What shady Italian
company?
Posted on 12/03/2006 2:09:51 PM PST by calcowgirl
SACRAMENTO - An Italian company with a blemished history quietly purchased a U.S. firm that runs lotto and other online games in California and 24 other states - a development that has surprised and angered California lawmakers into action.
But the state lottery's acting director is standing by her decision to approve California's part in the $4.7 billion merger, as the lottery and its online operator, GTECH, reassure critics it will be business as usual.
Nevertheless, legislators and government watchdog groups are concerned about whether the lottery, in the wake of acquisition by Lottomatica, will remain fair to players, prize winners and schools, which get a third of the revenue.
After being shown internal documents obtained from the government on the merger, they questioned the buyer's business practices; lotto terminal shutdowns; lack of audits; absence of vendor and employee background checks; and if the U.S. accounting and legal probes of the deal were adequate.
A state senator - who learned of the merger when asked to comment on the documents - said he was scheduling an emergency hearing of his government-organization committee that oversees the lottery by mid-December.
Sen. Dean Florez, a Fresno-area Democrat, also said any upper-house confirmation of acting Lottery Director Joan Borucki, a gubernatorial appointee who approved the deal with little public scrutiny, would now be in jeopardy.
"Here is a sole source, dead of the night, no-public-hearing contract, not only not brought to the Legislature, but not even brought to the commission itself," Florez said. "I think it's actually grounds for the Senate Rules Committee to give the acting lottery director a thumbs down."
Lottery spokesman Rob McAndrews and GTECH said they stand ready to answer lawmakers' questions.
GTECH President W. Bruce Turner said the company would, among other things, promptly notify California in case of "any change of control" of its buyer, that Lottomatica "will address personal disclosure requirements" for key employees and others, and implement "anti-corruption and anti-bribery programs" like those of GTECH.
The Attorney General's Office, responsible for legally defending the lottery, also was surprised like others.
"I'm not aware of the lottery seeking our advice or counsel on this matter," said Nathan Barankin, an agency spokesman.
Government watchdog groups voiced fears.
"This decision brings into question the lottery's integrity," said Fred Jones, an attorney for the California Coalition Against Gambling Expansion. "Who will the people and schools of California hold accountable if this fateful decision eventually proves unwise?"
McAndrews said that despite new ownership, operations and senior management of GTECH will remain essentially unchanged and that there was no need to have the purchase by Lottomatica formally acted on by the policy-setting Lottery Commission.
McAndrews said the acting lottery director regularly briefed commissioners on the progress of lottery probes of the proposal during meetings in the lottery's Sacramento headquarters.
The California, Nebraska and Oregon lotteries dispatched security agents to Italy, where they joined the FBI, State Department, Interpol and Italian police to scrutinize Italian criminal files.
Meanwhile, the North American Association of State and Provincial Lotteries hired the Grant Thornton accounting firm to report on financial questions about Lottomatica.
Though findings were generally positive, they included the Italian government's $7.5 million fine against Lottomatica for colluding with a competitor and a similar penalty for a one-day outage of the country's games, according to government records acquired by MediaNews Group through a California Public Records Act request.
"We were aware of all of those issues and none of them were found to have any impact on GTECH's ability to meet the terms of our contract with them," McAndrews said. "That's what the decision was about - whether we would be terminating our contract with GTECH based on the fact that they were merging with Lottomatica."
Records show lottery investigations also raised lesser concerns, including the discovery that Lottomatica does not perform background checks on new employees and vendors. The Italian government also does not verify it is receiving the correct amount of revenue from Lottomatica.
GTECH also runs the Texas state Lottery.
Shouldn't state legislators reconsider their lottery operations now that a foreign company controls it?
Ah, yes. Borucki. This is the same dingbat that was calling for a tax-by-the-mile gasoline tax a couple years ago when Arnie had her working Transportation issues.
The lotteries should be renamed, "The stupid persons tax".
Lottomatica home page:
http://www.lottomatica.it/home/index.html
The Mobiliare.
Borucki. This is the same dingbat that was calling for a tax-by-the-mile gasoline tax a couple years ago when Arnie had her working Transportation issues.
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ding ding ding ding ding...
That Gub, he sure can pick 'em.
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