The head of London’s Hippodrome casino has hit out at “socially unacceptable” high-stakes betting machines, weeks ahead of the results of a crucial government review into their future.
The “crack cocaine” machines allow customers to bet up to £100 a spin but campaigners among casino and arcade operators are calling for the maximum stake to be slashed to £2.
Bookmakers such as William Hill and Ladbrokes Coral have threatened up to 30,000 jobs could be lost across the industry if stakes are drastically cut.
But Hippodrome chief executive Simon Thomas said: “The reality is that if they went it wouldn’t make any difference to my business at all. Where the damage for my business comes is reputationally — people see problem gambling, High Street fights — all of that puts a negative slant on gambling. In the UK we have this anomaly where we have 35,000 hard gambling machines in easily accessible venues which used to be bookies and are now mini-casinos.”
The Hippodrome has 20 lower-stakes machines where maximum spend is a fiver.
Former culture secretary John Whittingdale last week said sports minister Tracey Crouch, who announced the review, was “no fan” of the machines and added: “I can’t say I would be surprised if there are quite radical measures produced.”
One of the UK’s most fêted tech entrepreneurs, Mike Lynch, faced 20 years behind bars on Friday as the US Department of Justice accused him of fraud over his $11 billion (£8.6 billion) sale of the Autonomy software business he founded.
Lynch struck a deal to sell the business to US giant Hewlett Packard in 2011 in a deal which netted him more than $800 million personally from his own stake in Autonomy.
But HP’s chief executive Meg Whitman wrote off more than three-quarters of the value of the company just a year later, making it one of the most disastrous acquisitions in corporate history.
The 14 counts of conspiracy and fraud against Lynch — who founded Autonomy in 1996 and sits on the Government’s science and technology advisory committee — carry a maximum sentence of 20 years in prison.
The DoJ’s indictment against the former chief executive, pictured, accused him of a “fraudulent scheme to deceive… about the true performance of its business, financial performance and condition… revenue and expenses and prospects for growth” from 2009 until October 2011.
The DoJ, which began its investigation in 2012, goes on to accuse him of “artificially inflating” revenues, and falsely claiming it was a “pure software business”, as well as misleading regulators and “intimidating and pressuring” analysts. It also claims Lynch fired a finance officer in the US “who questioned whether Autonomy’s financial statements were accurately stated”.
The seven-year saga has also seen the Serious Fraud Office open and close an investigation into the case, and HP has also had to settle a class action by its own shareholders stung by the disastrous takeover.
In 2015, HP launched a civil claim against Lynch and allegations over Autonomy improperly booking revenues — such as a deal to digitise the Vatican library, which fell through — emerged in court documents earlier this year. Lynch promptly counter-sued over smears to his reputation after the deal. This trial was due to begin in March but is likely to be delayed by the DoJ’s criminal trial. Former Autonomy chief finance officer Sushovan Hussain was convicted for fraud in April and has yet to be sentenced, but is appealing.
Lynch’s lawyers called the indictment “a travesty of justice”, adding: “This case is unsupportable. It targets a British citizen with rehashed allegations about a British company regarding events that occurred in Britain a decade ago. It has no place in a US court. There was no conspiracy at Autonomy and no fraud against HP. HP has a long history of failed acquisitions. Autonomy was merely the latest successful company it destroyed.
“HP has sought to blame Autonomy for its own crippling errors, and has falsely accused Mike Lynch to cover its own tracks. Mike Lynch will not be a scapegoat for their failures. He has done nothing wrong and will vigorously defend the charges against him.”
The economy is in danger of crunching into reverse for the first time in six years as Brexit fears undermine the UK’s dominant services sector, experts warned on Wednesday.
The gloomy warning came after the Chartered Institute of Procurement & Supply’s latest snapshot showed firms accounting for the lion’s share of output barely managed any growth at all during a bleak November.
The Cips activity index slumped much more than expected to 50.4 last month, only just above the key 50 signalling expansion and the worst since the immediate aftermath of the Brexit vote in June 2016.
The shock decline, combined with sluggish growth among manufacturers and builders, puts the overall economy on course to grow at just 0.1% in the final quarter, according to survey compiler IHS Markit. That would be the worse result since the Beast from the East blizzards ravaged the UK last winter.
Chris Williamson, chief business economist at IHS Markit, said there could be even worse news to come: “A contraction of service sector business activity in November was only avoided by firms working through back orders to an extent not exceeded since 2009.
