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Former Kenyan MP Accuses David Baazov of Fraud and Gambling Proceeds Misappropriation

Amaya founder and former CEO David Baazov lands in hot water, former Kenyan lawmaker comes forward with serious fraud accusations

A former Kenyan MP accused Amaya Gaming Group (now The Stars Group) and its founder, businessman David Baazov, of misappropriating billions of Kenyan shillings through NIC Bank accounts after the company entered the East African country in 2010.

Kennedy Nyagudi, a former MP representing the city of Kisumu, claimed Amaya had allegedly conspired with the above-mentioned bank to move abroad billions of Kenyan shillings that had been generated by the Canadian gambling giant’s local subsidiary.

Amaya formed its Kenyan subsidiary in 2010. Mr. Nyagudi said in an investigative documentary that aired on KTN News earlier this week that he held a 15% stake in the subsidiary and was listed as one of its Directors. Mr. Baazov reportedly owned the remaining 85% stake in Amaya’s Kenyan branch.

The company launched two products – the M-Lotto Sweepstakes and the Mega Mega Kwachua mamilii lottery – which quickly gained popularity among Kenyan gamblers and raked in millions of Kenyan shillings shortly after they commenced operation.

The proceeds from Mega Mega Kwachua mamilii lottery product, which totaled KSh375 million, according to Kenya’s Betting Control and Licensing Board (BCLB), were initially being wired to Amaya’s account at Equity Bank, Mr. Nyagudi revealed. Under the country’s gambling law, any gambling operation is obligated to contribute 25% of its gross proceeds to a local charity. In the case of Amaya, it was supposed to donate money to the Lion’s Heart Self Help Group. The organization was established to help orphans and widowed women in Kenya’s Siaya County.

By October 2011, the gambling company had not donated the required amount to the charity. The then-Chairman of the BCLB, Kenya’s gambling regulator, filed an affidavit to reveal how much Amaya had collected from its Kenyan lottery operations. According to the affidavit, the company had reaped in the approximate amount of KSh375 million and was supposed to contribute KSh93 million to the Lion’s Heart organization. However, the charity claimed the gambling giant owed it well over KSh73 million.

New Bank Account

Mr. Nyagudi further said that Mr. Baazov then opened new bank accounts in NIC Bank without the former lawmaker’s knowledge and stopped transferring money to the Equity Bank accounts. The new accounts were opened in Mr. Nyagudi’s name and were allegedly used by the Canadian-Israeli businessman and associates of his to siphon around KSh500 billion out of Kenya.

The former Kenyan lawmaker is now suing Mr. Baazov, his alleged accomplices and NIC Bank, accusing the businessman of fraud and the bank of helping him to conduct improper money transfers. Mr. Nyagudi also said earlier this week that he has filed a notice to Kenya’s Director of Public Prosecutions to inform them that he intends to prosecute the bank privately for failing to disclose details about Mr. Baazov and his accounts. NIC Bank had previously been issued an order to provide details about Amaya’s Kenyan operation and about the Canadian-Israeli businessman’s dealings but had refused to do so and the agencies responsible for prosecution had failed to take further action.

Mr. Baazov was up until recently the subject of insider trading investigation and prosecution in his home country. The businessman was probed for allegedly trading inside information about the company prior to Amaya’s $4.9-billion acquisition of The Rational Group, parent company of the PokerStars and Full Tilt Poker brands, and thus affecting his company’s stock price.

The Quebec securities watchdog, Autorit√© des marches financiers (AMF), brought 23 charges against Mr. Baazov in March 2016, which marked the beginning of a lengthy trial. The Court of Quebec decided to stay the legal proceedings against the businessman this past summer, arguing that the AMF had made “repeated errors” and showed a “lack of rigor” over the course of its investigation.

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