Compliance lessons from Entain’s £615 million HMRC and CPS agreement

Jette Nygaard-Andersen stepped down from her role as Entertain plc CEO on 13 December 2023 – eight days after the deferred prosecution agreement was reached and judgement handed down.

The precise facts of the case remain under seal. 

However, we do know that the agreement was reached largely because Entain plc made major changes in its operations and agreed to pay £615 million.

Here, we look more closely at the case – and consider what accountants and finance leaders can do to help businesses and clients remain compliant.

What we know about the case

On 28 November 2019, Entain Holdings (UK) Limited, a subsidiary of Entain plc, received a production order from HMRC. 

This order asked for more information about Entain Holdings’ Turkish-facing business, which the company held from 2011 before selling it in December 2017.  

Initially, HMRC investigated third-party suppliers only. However, on 21 July 2020, HMRC announced it would delve further – into entities within Entain plc. 

The company has since stated that both third parties and former employees may have engaged in misconduct.

This misconduct concerned, possibly among other things, failure to prevent bribery under Section 7 of the Bribery Act.

How the DPA was reached – and its main conditions

“[The DPA] suspends the criminal prosecution under certain conditions for four years,” says Tom Jenkins, a Senior Associate at RPC with anti-corruption investigation and compliance programme implementation experience who has advised on cases involving DPAs.

“Importantly, Entain’s significant remedial efforts in its compliance programme were recognised as allowing the CPS to feel confident of a low risk of reoffending.”

These efforts included making such extensive changes to compliance procedures that the judge described Entain as a “different entity”, “both in form and substance”.

“This most likely means that Entain will have strengthened its internal controls, policies and procedures in compliance with the Bribery Act 2010,” Jenkins says. 

“We don’t know what they had previously, but the Group now has a code of conduct, committees overseeing the areas where the bribery occurred, senior staff overseeing activities that could lead to bribery, and training to help staff understand what they need to do to avoid bribery and what they must do if they come across it,” says Andrew Parkes, National Technical Director, Tax at Andersen LLP.

Further, Entain overhauled senior management, agreed to exit more than 140 markets where gambling is not clearly regulated, and agreed to commission an external compliance review by PwC.

Initially, HMRC investigated third-party suppliers only. However, on 21 July 2020, HMRC announced it would delve further – into entities within Entain plc. 

The company has since stated that both third parties and former employees may have engaged in misconduct.

This misconduct concerned, possibly among other things, failure to prevent bribery under Section 7 of the Bribery Act.

How the DPA was reached – and its main conditions

“[The DPA] suspends the criminal prosecution under certain conditions for four years,” says Tom Jenkins, a Senior Associate at RPC with anti-corruption investigation and compliance programme implementation experience who has advised on cases involving DPAs.

“Importantly, Entain’s significant remedial efforts in its compliance programme were recognised as allowing the CPS to feel confident of a low risk of reoffending.”

These efforts included making such extensive changes to compliance procedures that the judge described Entain as a “different entity”, “both in form and substance”.

“This most likely means that Entain will have strengthened its internal controls, policies and procedures in compliance with the Bribery Act 2010,” Jenkins says. 

“We don’t know what they had previously, but the Group now has a code of conduct, committees overseeing the areas where the bribery occurred, senior staff overseeing activities that could lead to bribery, and training to help staff understand what they need to do to avoid bribery and what they must do if they come across it,” says Andrew Parkes, National Technical Director, Tax at Andersen LLP.

Further, Entain overhauled senior management, agreed to exit more than 140 markets where gambling is not clearly regulated, and agreed to commission an external compliance review by PwC.

“The Court has concluded that there have been sweeping changes to the company’s compliance procedures and that Entain is committed to the promotion of open and transparent gambling operations, and improvement of their corporate governance,” Chief Crown Prosecutor Andrew Penhale said, announcing the agreement. 

The £615 million Entain agreed to pay included a penalty and disgorgement of profits totalling £585 million, a charitable donation of £20 million, and a £10 million contribution to CPS and HMRC costs. 

Compliance lessons from the case

Jenkins and Parkes share key lessons from this case – Jenkins around compliance processes and Parkes around avoiding wrongdoing as well as the appearance of wrongdoing.

“A key role accountants can play to support clients is in establishing and managing controls around payments out of the business,” Jenkins says.

“When looking at payment controls, accountants and their clients should bear in mind the six guiding principles for establishing adequate compliance procedures set out in the Ministry of Justice’s Guidance to the Bribery Act.”

Those principles, the guidance explains, are scalable to suit organisations of different sizes and levels of complexity: 

1. Proportionate procedures, matching the risk the organisation faces, maintaining practicality and clarity, and enabling monitoring
2. Top-level commitment, fostering a culture in which bribery is unacceptable
3. Periodic, documented risk assessment
4. Due diligence to assess bribery risk related to those acting on behalf of the organisation
5. Communication and training proportionate to bribery risk
6. Monitoring compliance and reviewing procedures

Jenkins suggests a series of questions:

• Has the company assessed the risks of these payments? 
• Has appropriate due diligence been conducted on the recipients? 
• Do the financial controls in place ultimately reflect these risk assessments and due diligence checks? 

“Accountants can help with both building and checking clients’ financial control systems, to ensure that they form a realistic part of [a business’s] protective framework,” Jenkins says.

Parkes points out that HMRC has access to great and growing data sets – as analytical tools’ capabilities expand, so will HMRC’s ability to detect non-compliance. 

“The case shows that HMRC obtains its information from many sources, and even if you are not under enquiry, they can still find out about your wrongdoing,” Parkes says.

“As ever, the best way to avoid this problem is simply not to get involved in any act that could be considered to be bribery.”

Parkes acknowledges that this can be a challenge for those working overseas or across jurisdictions, and Entain plc was. He suggests seeking specialist advice before starting work in overseas markets, and remaining diligent to risks. 

“If you do suspect bribery has occurred, come clean as soon as possible, as self-reporting companies get much better treatment than ones who are caught,” he says. 

“Entain got away relatively lightly and it’s unlikely that another business would receive the same punishment.”

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