“As such, unless demand revives, a slide into economic decline at the turn of the year is a distinct possibility.” The UK economy has not seen outright contraction since the final quarter of 2012, when it sank 0.2%.
The latest poor economic news came during a month when Theresa May was rocked by resignations over her withdrawal deal, which faces defeat at Westminster next week. The Bank of England’s worst-case scenario for a disorderly Brexit warned of a potential 8% slump for the economy last week.
The Cips survey revealed new orders barely growing as clients delay investment decisions, and a slowdown in jobs growth. Cips director Duncan Brock said: “Respondents have provided plenty of evidence that the prime cause of this slowdown must be firmly placed on the shoulders of Brexit indecision.”
ING economist James Smith said: “The bottom line is that fourth-quarter growth is likely to be noticeably lower than in the third… we have our doubts that this will be heavily offset by pre-Brexit inventory building. While recent Bank of England commentary has made it clear that policymakers would like to resume tightening fairly soon given the stronger wage growth backdrop, we don’t expect a rate hike before May 2019.”
The boss of one of London’s biggest housebuilders on Friday pleaded with politicians to avoid a hard Brexit disrupting the vital flow of materials into the UK.
Berkeley Group, which accounted for more than 10% of the capital’s private and affordable homes in the six months to October, imports around half its materials from Europe, as well as relying on an EU workforce.
Chief executive Rob Perrins called for a “pragmatic” solution ahead of a critical vote on Theresa May’s withdrawal deal, the defeat of which is likely to presage another period of turmoil at Westminster next week.
Perrins warned: “I hope we find a solution that doesn’t keep the uncertainty running on or means we get a very hard Brexit, which doesn’t allow the free movement of materials. Materials will be the issue, if you have short-term materials shortages.”
Berkeley imports timber from Holland, and cement and bricks from Belgium, while its cladding is sourced in the Far East but assembled on the Continent and imported on a “just-in-time” basis.
He added: “To reorder the supply chain will be difficult. When you switch, switching cladding will be really difficult. If you can’t get a building water-tight, it doesn’t matter that I can source a kitchen from the UK. I haven’t got a water-tight building.
“You have got to sort out your whole supply chain, because you will be held up by a part of it… Free movement of goods is critical and any government would want that. We won’t get fresh food. We won’t be the first business to run out. Hopefully pragmatism will come into play, it has to.”
Berkeley’s first-half profits slid 25% to £401.2 million, although “resilient” trading despite Brexit uncertainty and stamp duty tax hikes meant it upgraded full-year forecasts by at least 5%. The shares rose 3%, or 99p, to 3420p.
The firm has splashed out on 11 sites but has a cash pile of £859.7 million, up from £687.3 million in April. Perrins said it was “a bit underinvested”, adding: “It would be better to have it invested in the UK, employing people, but you take a degree of caution.”
Berkeley has committed to pay £280 million a year in dividends until 2025.
Canaccord Genuity’s Aynsley Lammin said: “Clearly the risk of a recession on the back of a disorderly Brexit cannot be ignored, but the group’s comments today confirm it is in great shape and, in a reasonable macro backdrop, has confidence in delivering good returns.”
SPREAD-better IG Group’s revenue slide has accelerated since a European crackdown on the market, the firm admitted today.
Restrictions on borrowing, which can massively magnify client losses , were introduced in August. The company expects first-half revenues to be 6% lower than last year in the six months to November, worse than the 5% registered in September.
The firm is looking to side-step the crackdown as more of its UK and EU clients take on “professional” status by meeting stricter criteria on their wealth and the number of trades they place. Professional clients account for 70% of revenues since the new regime came in, but the number of new clients in its European business has slumped 30% to 8200.
Shares eased 7.75p, or 1%, to 600.75p.
Shore Capital’s Paul McGuinness said: “We still regard this as a resilient overall performance for the six months.”
Online casino operators were hit with £6.85 million more in fines on Thursday as the gambling watchdog stepped up its crackdown on the sector amid fears over money-laundering.
Malta-based operators Casumo and Videoslots were ordered to pay £5.85 million and £1 million respectively for failing to put in place effective safeguards against criminals potentially using the sites to launder illegal cash, as well as preventing vulnerable customers from pumping more cash into online slots. The latest action follows a recent £7.1 million penalty for Daub Alderney, part of the AIM-listed Stride Gaming Group.
