The Czech billionaire whose company takes over running the UK national lottery from Thursday is still in business with the Kremlin-owned gas company Gazprom, nearly two years after promising regulators he would sever ties with Russia.
The Gambling Commission awarded Allwyn the lucrative 10-year licence to run the lottery, estimated to be worth up to £100bn in sales, in March 2022.
The decision followed a three-way bidding war between Allwyn, media tycoon Richard Desmond, and Camelot, holder of every licence since weekly draws began in 1994.
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.
Komárek has condemned Russia’s “brutal” invasion of Ukraine, including in an open letter published in March 2022, as the Gambling Commission was finalising its decision.
Allwyn is also understood to have promised the regulator during the bidding process that Komárek would terminate any links with Russia as soon as possible.
But both the commission and Allwyn have since faced questions from MPs about Komárek’s joint venture with Gazprom, which operates the Dambořice underground gas storage facility in the Czech Republic.
Gazprom is not sanctioned in the UK but many of its executives are. MPs on the culture, media and sport committee have also expressed concerns about any lingering ties between Komárek’s business empire and the Kremlin.
In June 2022, Gambling Commission staff told the committee that they expected an announcement about plans to end the relationship within “days”.
However, the plan had not been completed by November last year, a Tortoise podcast revealed.
The Guardian has now established that, while Komárek has taken steps to reduce Gazprom’s stake in the joint venture, the Kremlin-owned gas company still retains a 50% shareholding pending legal approval of a share issue that will dilute its holding to below 3%.
Komárek, who grew up in Moravia, where the gas facility was built, became a billionaire in post-Soviet Czech Republic, using a loan from his father as a platform to build an empire spanning oil and gas, property, technology and lotteries.
His partnership with Gazprom began in 2013, when Czech firm MND, wholly owned by his Switzerland-based holding company KKCG, entered into a 50:50 partnership with Gazprom to build a gas storage facility in the Czech Republic.
The resulting company, Moravia Gas Storage (MGS), carried on with the same equal ownership structure after Vladimir Putin’s invasion of Crimea the following year.
But Russia’s all-out invasion of Ukraine in February 2022 is understood to have kickstarted efforts by KKCG to extricate itself from the co-investment with Gazprom.
Less than a month later, KKCG-owned Allwyn won the fourth national lottery licence, after offering assurances that it was working to cut any ties Gazprom.
It has since struggled to effect the divorce, despite the Gambling Commission’s assurances to MPs that an announcement ending the partnership was imminent.
In June, shortly after the select committee evidence session, KKCG did announce plans to transfer its shares in the storage facility, held via MND, to the Czech government.
However, those discussions broke down and in October 2023, more than a year later, KKCG announced that MGS would issue new shares worth 36m Czech krona (£1.2m), all of which would be bought by MND.
This, it said, would increase the stake held by Komárek-owned MND to 97.37%, leaving Gazprom Export LLC, a subsidiary of Gazprom, with 2.63%.
In November last year, the company received regulatory approval for the transaction although final legal approval to reduce Gazprom’s stake from 50% is still pending.
KKCG is understood to be keen to remove Gazprom from the venture entirely and sources close to the company said its efforts to remove the Russian state gas company had been slowed by regulatory and legal processes.
The Gambling Commission declined to comment.
In a letter to the culture, media and sport committee, sent in December, the commission said it had been satisfied that Allwyn was not in business with any sanctioned entities and that any Russian interests had no bearing on the lottery.
It said that KKCG had made “substantial progress” in cutting ties with Gazprom and had already acted to sell an oil terminal in Russia’s Samara region.
The regulator also said it had worked with UK Security Vetting, the government’s national security vetting provider.
KKCG declined to comment.
