The fight for the valuable SportPesa gaming trademark has escalated to the Office of the Registrar of Trademarks in a fresh suit alleging fraudulent transfer of the brand, tax evasion and forgery.
The Registrar of Trademarks has been put on the spot for facilitating the alleged fraudulent transfer of two trademarks from Pevans East Africa to UK-based SportPesa Global Holdings Limited (SPGHL) for £100,000 (Sh17.3 million) each.
Pevans East Africa pioneered sports betting in the country.
Paul Wanderi Ndung’u, one of the shareholders of Pevans East Africa, has filed a suit at the Registrar of Trademarks, which has quasi-judicial powers, seeking to reverse the sale, citing fraud and forgery.
He wants the brand reinstated to Pevans East Africa, terming the transfer to SPGHL and eventually to Milestone irregular, illegal and subject for a tax evasion investigation and accounting fraud.
“A declaration that the Certificate of Registration of Assignment issued on June 2, 2020 in respect of trade mark number 74874 (SportPesa) is hereby cancelled,” said Mr Ndung’u, who has a 17 percent stake in Pevans.
“The name SportPesa Global Holdings Limited be expunged from the register of trademarks in relation to trade mark number 74874. That the Register be corrected to reflect Pevans East Africa Limited as the bona fide proprietor of trade mark number 74874.”
The fresh suit will intensify the battle for the brand and firm between former partners and now turned rivals —Mr Ndung’u and Asenath Wachera with a combined ownership of 38 percent of Pevans and the chief executive of the firm, Ronald Karauri, who backed the transfer.
Filings at registrar indicate that the application for transfer of the trade mark from Pevans East Africa, the original owner of the SportPesa trademark, to UK-based SGHL was based on a deed of assignment of September 1.
The deed of assignment is a legal document that formally transfers ownership or rights in an asset including trademarks from one party to another party.
But the filings show that the deed of assignment of September 1 is not available and one for June 2 is attached to the transfer documents.
This suggests that the trademark was owned by Pevans and SPGHL between June 2 and September 15.
Mr Karauri signed the deed on behalf of the firm, while Kalina Karadzhova, a Bulgarian national and a resident of the Isle of Man, signed the pact on behalf of SPGHL where she serves as a director.
Mr Ndung’u reckons that a dated deed of assignment must be attached to the transfer approval papers, arguing that September 1 deed was never filed with the registrar and it remains a mystery how the transfer was executed.
“The deeds of assignment dated 1st September 2020 declared in forms 14 were absent and therefore no stamp duty was paid rendering the approval and registration of the assignments illegal for violating express provisions of the Trade Marks Act and the Stamp Duty Act and therefore null and void ab initio,” said Mr Ndung’u.
Buyers of trademarks are required to pay a stamp duty equivalent to 2.0 percent of the deal value.
The tax is used to validate the assignment document, which is crucial for the legal recognition and enforceability of the trademark transfer.
Mr Ndung’u says SPGHL did not pay stamp duty for the deal, putting the validity of the transfer into question.
“A non-registered foreign company cannot be issued with a KRA PIN and therefore during the material time it could not have been able to pay stamp duty in the iTax System,” he said.
He added that SPGHL was not registered in Kenya and therefore was not allowed to conduct business in line with the companies Act.
Before approving transfer and registration of trademarks, the Registrar of Trademarks is expected to ensure stamp duty for the deal has been paid.
Pevans and SPGHL had similar shareholders and stakes until October 2019 when they fell out after dilution of Mr Ndung’u and Ms Wacera in the UK firm from the combined 38 percent stake to less than 2 percent.
Mr Ndung’u reckons that the transfer of the brand was also not unanimous and lacked shareholder approval from the UK firm where he served as the chair.
He adds that SPGHL financial statements for the year ended December 2020 December 2023 does show the payment of £200,000 (Sh34.6 million) for the two trademarks as an expense or intangible asset.
“This omission further underscores the fraudulent nature of the purported assignment and suggests that the transaction lacked substance and commercial authenticity,” he added.
Mr Karauri and another Pevans minority owner, Robert Macharia, would later emerge with a controlling 84 per cent stake in Milestone Games, the company that was subsequently assigned the right to use the SportPesa trade mark in Kenya by SportPesa Global in the roundabout deals.
Milestone, Pevans and SPGHL in a joint submission wants the suit dropped, arguing the High Court should hear the dispute and not the Registrar of Trademarks.
“The opponent should have filed an appeal to the High Court against a decision of the Registrar of Trademarks,” they said in their August 28 filing.
The warring parties will this Thursday come before Eunice Wainaina, the assistance Registrar of Trademarks for hearing.
The Registrar of TradeMarks certified the transfer of the SportPesa brand on September 15, 2020, a day after receiving the application—which was not accompanied by deed of assignment of September 1.
The effective registration date was backdated to June 2 when the deed of assignment was recorded.
“Your good office issued backdated Certificates of Assignments dated 2nd June 2020 in respect of trademarks number 74874 and 80597, although the forms TM14 were received in your office on 14th September 2020,” Mr Ndung’u said in reference to actions of the office of the Registrar of TradeMarks.
“This is a serious offence under the Penal Code as it is tantamount to, among other things, uttering false documents and forgery. ”
The Office of the Registrar of TradeMarks is also accused of failing to publish the transfer in the monthly Industrial Property Journal (IPJ) to invite objections or alert third parties.
The publication is needed six months before the transfer.
“The same officer who handled the irregular transfer of trade mark number 4874 undertook this second transfer (number 80597), raising concerns of institutional compromise and collusion,” said Mr Ndung’u.
Sportpesa Global subsequently authorised Milestone to use the trade name in Kenya.
The move came after Pevans ceased operations following the cancellation of its operating licence in July 2019 over unpaid taxes and penalties amounting to Sh21.4 billion.
The move effectively brought back the popular SportPesa gaming brand by severing its ties with Pevans’ regulatory and tax problems. SportPesa was launched in Kenya in 2014 by Pevans, a company whose shareholders include Ms Wachera with a 21 percent stake, Mr Ndung’u (17 percent), Mr Karauri (seven percent) and Mr Macharia (three percent).
The investors also held nearly similar stakes in UK-based SPGHL, which owns gaming subsidiaries in other markets, including Tanzania, before the dilution of others
“I have at all times before 4th November 2019 been a 17 percent shareholder of the 1st Defendant (SportPesa Global Holdings Limited, UK) until my shareholding was unlawfully diluted to 0.8 percent through an illegal dilution scheme that I have challenged at the High Court of Justice United Kingdom,” said Mr Ndung’u.
American Gene Grand had a 21 percent stake in Pevans and Bulgarians-- Guerassim Nikolov, Nikolae Mineva and Ivan Kalpakchiev—had a combined ownership of 26 percent.
They earned dividends totalling Sh7.6 billion in the four and half years to June 2019, underlining its cash-rich status.
