Not too many years ago, GTECH Holdings Corp., the world’s largest provider of lottery services, was mired in accusations of wrongdoing in both this country and in the United Kingdom, resulting in a complete shakeup of top executives.
After new leadership took over, particularly in the form of West Point graduate and successful Wall Street executive Bruce Turner, the company’s fortunes improved tremendously. Company shares that had dropped to the teens zoomed northward to reach the middle $50 range.
Then came word out of Brazil that some of GTECH’s people were involved in an attempted bribe to have the company’s lottery contract extended. The negative announcement started a decline in share value that on Friday brought it to $42.37. (On Monday, the company’s shares were split 2-1)
Yet, little information has been forthcoming from Brazilian authorities.
But, on Friday, the Rhode Island company received a second notice from the Securities and Exchange advising that a formal order of investigation was being issued. However, the SEC added that the second notice was unrelated to any recent or new developments in the matter and is a routine procedure.
The company said it was cooperating with the SEC review by providing a substantial volume of documents, many in Portuguese, the national language of Brazil, from its Brazilian operations.
Also, the company said an internal review conducted by management and under the supervision of the independent directors of the GTECH board of directors is continuing. "From what has been learned from that investigation to date, the company is confident that it acted appropriately and GTECH"s compliance program worked as it is intended," said a company statement.
Meanwhile, the company announced it had been served with a civil complaint filed by the Brazilian Public Ministry. The lawsuit seeks to impose damages equal to the sum of all amounts paid to GTECH under its two contracts of 1997 and 2000. This was estimated at $650 million.
The company has appealed.
In recent years, the lottery business in Brazil has amounted to about 10% of GTEC