29 Sep 11
Barry Carter: AGCC, You Failed
In the aftermath of the AGCC suspending Full Tilt's license, journalist Barry Carter suggests this could have been prevented.
It took nearly two weeks (and before that three months) for the Alderney Gambling Control Commission (AGCC) to revoke the license of Full Tilt Poker. We are only a few hours into this latest plot twist, but after a two weeks of silence, there has already been a big backlash against the AGCC by the players, no matter how inevitable this news was.
Should we be directing our frustration at the AGCC right now, after all they are not accused of money laundering, they didn't accept deposits that they couldn't process, they didn't report funds as liquid when they had been seized by the DOJ. These were all things that were out of control of the AGCC, and they noted this in their press release which stated they were 'fundamentally misled' about the funds at Full Tilt.
Out Of Their Control?
But let us look a little deeper into what was in their control. The accounting evidence in the determination notice was compiled by accountants Dixon Wilson on the 28 June 2011. These audits highlighted that around $331 million was seized by the US Department of Justice between 2007 and 2011. These frozen funds were reported as liquid, and should have been immediately brought to the attention of the AGCC by Full Tilt.So in 2007 Full Tilt should have reported this, and by not doing so, they managed to fool the AGCC for four years?
Four years?
What on earth does a regulator do if they cannot notice a $331 million shortfall on account over four years? Is it not the job of a regulator to regularly audit a company with millions of dollars of customer money, instead of naively accepting whatever play money account balance is reported at the end of the tax year?
Where were the Audits?
It depends entirely on the industry and the country the business is in, but most regulators insist on annual accounting audits by third parties to ensure things like this do not happen. Full Tilt was a privately limited company, which usually means that they would be subject to less mandatory audits, but surely that is no excuse?Very few privately limited companies would ever hold onto customer funds for significant amount of times like an online poker room does. In that regard they are operatively more similar to a bank, and with so much potential for financial ruin, surely the AGCC should have treated regulating them in the same manner?
Although I am sure that the AGCC do ensure company accounts are audited regularly, I cannot believe for one second that this happened with the degree of scrutiny they should have been. Let me remind you once again, $331 million seized since 2007 - how can any remotely experienced accountant miss that?
They told us that they allowed Full Tilt an extension on their hearing to pursue an investor as it was in the player's interest to do so, because it would enable the players to get their funds back. Rather fortuitously this also allowed them to get £250,000 in operating fees that were owed to them. Now that they have revoked Full Tilt's license, I am not seeing much mention to them still looking to get the players funds back any more.
The AGCC are trying to say they were fooled by Full Tilt for all this time, I say that the AGCC failed us. Would the events of Black Friday still have happened no matter what they did? Yes. But had Full Tilt been regulated with more scrutiny, had they been audited properly in the last four years, not only would Full Tilt's accounting shortfall been noticed sooner, this most likely would have been prevented from ever happening at all.
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Related Articles:
AGCC Revoke Full Tilt Poker's License
AGCC Determination Notice: $331 Million Seized by DOJ, Full Tilt Insolvent
#1
ruuuic, 29 Sep 11 17:33
AGCC keep up the good work#2
boboistina, 29 Sep 11 17:41
i love AGCC and their work, in fact i love them so much that i will NEVER open an account on any other site they license, nor will i deposit any funds on the ones i have already opened account or played at.Nice article BTW.
#3
Pe6o0o, 29 Sep 11 17:44
+1#4
datsmahname, 29 Sep 11 17:46
AGCC basically revoked the license initially, but then FTP argued and only then was the license suspended.Given that apparently NO ONE showed up to argue their case at the hearing, I cannot understand this bold association that AGCC failed to give them an opportunity to get their license back.
No doubt, they made huge mistakes in oversight and hopefully they'll learn from it but I don't see any glaring problems with the way they've handled the situation in recent months.
#5
datsmahname, 29 Sep 11 17:54
Think about what happened, the US DOJ does their job and goes after FTP. AGCC responds by not allowing FTP to continue to operate in other countries.Yep, they left the hard work to other folks, and they may have had some very selfish interests for shutting down FTP... but it was still the right choice when they made it.
#6
eteris, 29 Sep 11 17:58
"handled the situation in recent months" - and where were they since 2007?#7
datsmahname, 29 Sep 11 18:10
@6 Where they've always been, under equipped to properly oversee a massive billion dollar company.#8
datsmahname, 29 Sep 11 18:15
So clearly they shouldn't have been offering the license to begin with right? But why would a small country pass up such a hugely profitable decision. I can only speculate here about Gibraltar's situation but I suspect the country has benefited greatly.If this has come at our expense, well we could play the blame game all we want. We could go all the way back to the UIGEA and say that BAD legislation lead to a climate where these problems were very likely to arise.
#9
bbosstjan, 30 Sep 11 10:16
I guess time is coming for a lawsuit against AGCC for not doing their job, which resulted in players loosing money due to fraud comited by FullTilt and co.#10
boboistina, 30 Sep 11 13:12
I think they knew about fulltilt but were paid well to look the other way, untill DOJ got involved and they had no other choice than to suspend FTP's license.#11
datsmahname, 30 Sep 11 20:19
Its also possible that FTP was making so much money and kept on such good terms with the AGCC (up until recently of course) that the AGCC simply gave them a lot of rope.Given the resources available to the AGCC, licensing a company that may have appeared to require very little oversight may have been a welcome arrangement.