Gtech Holdings Corp., the world’s
biggest seller of computerized lottery systems, received a
subpoena from the U.S. Securities and Exchange Commission for
documents on the its Brazilian operations.
The investigation involves allegations of wrongdoing during
negotiations for a contract extension, the West Greenwich-based company said in statement. Gtech has said that it
acted appropriately. The company said it is cooperating with
the probe.
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Gtech said in May that its contracts to provide services to
Caixa Economica Federal, a Brazilian bank and operator of Brazil’s
national lottery, were under scrutiny by the SEC and regulators in
Brazil. In March, federal attorneys with Brazil’s Public Ministry
recommended that criminal charges be brought against nine people,
including Gtech and Caixa executives.
“This investigation will weigh on the stock until it is
resolved, and the timing of any resolution is unclear,” Celeste
Mellet Brown, an analyst at Morgan Stanley, said in a note to
investors. She cut her rating on the company’s shares today to
“underweight” from “overweight.”
The Brazilian government in March said that it had “strong
evidence” Waldomiro Diniz, a former aide to Cabinet Chief Jose
Dirceu, may have helped Gtech extend contracts in 1997 and 2000.
Brazil accounts for about 9 percent of Gtech’s revenue,
according to analysts.
Bloomberg News
