Maltco blocks lotto tender

Finance Minister Tonio Fenech has expressed anger at a temporary court injunction obtained by Maltco Limited which has stalled government's call for tenders for the operation of national lottery games including lotto, Super 5 and the national lottery.

The injunction was ordered on 9 December by Judge Joseph Zammit McKeon, who presided over the First Hall of the Civil Court, upholding a request by Maltco Lotteries to stop government, the Lotteries and Gaming Authority and the Privatisation Unit from receiving, processing or allocating any licence to another operator.

Submissions by Maltco will be heard in court tomorrow Tuesday before Judge Zammit McKeon.

In a writ signed by lawyers Stefan Frendo and Antoine Cremona, Maltco Limited argued that government acted beyond its remit by ignoring clauses in the existing contract and obliging it to renew the licence on the basis of "impeccable performance".

Maltco argued that the call for tenders was issued without any consultation by the Gaming Authority, which simply wrote a letter informing the company that it will not renew its operating licence, but will extend its operations until 4 July 2012.

Despite challenging this decision in court last September, Maltco said that government still went ahead and issued a call for tender, creating further prejudice and damages.

Maltco insisted that government cannot ignore the fact that it will be removing a wealth estimated to be worth millions of euro by not renewing the lottery licence, and alleged abuse in ignoring calls for renewal on the basis of good performance.

The company has personally called on finance minister Tonio Fenech to take the witness stand together with Cabinet secretary Godwin Grima, among a long list of government officials.

In his official reply to the court, Fenech express strong opposition to Maltco's writ and requests, adding that contrary to the company's arguments, it had and still has every right to participate in the call for tender as long as it satisfies the criteria in a process which is "open to all".

The Gaming Authority also rejected Maltco's call for an injunction, arguing that even in the worst possible scenario for the company, the court cannot substitute its discretion with that of the plaintiff.

The authority objected to Maltco's claims over its licence renewal, and quoted from the licence clauses which clearly states that: 'for avoidance of doubt, the Licensee acknowledges that the Authority shall have discretion as to whether to grant another National Lottery licence (as defined in the Act) to the Licencee in terms of article 26(3) of the Act and as to whether to renew this license in accordance with the provisions of article 27 of the Act'.

Intralot, Maltco's mother company: the untold story

A probity investigation led by Kroll Associates Inc. - a reputed Chicago-based investigation firm - has uncovered numerous criminal indictments brought against Intralot SA, the world's second-biggest gambling services provider, and mother company of Malta-based operator Maltco Lotteries Ltd.

Headquartered in Athens, Greece, Intralot has faced a string of investigations over money-laundering, fraud, embezzlement, bribery, misleading investors and espionage, coupled with its loss of licenses in Bulgaria and South Africa and its dismal performance record in Australia.

Formed in 1992, Intralot is headed by Constantino Antanopoulos, in his role as vice chairman and chief executive of the company, while billionaire Socrates Kokkalis owned more than 20% of the company together with Konstantinos Dimitriadis, who owned almost 9%.

Intralot was one of three bidders on the lucrative State of Illinois contract to privately manage the lottery, with the aim of increasing sales and revenue for the State. The others were Camelot Illinois and Northstar Lottery Group, a consortium of GTECH, Scientific Games and Energy BBDO. All of the Northstar companies currently hold contracts with the lottery.

Investigators alleged that Intralot failed to disclose the ownership interests of two key people: Socrates Kokkalis and Constantinos Antonopoulos in the company. Both had been indicted for criminal offenses in the past, although the report also noted they were acquitted.

Kokkalis was indicted at least four times by Greek prosecutors for money-laundering, fraud, embezzlement, bribery, misleading investors and espionage, the report said.

In 2002, an Athens prosecutor charged Kokkalis with espionage, fraud, embezzlement, money laundering, bribery and taking bribes.

The charges stemmed from the allegations that Kokkalis was a former informant for the East German secret police, the Stasi, and spied on Greece on behalf of East Germany. The espionage charges originated after a German parliamentary investigation determined that Kokkalis was the subject of a 350-page Stasi dossier that showed Kokkalis had been an informant from 1963 to 1989.

The German investigation also allegedly showed that from 1986 to 1991, Kokkalis's German bank account held over US$11 million, which was purportedly used to bribe Greek officials to buy outdated East German equipment.

The Athens prosecutor also alleged Kokkalis used offshore companies in tax havens such as Cyprus, Switzerland and Ireland to launder income from Russian lottery contracts.

Kokkalis bribed members of the Russian Olympic Committee to win a contract for Lotto-Million, a national lottery benefitting the Olympic Committee and the City of Moscow.

While arguing that the charges were an organised attack against him by unknown business and publishing interests, Kokkalis was ultimately acquitted, in particular for espionage because the statutes of limitation had expired.

Also in 2002, another Greek prosecutor charged Kokkalis with defrauding investors who bought US$628 million worth of stock in three of his companies (Intrasoft, Intralot and Intracom). Kokkalis was accused of failing to invest the money in his companies as required by Greek law. Again, he was acquitted.

A year earlier, Kokkalis, together with his son and seven other Intralot directors, were indicted in Greece for embezzlement and breach of duty, while aiding and abetting the Greek government owned lottery organisation OPAP.

Christos Salales, OPAP's managing director, was fired in the wake of the indictment, and was soon hired by Kokkalis to work in his company.

Kroll investigators go on to reveal that since its inception, Intralot has been embroiled in numerous controversies, both in Greece and abroad. Many of the controversies involve allegations that Intralot and Kokkalis engaged in corruption to obtain lottery contracts.

In 2005, the Socialist Pasok Party refused to renew Intralot's scratch card lottery contract and announced a new international tendering process in order to dispel suspicions of preferential treatment to Intralot.

In February 2003 however, the Council of State ruled that the tender was invalid, while media and centre-right opposition party Nea Democratia denounced the tender as "custom made" for Intralot.

More allegations surfaced that year, as allegations of game-rigging revealed collusion between gaming company officials to pocket winnings.

The case in question concerns Stamatina (Tania) Marmara, wife of Intralot official Giorgos Salonikis, who is alleged to have cashed betting winnings amounting to €7.5 million in various stages between 2003 and 2005.

Her husband Salonikis was a director at Intralot, associate to Kokkalis and former vice-chairman of Olimpiakos Basketball Club.

"Given these issues and allegations... even the suggestion that the department would have recommended Intralot to the governor or that the governor would have entrusted one of the State's most valuable assets - the Lottery - to Intralot by selecting it as the private manager is incredible, to say the least," the Kroll report concluded.