Another Malta-based online casino operator, CZ Holdings, has surrendered its licence to operate in Britain after the watchdog began a review. Since 2014, all firms offering casino games to UK players must hold a licence from the Gambling Commission.
The regulator has also written to nine further operators over their conduct while more fines could be on the way as a further six are still under investigation. Individual bosses are also being targeted.
Commission chief executive Neil McArthur said “a large number of operators and their senior management” were falling foul of the rules. He said: “Everyone in a gambling business must understand its policies and procedures and take responsibility for properly applying them.”
Culture Secretary Jeremy Wright added: “Protecting vulnerable consumers is our prime concern.”
The pound surged higher on Tuesday as traders seized on comments from a top European Court of Justice official that the UK could unilaterally change its mind on Brexit.
The ECJ’s advocate-general Manuel Campos Sanchez-Bordona told the court any potential decision by the British Government to U-turn on invoking Article 50 would be lawful. Advice from the advocate-general does not have the status of a ruling, but the full court follows his opinion in around 80% of cases. The final verdict is expected within weeks but the intervention electrified currency markets, pushing sterling up almost a cent against the dollar to $1.2830.
Sanchez-Bordona said Article 50 “allows the unilateral revocation of the notification of the intention to withdraw from the EU”.
Jo Maugham, one of the pro-Remain QCs who brought the case, said the opinion “puts the decision about our future back into the hands of our own elected representatives”. The European Commission has called for additional unanimous agreement of the remaining 27 members.
Currency analysts said the likely ruling “changed the dynamics of the tail-risks” around leaving the EU.
Nomura’s Jordan Rochester said: “For the last two years, [EU chief negotiator] Michel Barnier has said the clock is ticking. The market is taking it as a good thing as it reduces the chance of a cliff-edge Brexit if we can unilaterally reverse it.” But he added that it also “opens up a can of worms” if a new leadership wanted to attempt to renegotiate.
The intervention came a week before a critical vote on the divorce agreement. But former Bank of England governor, Lord King, today launched an astonishing broadside at his successor Mark Carney over the Bank’s controversial scenario forecasts, which set out a possible 10% fall in GDP after a disruptive no-deal Brexit.
King compared the Bank’s forecasts with the “flimsy and arbitrary” assumptions of Project Fear before the referendum and said they were not based on “plausible” scenarios. “It saddens me to see the Bank of England unnecessarily drawn into this project,” he added.
The Bank — understood to have been working on the scenarios for more than a year — published them on the orders of the Treasury Select Committee.
Investec’s economist Philip Shaw said: “It is very difficult when you are constructing scenarios how severe to make them. It is one of the pitfalls. I have a certain amount of sympathy with the Bank.”
In Illogan, Cornwall, the shelves of the Mann family are creaking with 52 tins of baked beans, 16 cans of tuna and more rice than the average Indian restaurant probably uses in a week.
The Manns, who made the papers for stockpilng four months’ food in case of a no-deal Brexit, say “it’s about being able to survive”.
Melodramatic though that sounds, they are only mimicking the behaviour of many businesses across the country, which have been stockpiling for the worst eventuality. And five days away from the looming defeat of the Government’s Brexit withdrawal agreement — opening the door to who knows what? — it’s not exactly surprising much of corporate Britain is taking the safety-first approach.
Thankfully the threat of a no-deal looks to have receded this week, after MPs inflicted defeats on the PM to take more control over the Brexit process, and Europe’s top legal official indicated that the UK could, if necessary, revoke Article 50 unilaterally.
But the real concern is that the damage is already done; it may already be too late to avoid a recession, or at least a sharp slowdown.
The stockpiling of goods by the likes of Mr Kipling-maker Premier Foods (£10 million) or Majestic Wine (£8 million) could have implications for their suppliers on the Continent, as well as our own exporters to the EU.
That’s down to the so-called “bullwhip” effect. In the world of logistics, it means relatively modest changes in customer demand being amplified down the supply chain, like the flick of the wrist on the handle of the whip making far bigger waves at the end of the thong. Over time it can lead to hugely inefficient pile-ups of stock further down the chain, threatening volatile swings in production. Higher demand from customers means retailers order more stock from wholesalers, who in turn order more from manufacturers, who in turn order more from their own suppliers.
If those customers holding the whip handle start stockpiling, then the impact of those decisions may only be felt months later among European supply chains, according to logistics professor Jan Fransoo, in Hamburg. And when those customers stop stockpiling and return to a more normal order level, it will take time for those lengthy supply chains to adjust. Somewhere along the line, even after our trade relationship has settled down (hopefully), he warns that there could be a huge fall-off in European industrial production.
