the first time at GVC, there are more ques­tions than an­swers’

The Daily Telegraph - Business - - Business Comment - Ben Mar­low

You can get some great odds at Lad­brokes right now: 3/1 on the favourite Bal Mal to win today’s 13.05 race at Chep­stow; 4/1 on Don­ald Trump to of­fi­cially par­don him­self dur­ing his first term; and 500/1 on Louis Th­er­oux to be the next James Bond. But what odds would you have got on par­ent com­pany GVC re­veal­ing it is the sub­ject of an HMRC in­ves­ti­ga­tion just three days af­ter the sud­den de­par­ture of long-serv­ing jockey Kenny Alexan­der?

The com­pany said it was co-op­er­at­ing, so why did Alexan­der hang up his jodh­purs be­fore the in­quiry was an­nounced to the stock mar­ket?

Af­ter all, the tax­man’s probe cen­tres on a deal that its long-serv­ing chief ex­ec­u­tive was very much at the heart of, the one in 2017 where the bookie’s Turk­ish arm was gifted to a trio that in­cluded a friend he owned a stud farm in Ayr­shire with. Not only that but GVC didn’t bother to dis­close the re­la­tion­ship to in­vestors.

Not for­get­ting of course that it was only last year that Alexan­der had said he would only leave if he was run over by a bus, which he wasn’t.

No, ap­par­ently lock­down prompted a change of heart and he wanted to spend more time with his fam­ily, so keen in fact that he left the very next day, even though pre­sum­ably he’d spent the last few months stuck in­doors with the rest of the Alexan­der clan.

So, it’s all a huge co­in­ci­dence, and a very con­ve­nient one at that. The com­pany says HMRC first started dig­ging into the Turk­ish sale back in Novem­ber last year but at the time it “un­der­stood” the fo­cus of the in­ves­ti­ga­tion was “for­mer third party sup­pli­ers” and “no GVC en­tity” was be­ing looked at.

Pre­sum­ably that ex­plains why GVC chose not to tell the mar­ket at the time. It’s com­ing clean now be­cause the tax au­thor­i­ties have ex­panded their in­ves­ti­ga­tion to ex­am­ine “po­ten­tial cor­po­rate of­fend­ing”, a de­ci­sion that the com­pany was only no­ti­fied of on Mon­day. Be­yond that, HMRC is giv­ing lit­tle else away, prompt­ing GVC to com­plain that it is “dis­ap­pointed by the lack of clar­ity”, an assess­ment that share­hold­ers seem to agree with. If there’s one thing in­vestors hate, it’s un­cer­tainty and this an­nounce­ment cre­ates plenty of that, which prob­a­bly ex­plains why its share price tum­bled 7pc on the news. Pass­ing men­tion of sec­tion 7 of the Bribery Act won’t have helped ei­ther. Not for the first time at GVC, there are more ques­tions than an­swers.

Robin­hood de­lays its shot at UK

The de­ci­sion of stock-trad­ing app Robin­hood to post­pone its UK launch is a blow for a fledg­ling com­pany with such a worth­while am­bi­tion.

Founders Baiju Bhatt and Vladimir Tenev, a pair of Stan­ford Univer­sity grad­u­ates, say their goal is “democratis­ing fi­nance for all”.

Even the name is emo­tive, the sug­ges­tion be­ing that the “poor” are be­ing handed the keys to a world dom­i­nated by the wealthy.

There is much to like about plat­forms like this. One of the big­gest ben­e­fits of new tech­nol­ogy is that fi­nance has be­come much more ac­ces­si­ble.

Apps like Robin­hood have made it both cheaper and eas­ier for the man on the street to dab­ble in the stock mar­ket re­gard­less of ex­pe­ri­ence.

But there is a dark side too. The typ­i­cal cus­tomer is young – the av­er­age age is just 31. Bravado and naivety are in plen­ti­ful sup­ply, which means steep losses are com­mon.

The app’s strengths are also its weak­nesses. Buy­ing and sell­ing stocks is sim­ple and the ex­pe­ri­ence is de­lib­er­ately dumbed down. Users re­ceive emoji no­ti­fi­ca­tions cre­at­ing the feel­ing of be­ing part of a game rather than play­ing with real money. Crit­ics say it is no dif­fer­ent to on­line gam­bling.

In­vestors can be­come con­fused about the true state of their fi­nan­cial po­si­tion. In June, 20-yearold stu­dent Alex Kearns killed him­self, in the mis­taken be­lief that he had just lost $730,000, (£572,000) when in fact he was $16,000 in the black. The com­pany says it is “re­fo­cus­ing ef­forts on strength­en­ing our core busi­ness in the US”. If that means strength­en­ing its sys­tems and beef­ing up on­line checks and bal­ances to make cus­tomers more aware of the risks in­volved, then that seems like a small price to pay for democ­racy.

New nor­mal but same old menu

McDon­ald’s is on the verge of re­open­ing 700 restau­rants so we can all stuff our faces on dou­ble cheese­burg­ers and those se­ri­ously un­der­rated moz­zarella dip­pers. Coca-Cola says de­mand is re­cov­er­ing af­ter a tough quar­ter.

Mean­while, UK house­holds spent an ex­tra £24m on tea and cof­fee and an ad­di­tional £19m on bis­cuits in the last four weeks. For­get the new nor­mal, this is the re­turn of the old nor­mal. What a re­lief.

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