FRANCE BACKS OFF ON NYLANDER ARREST (Update)

26 October 2007

Embarrassing pull back after international outcry


The French government, in the midst of working toward a reasonable rapprochement with the European Commission over its monopolistic policy on online gambling, has been placed in the embarrassing position of having to distance itself from the arrest Monday of Unibet CEO Petter Nylander (see previous InfoPowa reports)

The arrest, by Dutch officials on a European warrant issued by a French judge exploiting 19th century protectionist laws, sparked an international outcry and a warning from the European Commission.

The Financial Times reported late Tuesday that the French government had ordered the case against Nylander to be dropped - but it was not before a series of connected events unfolded.

Nylander was due to appear before a judge in a closed hearing as the Amsterdam prosecutor’s office sought to extend his detention, although a European Commission source said: “Instructions were given to drop the proceedings,” after a spokesman diplomatically criticised the arrest by implying that Nylander was innocent of wrongdoing.

Official spokesman Oliver Drewes had earlier reiterated the Commission’s contention that French gambling laws were out of line with EU rules. “In our view, somebody might have been arrested who is innocent under [EU] law,” he said.

But at that point France’s European Affairs Minister, Jean-Pierre Jouyet, insisted the move was “perfectly consistent with the internal market” as "no internal market for gambling existed."

The basis of the arrest was the proceedings issued last year against Unibet by Française des Jeux, the French lottery monopoly, and PMU, the monopoly that governs betting on horses. These organisations claimed that Unibet was in breach of national laws passed in 1836 and 1891 protecting state-owned monopolies.

Later, the French government appeared embarrassed by the arrest, which comes as Paris seeks a compromise deal that will position it in compliance with EU principles. Last week, after the French interior minister said she wanted French casino operators to be allowed to launch internet betting services, Partouche's share price jumped over five per cent.

"It is not a matter between the state and Unibet," said a spokeswoman for the French budget ministry. “Française des Jeux and PMU will be told to drop their complaint.”

The FT reports that Nylander’s arrest was criticised by Unibet, the European Commission and Swedish politicians, who all argued that Unibet’s operations were legal under EU law.

Christofer Fjellner, a Swedish member of the European parliament, said: “A worrying fact is that the European arrest warrant, an instrument put in place to combat terrorism and organised crime, is now used by the French government to punish those who fight French protectionism.

“What will be the next sector to be threatened with French arrests? The French are turning the European arrest warrant into a political tool.”

A spokeswoman for Unibet said the arrest was a surprise and lawyers were working for Nylander's freedom. “They should release him immediately,” she said.

Charlie McCreevy, the internal market commissioner for the EC who has repeatedly clashed with France on the gambling issue, denounced the arrest. “They may have arrested an innocent man,” his spokesman said.

McCreevy began legal action against France over the summer after the organisers of the Tour de France cycle race, sponsored by FdJ, prevented the Unibet team from taking part in the French legs. Eric Woerth, the French budget minister, is due to discuss the opening up of the French online gambling market with Mr McCreevy on November 6.

Jean-Pierre Jouyet, the French Europe minister, told reporters in Strasbourg it was ready to open the market to all who met certain conditions: “We are ready to find a new framework for gambling if conditions are respected. Those wanting a licence would have to satisfy criteria on preventing addiction and money laundering.”

Unibet has been a vociferous opponent of European state gambling monopolies, which it claims usurp European Union principles of free trade and services. The Stockholm-listed company became one of the highest-profile internet betting firms in France after its cycling team, which sports the firm’s logo on its shirts, was banned from this year’s Tour de France. Unibet has been threatening to sue the organisers over the ban.

In a statement shortly after Nylander's arrest, Unibet said it was “outraged by France’s total disregard” of EU law, pointing out that in July France’s highest court had itself overturned a decision banning a Maltese operator from offering online betting on French racing. Its deputy chief executive, Ragnar Hellenius, said: “We are upset at this unlawful act and harrassment against our company.”

Earlier this year, John Anderson, then chief executive of online gambling firm 888 Holdings, voluntarily attended an interview with the French authorities, while Patrick Partouche, head of the French casino operator Groupe Partouche, was fined and handed a suspended sentence for lending his name to an offshore poker website.

Austrian executives from the Vienna-listed online gambling group Bwin were detained last year by French authorities for advertising its product via a football sponsorship.

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