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Jul 29, 2004, 1:44 pm (1 comment)
Gtech Holdings Corp. said Thursday that the Securities and Exchange Commission opened a formal investigation into the lottery operator's dealings in Brazil.
The SEC previously issued an informal request for documents from Gtech, as part of its investigation into public corruption matters in Brazil. Gtech said regulators told the company that the new order is a routine action, unrelated to any recent developments, that is intended to give the SEC adequate investigatory powers if needed.
Gtech said it also being sued civilly by Brazil's Public Ministry over the company's contracts with Caixa Economica Federal, the state-owned bank that runs Brazil's lottery. Gtech has been plagued for much of the past year by allegations of bribery involving the bank's awarding lottery contracts to the company.
Shares fell $2.26, or 5.25 percent, at $40.80 in morning trading on the New York Stock Exchange.
The Brazilian government's lawsuit seeks damages of about $650 million, the amount paid to Gtech in two contracts from 1997 and 2000. Gtech said it believes that the contracts were valid and enforceable, and so does not expect material liabilities to result from the claim.
Gtech said in June that it was lowering second-quarter earnings guidance because of the Brazilian scandal. The company now expects to earn between 70 cents and 75 cents per share, down from a previous forecast of 75 cents to 80 cents per share.
AP
Maybe GTech should stick to North America?