BusinessCompany NewsPartyGaming in BDO indemnity mystery

PartyGaming in BDO indemnity mystery

PartyGaming is facing questions over liability promises it is thought to have made to BDO Stoy Hayward over the US ban on online gaming

PartyGaming reiterated last week that it had issued indemnities to advisers
over the US ban on online gaming, which are now thought to be the subject of
increasing interest from analysts.

Referring to speculation about the US Department of Justice’s reported
pursuit of advisers, PartyGaming said: ‘Certain customary indemnities have been
given by the company to its advisers in connection with the company’s initial
public offering in June 2005 and other assignments, and claims under such
indemnities cannot be ruled out. The group has not, however, received notice of
any such claim to date.’

It is unclear what liabilities may arise in the US, but BDO has already had
to place certain restrictions on travel on PartyGaming’s audit team.

BDO carried out the reporting accountant work on PartyGaming’s IPO, and
continues to be its auditor.

Neither BDO not PartyGaming would elaborate on the indemnities this week,
citing client confidentiality. The online gaming company has been in discussions
with the DoJ since June in relation to its activities before the enactment of
the UIGEA on 13 October 2006, which forced non-US companies to withdraw from the
market.

After its US retreat, PartyGaming’s total revenue was down 68% to $212.5m
(£106.3m) compared to $661.9m for the same period in 2006.

The FTSE 250 company added that the talks with the DoJ were continuing but it
was ‘too early to assess the likelihood of any particular outcome of these
discussions.’

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