Official statistics on inventory build up can be volatile, Fransoo has produced some rough and ready numbers on the potential fall-out for European firms. If the UK imports around €300 billion (£270 billion) in physical goods from the European Union every year, he estimates an extra month of stockpiling, or about €25 billion of goods.
Total European industrial production is around €2.5 trillion a year, so his rough calculation is that UK firms are stockpiling around 1% of that; and if virtually all of that is being bought in the present quarter that means a massive 4% jump in European production.
That’s before any potential for over-reaction from stockpilers. “If this were all more or less true, the rebound on the bullwhip next year could be huge, with drops in import figures that would go well beyond the growth in the present quarter,” Fransoo adds.
Leavers might welcome such difficulties for our Continental neighbours as giving them added incentive to get back to the table and offer a better deal. But it scarcely needs saying that economic pain in Europe is not good for us here, given our close trading links.
And the bullwhip problem isn’t confined to the Continent, as it will almost certainly hit anybody over here exporting to the EU. Industry sources talk about whisky producers piling up stocks for Christmas, but planning to continue the production surge in the case of a no-deal Brexit, building up more inventory on the Continent. At some point the stockpiling boost for our own — admittedly smaller — export sector will fade, denting production and slowing economic growth.
The bullwhip can be countered with greater communication of demand along supply chains to avoid those larger ripples fanning out across wholesalers, manufacturers and suppliers. But given the posturing of the Westminster political bubble around the Brexit deal or no-deal — playing a game of ideological chicken with the country at stake — there’s no clear message to send; that’s why the country is running out of warehouse space for frozen and chilled food.
If there are no answers soon, what will our inept political class do when the entire country starts behaving like the Manns?
Foxtons founder and billionaire Jon Hunt has added to his huge fortune after racking up multi-million-pound profits on the £120 million sale of a City office block, the Evening Standard understands.
The shrewd Hunt, who sold the aggressive estate agent he founded at the peak of the market to private equity firm BC Partners in 2007, has offloaded the Cannon Green office development to Korean investor Kiwoom via his latest property company Ocubis.
Industry sources said Hunt is likely to have more than doubled his money on the development, having bought the former Princess House for £29 million in 2014 and spent around £25 million on a major refurbishment before rebranding it Cannon Green.
The sale is believed to have completed this week.
According to the Sunday Times Rich List Hunt is worth around £1.4 billion, owning Heveningham Hall in Suffolk and some £600 million in commercial property. Last year he won a 10-year battle to build a super-basement under his Kensington home housing a museum for his collection of cars.
BT is close to completing the sale of its historic central London HQ for around £220 million, the Evening Standard understands.
The struggling telecoms firm appointed agents Cushman & Wakefield to handle the sale of the Newgate Street base next to St Paul’s Cathedral in the summer as part of plans to save £1.5 billion.
The current headquarters stands on the site where Guglielmo Marconi made the first public transmission of wireless signals in 1896. The move will end BT’s association with the site stretching back more than a century.
Market sources said the strong sale price — rumoured to be to a private Hong Kong buyer — reflected the scarcity of sizeable development sites in the City.
BT, which also unveiled 13,000 job cuts as a result of its overhaul, is considering a number of options for its new home including Canary Wharf’s Wood Wharf and Stratford’s International Quarter. BT was unavailable for comment.
BT is to remove Huawei equipment from its 4G network. The move comes amid concerns in the West over the Chinese firm’s involvement in telecoms infrastructure.
The City watchdog flagged up plans to put much tighter reins on the trading of volatile cryptocurrencies today as bitcoin plunged again.
The Financial Conduct Authority will consult early next year on a potential ban on the sale of products to retail customers such as contracts for difference linked to cryptocurrencies.
CFDs allow customers to bet on volatile currencies using borrowed money, enhancing winnings but also magnifying potential losses on a hugely volatile asset class.
The FCA’s move follows the final report of the UK Cryptoasset Taskforce in October. Bitcoin was at the centre of a buying frenzy a year ago that pushed the price to almost $20,000 but it has fallen by more than 80% since then. It lost another $241 to $3362 today.
The watchdog is also widening the scope of a European crackdown on spreadbetting introduced this summer to include so-called “turbo” certificates, which have similar risk features and payout structures to CFDs.
