Branson proves there's no such thing as a free lunch in British lottery tangle

It's been a tough week for the British national lottery. So much a part of daily life since its launch in 1994, it has been dragged through the mire and the courts this week in a good old-fashioned row about money. And its problems may not be over yet.

Just as the new director general of the lottery regulator, Oflot, has been appointed to restore public confidence, it was revealed yesterday that the auditor general has not had access to the lottery's accounts since it began.

A nudge here and a wink there and everyone can have a slice of the pie.

Not so for Richard Branson, the boss of Virgin, who has called on the government to terminate the current lottery licence and rename it in true, post-Diana style - the People's Lottery.

The row began last Monday when Mr Branson won his libel case against Guy Snowden, the former chief executive of G-Tech UK, a subsidiary of G-Tech Corporation which owns a 22.5 per cent share in the lottery operator, Camelot.

The jury decided Mr Branson was telling the truth when he accused Mr Snowden of trying to bribe him to withdraw his rival bid to run the lottery in 1993. Virgin could not be bribed. Mr Snowden vigorously denied the allegations.

But his fate was sealed with a few words uttered over lunch: "I mean what can we do for you personally, Richard?"

The lunch cost Snowden £100,000 in damages to Branson and costs of £3 million, his directorship of Camelot and his chairmanship at G-Tech Corporation in the United States.

Even as he celebrated on the steps of the High Court, fists clenched in victory, Branson was not satisfied. He turned his anger on the director general of the lottery regulator, Oflot, Peter Davis, demanding his resignation.

The first of many blows was struck when Branson said Davis had harboured "serious reservations" about awarding the lottery licence to Camelot and that he had ignored the original allegation of bribery.

For Davis, who had given evidence on G-Tech's behalf during the case, his position appeared "untenable".

On Tuesday, the press joined Branson in raising doubts over Davis's ability to restore public confidence in the lottery. Had not Davis accepted seven free flights on G-Tech jets and helicopters while on a visit to the United States?

And was he not criticised by the National Audit Office for making "serious errors of judgment" in his relationship with G-Tech? It seemed his days were numbered as the press and politicians called for his resignation.

It came a lot sooner than that. Later the same afternoon Davis was "summoned" by the Culture Secretary, Chris Smith, to visit him at the Department. Jostled by photographers on his way into the building, three hours later Davis escaped by the back door, out of luck and out of a job.

The inevitable questions followed - was he pushed or did he jump? Or was it a case of political "persuasion?" Smith maintained Davis's resignation was a "mutual" decision taken "in the interest" of the national lottery. But sensing a whiff of political trickery, the shadow culture secretary, Francis Maude, accused the government of persuading Davis to resign in order to avoid embarrassment.

Indeed, press briefings before Tuesday afternoon's meeting suggested the government wanted the issue cleared up quickly. Did Tony Blair have full confidence in Davis? "He has absolute confidence in Chris Smith's ability to see Davis this afternoon," was the coded reply.

Branson declared himself delighted with the result - ticket sales for Wednesday night's lottery increased by 2 per cent - and for the man who took on British Airways and won, another victory was complete.

But with revelations about the complicated relationship between G-Tech and the lottery published daily, the key question facing the new lottery watchdog, John Stoker, is what to do about Snowden.

As a large shareholder in the GTech Corporation, Snowden's salary from his shares in 1997 reached almost £2.5 million. If Davis had to go, it seems incredible that Snowden can continue to profit from the lottery for much longer.