The Czech billionaire, whose company will now be managing the UK national lottery starting Thursday, is still financially involved with Gazprom, a gas company owned by the Kremlin. This is despite his promise to regulators two years ago that he would cut ties with Russia.
In March 2022, the Gambling Commission granted Allwyn the valuable 10-year license to operate the lottery, which is expected to generate sales of up to £100 billion.
A three-way competition between Allwyn, media mogul Richard Desmond, and Camelot, who have held all of the weekly draw licenses since 1994, resulted in the decision.
Allwyn, which successfully fended off legal challenges from the losing bidders after the licence was awarded, is ultimately owned by the Czech entrepreneur Karel Komárek, via his holding company KKCG.
In March 2022, as the Gambling Commission was making its final decision, Komárek publicly denounced Russia’s aggressive invasion of Ukraine as “brutal.”
During the bidding process, Allwyn reportedly pledged to sever any connections with Russia at the earliest opportunity.
However, both the commission and Allwyn have been asked by MPs about the collaboration between Komárek and Gazprom, who are in charge of the Dambořice underground gas storage facility in the Czech Republic.
While Gazprom has not faced sanctions in the UK, several of its leaders have. Members of the culture, media, and sport committee have also voiced worries about potential connections between Komárek’s business holdings and the Russian government.
In June of 2022, members of the Gambling Commission informed the committee that an announcement regarding the termination of the partnership was expected within a matter of “days”.
According to a Tortoise podcast, the plan was not finished by November of last year.
The Guardian has confirmed that Komárek has made efforts to decrease Gazprom’s ownership in the joint venture. However, the gas company, which is owned by the Kremlin, still holds a 50% stake until a share issue is legally approved. This will reduce its ownership to less than 3%.
Komárek, a native of Moravia, where the gas plant was constructed, achieved billionaire status in post-Soviet Czech Republic through a loan from his father, which he used to establish a vast empire encompassing industries such as oil and gas, real estate, technology, and lotteries.
In 2013, his collaboration with Gazprom started. The Czech company MND, which is owned entirely by his holding company KKCG based in Switzerland, formed a 50:50 partnership with Gazprom to construct a gas storage facility in the Czech Republic.
After Vladimir Putin’s invasion of Crimea the following year, the ownership structure of the company remained unchanged, and it continued to operate as Moravia Gas Storage (MGS) with equal ownership.
However, it is believed that Russia’s complete invasion of Ukraine in February 2022 prompted KKCG to begin efforts to remove itself from the joint investment with Gazprom.
In under a month, Allwyn, owned by KKCG, was awarded the fourth national lottery license. They provided reassurances that they were actively working to sever any connections with Gazprom.
Despite promises from the Gambling Commission to Members of Parliament that a decision to end the partnership was close, it has faced difficulties in finalizing the divorce.
In June, soon after the evidence session of the select committee, KKCG announced its intentions to transfer the shares it held through MND in the storage facility to the Czech government.
Unfortunately, the talks came to a halt and in October 2023, over a year later, KKCG stated that MGS would be releasing new shares valued at 36 million Czech krona (equivalent to £1.2 million), with MND purchasing all of them.
According to the statement, this would result in a higher ownership percentage for MND, which is owned by Komárek, at 97.37%, while Gazprom Export LLC, a subsidiary of Gazprom, would hold 2.63%.
In November of last year, the company was granted regulatory approval for the transaction. However, the final legal approval to decrease Gazprom’s stake from 50% is still pending.
KKCG is reportedly eager to fully eliminate Gazprom from the partnership, but insiders revealed that their attempts have been hindered by regulatory and legal procedures.
The Gambling Commission refused to provide a statement.
The commission sent a letter to the culture, media and sport committee in December, stating that they were confident Allwyn was not doing business with any sanctioned entities and that any involvement from Russian interests did not affect the lottery.
According to the statement, KKCG has made significant strides in severing connections with Gazprom and has taken steps to divest an oil terminal in the Samara region of Russia.
The regulator announced that it collaborated with UK Security Vetting, which is the national security vetting provider for the government.
KKCG chose not to provide a statement.