How NIC Bank got entangled in Amaya lottery cash battle


Ken Nyagudi, a director of Amaya Gaming’s Kenyan subsidiary. FILE PHOTO | NMG

Little-known charity Lion’s Heart Self Help Group’s David vs Goliath battle against the world’s largest publicly listed online gambling firm, Amaya Gaming Group, over alleged embezzlement of aid funds has piled more misery on the bookmaker, while sucking in NIC Bank #ticker:NIC.

Lion’s Heart has sued Amaya’s local subsidiary in a bid to recover Sh73 million it claims was embezzled by the gaming firm’s officials, David Baazov, Daniel Sebag and Benjamin Ahdoot with the help of NIC, which allowed them to open accounts that were used to siphon the cash meant for aid.

The charity has sued alongside one of Amaya’s directors, Kennedy Odhiambo Nyagudi. Amaya is yet to respond to the suit. Amaya kicked off its operations in Kenya in 2010 with the M-Lotto sweepstake and later introduced the Kwachu 6/48 Lotto.

Documents filed in court indicate that the firm was to donate 25 per cent of its earnings to Lion’s Heart, which the charity group now holds did not happen.

The suit comes as Amaya’s founder, Mr Baazov, is fighting charges of insider trading in Canada. Insider trading is the buying or selling of a security by someone who has access to material nonpublic information about the security.

The charges lodged by Canadian authorities came after Amaya’s purchase of rival firm, the Rational Group for a reported $4.9 billion (Sh505.9 billion).

The buyout saw Amaya become the world’s largest listed online gambling firm. Mr Baazov, the 37-year-old that was once described by Forbes as the king of online gambling, was forced to step down as Amaya CEO in August last year following the charges in Canada.

The inquest in Canada later prompted US investor David Weisman to lodge a class action suit against Amaya, which he says should have revealed to the public that its CEO had been implicated in an insider trading case.

Mr Weisman says in suit papers filed before the US District Court in Manhattan, New York, that by staying silent on the charges facing its CEO Amaya had defrauded shareholders.

Mr Nyagudi now claims that Mr Baazov, Mr Sebag and Mr Ahdoot secretly opened four bank accounts at NIC, which were used to keep channel money earned from Amaya’s operations out of the country and away from the reach of Lion’s Heart.

“NIC Bank received the funds from the lotteries through deposits, kept the funds safely in their custody and thereafter aided Amaya to disappear from the country by transferring the funds out of the country when their fraudulent conning scheme was discovered having defrauded unsuspecting Kenyans of hundreds of millions of shillings,” Mr Nyagudi claims.

NIC, following a court order issued by Justice Rachael Ngetich, furnished Lion’s Heart and Mr Nyagudi with a copy of documents used in opening of the disputed bank accounts.

Mr Nyagudi holds that only he and Mr Baazov are listed as directors of Amaya Gaming Group Kenya hence only the two of them had authority to open bank accounts.

He adds that the NIC nonetheless opened Amaya bank accounts despite being aware that the other individuals granted access to the accounts did not have the authority to do so.

NIC has asked the High Court to bar Mr Nyagudi from using the documents he has attached as evidence in the suit, as they are confidential and were issued before permission from the lender’s legal department was sought.

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NIC has also sought to bar Mr Nyagudi and Lion’s Heart from instituting contempt of court proceedings against its executives for failing to provide more documents related to the disputed accounts.

“The bank inadvertently forwarded copies of documents on October 24, 2017 to Mr Nyagudi’s and Lion’s Heart’s advocates before it could seek advice from its legal advisers, Wamae & Allen. The plaintiffs should be ordered to return all the documents and be restrained from relying on them without leave of the court,” NIC says in its application.

The bank adds that it has a confidentiality agreement with Amaya which bars it from sharing account information with third parties.

Mr Nyagudi however says Justice Ngetich’s orders put an end to the confidentiality NIC has claimed.

He has expressed fear he might be held accountable for the Sh73 million that Lion’s Heart was to receive, being Amaya’s only director still in Kenya.

“NIC Bank’s actions have now placed me in a very vulnerable positions since I am the duly registered director and shareholder on whose immediate shoulders all problems related to Amaya shall bear. NIC Bank therefore must be held to account for the loss of Sh73 million due and owing to Lion’s Heart’s from the lottery conducted by Amaya,” Mr Nyagudi adds.

NIC says that Mr Nyagudi, being an Amaya director, ought to have sought permission from the court before suing the gaming firm.