Branson sues troubled US lottery company

DAVID USBORNE and CHRIS BLACKHURST

GTECH, the powerful American lottery company accused this week by Richard Branson of attempted bribery, has been ousted from three US states where it has been entangled in allegations of shady business practices.

A spokesman for GTECH confirmed yesterday that it had failed to retain contracts to manage lotteries in Kentucky, Maryland and Arizona, but vigorously denied that the losses were the consequence of the legal controversies.

He was speaking on the same day as Mr Branson announced he was suing GTECH for calling him a liar over his bribery claim. GTECH said it would defend the action.

In the US, GTECH, which controls 26 of the 37 state lotteries, has never been found guilty of illegal activity and insists that it has "never been the target or the subject of an FBI investigation". However, its multiple brushes with scandal have helped to fuel suspicions that it has used borderline tactics to buy influence.

In Kentucky, Guy Snowden, the company's joint head - and the man accused by Mr Branson of trying to bribe him - refused to testify to a grand jury, opting to take the Fifth Amendment right to stay silent, in a federal case investigating claims that GTECH's former national salesman, David Smith, had defrauded his own company by channelling funds to a well-connected former state official, Rogers Wells, and receiving kick-backs from Mr Wells.

GTECH said Mr Snowden took the Fifth because he did not have time to read the "literally thousands of documents" pertaining to the case before he was due to appear.

In Arizona, GTECH made headlines in 1993 when the then lottery director, Bruce Mayberry, claimed that he received a leg of rotting mutton in the post from Mr Smith at a time when he was trying to force GTECH to comply with costly contract provisions to upgrade its lottery terminals.

In Maryland, in 1991, GTECH was embarrassed after it emerged that it was using the state's disgraced former governor, Marvin Mandel, to lobby for the state's lottery contract.

In New Jersey, a virtual replay of the Kentucky case against Mr Smith, again involving side payments to figures of influence and large kick- backs, is due to take place in a federal court next year.

Following Mr Branson's allegation, made on television and repeated in newspaper and radio interviews, GTECH went on the offensive, denouncing him as a liar. "Given the nature of the accusations that they have levelled against me and their attack upon my integrity and given the importance of the issues that have been raised, I have had no other option than to issue a writ for defamation against GTECH," Mr Branson said yesterday.

The action will centre on the allegation that over lunch at Mr Branson's home in September 1993 and in the presence of a colleague, John Jackson, he was offered a bribe by Mr Snowden to persuade him to pull out of the contest to run the National Lottery. It was time, said Mr Branson, for "all of the issues involved in this matter to be heard before the only public forum available, namely a judge and jury in the High Court where the question of GTECH's allegations and conduct will be put to the test."