ALEX BRUMMER: Gambling’s dark stains

The online gaming sector long has been an accident waiting to happen. Based in Gibraltar, it has grown exponentially and much of the time out of sight.

The main focus of Britain’s gambling regulator has been on social responsibility with sports TV channels, football grounds and kits a mecca for betting.

Gambling has long been an open goal for money laundering, as fans of the Netflix series Ozark will testify.

Betting bonanza: The main focus of Britain’s gambling regulator has been on social responsibility with sports TV channels, football grounds and kits a mecca for betting

The disclosure by London-quoted 888 that it failed to follow ‘know your client’ best practices for high rollers in the Middle East has provoked a crisis.

Israeli chief-executive Itai Pazner has been summarily dismissed and the share price plummeted.

Chairman Lord Mendelsohn, a Labour peer, finds himself thrust into the driving seat. There is little in his background as a political fixer to suggest he knows a great deal about the 3.25 at Huntingdon.

He must deal not just with money laundering breaches but debts, following the purchase of the non-US operations of bookie William Hill.

The firm’s stock market value has plummeted from a peak of around £2billion in 2021 to just £333million. 

Mendelsohn says the board takes the group’s ‘compliance responsibilities very seriously’. 

If that is the case, how wise was it for Pazner to tell the Sunday Times just 14 months ago that 888 was moving away from high rollers to focus on more regular punters (clearly not), and that he was unworried by regulation because there have been ‘worse risks we have managed to overcome’. 

Also clearly not. Losing the chief executive just two weeks after finance chief Yariv Dafna was set to leave is careless.

It is the second time in two years that 888 has come under scrutiny for money laundering, which is unlikely to endear it to Britain’s Gambling Commission or the US authorities. 

The immediate cost of the scandal is put at £50million, but there are City concerns that there could be historic liabilities dating back several years.

Mendelsohn has his work cut out with a mess which can only result in increased surveillance of the whole free-wheeling sector.

Going Dutch

After a period of British leadership at Unilever, the board has reached back into the Netherlands for Alan Jope’s successor.

Hein Schumacher lacks the credentials of someone with experience at rivals Proctor & Gamble or Nestle. But he did have a stint at Heinz, a failed bidder for Unilever in the past. He has since become dairy kingpin at Dutch co-operative Royal FrieslandCampina.

The choice of Schumacher usefully has the support of activist Nelson Peltz who has a seat on the Unilever board. 

The arrival of a new chief executive, and Peltz’s habit of releasing value by corporate splits, has led to speculation that this must be the game plan.

Breaking up the UK’s leading fast-moving consumer goods group, and a critical part of many share portfolios, including investor favourite Terry Smith, would be a mistake.

Sure, there are underperforming brands. And there has been less disclosure than might be desirable about Unilever’s purchase of new wave health and beauty products. There is further tidying up to be done beyond teas and spreads. 

But it shouldn’t be forgotten that Peltz’s past interventions have been detrimental for the FTSE 100 and Britain.

The break-up of Cadbury Schweppes led to both parts of that enterprise being controlled from overseas, weakening UK roots, the tax base and brand skills. 

Investors who saw off bidder Kraft Heinz and an attempt to shift Unilever’s domicile to Rotterdam should stand firm against doing the splits.

Legal eagles

Nigel Wilson has done a terrific job at Legal & General.

His ten-year longevity, against musical chairs at Aviva, is testimony to that. It was only last year that there was a smudge on his reputation when L&G emerged as a player in the liability driven investment (LDI) market which gambled with pension funds. 

His outstanding achievement is to recognise that the cascade of cash arriving at L&G could be put to use in reviving the nation’s infrastructure, including ports and the Cambridge Science Park.

There will be a global search for a successor. Wilson leaves behind a strong internal bench including Laura Mason, chief executive of L&G’s institutional pensions since 2018, finance boss Jeff Davies and Michelle Scrimgeour, who heads investment management.

Good potential choices in an insurance industry where women flourish.

This post first appeared on Dailymail.co.uk