Football Management

Commentary on the management of over 160 English football clubs by Dr John Beech, winner of the FSF Writer of the Year Award 2009/10 Twitter: @JohnBeech Curator of! Football Finance

Posts Tagged ‘Corruption’

Sepp Blatter’s already legendary Jim Callaghan impersonation

Posted by John Beech on May 31, 2011

Blatter’s demeanour at last night’s press conference was clearly one of defiance – it seems he really is blind to the mess the world governing body is in.  Mind you, if you watch again withe sound turned down (1), his body language is less self-confident – the ceaseless paper shuffling, and constantly tweaking the pair of microphones in front to him as if a pair of nipples had suddenly been thrust at him in some seedy nightclub.

The chances then of some serious reform of FIFA on his about-to-be-extended-unopposed watch are as remote as ever.  He is only vulnerable to pressure from outside stakeholders such as broadcasters and sponsors.  Broadcasters are unlikely to bother too much – the World Cup will be watched as eagerly by fans whether he or Caligula’s horse is in charge of FIFA.  Sponsors may yet prove more difficult to accommodate however, and there are already mumblings (2).  Sponsoring is not merely a questioning of gaining exposure for your brand – it only works effectively if there are shared brand values.  Interestingly, Coca Cola list their shared company values as ‘Leadership, Passion, Integrity, Accountability, Collaboration, Innovation, and Quality‘ (3).  It’s hard to see that the present circumstances are helping Coca Cola present their values of leadership, integrity and accountability much.  Adidas too will not be particularly happy bunnies this morning – they state on their webpage for Vision and Governance: “But leadership is not only about results, it is also about how success is achieved. We are accountable for the way we do business… We are committed to good governance“.  Not a great deal of brand synergy going on there at the moment either.

The one thing that can be said of Blatter is that he is a survivor.  Allegations that he acted corruptly date back at least to 2002.  As Nick Harris reported in The Independent nine years ago: “Sepp Blatter was yesterday accused by 11 senior Fifa colleagues of trying to buy votes to secure his re-election as president of football’s world governing body. The dramatic move could end the 66-year-old’s long career in the game.  In an unprecedented move in Fifa’s 98-year history, Blatter became the subject of a formal legal complaint filed in the Swiss courts by five Fifa vice-presidents and six other Fifa executive committee members.” (4)  Maybe we can’t expect too much in the way of sponsorship withdrawal as these allegation haven’t stopped them.

Blatter does have an Achilles heel nonetheless.  FIFA remains under investigation by Swiss federal authorities (5), as revealed by Matt Scott of The Guardian.  The Swiss may be more fussy than Adidas and Coca Cola when it comes to seeing their national ‘brand’ under threat.  Exemption from anti-corruption legislation for FIFA may well be lifted, especially as it applies to ‘not for profit’ organisations, an increasingly badly-fitting description for a body with reserves of almost three-quarters of a billion pounds (6).

One way or another, we shouldn’t expect a swift cleaning of the Augean stables, especially as Blatter is no Hercules.

Posted in Corruption, Ethics, FIFA, Governance, Public relations, Sponsorship | Tagged: , , , , , | 3 Comments »

Croydon’s crisis

Posted by John Beech on September 7, 2010

Croydon Athletic are in serious danger of disappearing, as a result of issues surrounding their owner, Mazhar Majeed, who, it is reported, has been arrested by customs officers over claims that he has laundered tens of millions of pounds through Isthmian League Croydon Athletic (1).  Majeed has only been involved with the club since 2008.

In a fast-breaking story which is not well covered by the bigger papers, it appear s that manager Tim O’Shea and his assistant Neil Smith have resigned (2), Martin Eede has changed his mind about taking on the vacant role of Chief Executive (3), players wages have not been paid (4), HMRC officials have paid a visit (5), and matches are now being cancelled (6).  A deeply worrying position for the fans to find the club in.

Whether Majeed is innocent or guilty, and the matter is of course sub judice so I’ll refrain for commenting, it needs to be pointed out that over a year ago there were dire warnings that football clubs were particularly vulnerable to being used as vehicles for money laundering.  In July 2009 I blogged on a report (7) by FATF, an intergovernmental body (8), which drew attention to a number of cases of money laundering which had taken place in the football industry.

Just how slack is financial regulation in the football sector?  Can we really press on without some serious tightening up?

CROYDON UPDATE – 23 September 2010

Croydon Athletic have won the first major survival battle – the Isthmian League is allowing the club to resume playing ‘subject to certain conditions, to which the Club have agreed‘ (A).

Posted in Benefactors, Corruption, Governance, Ownership | Tagged: , , , | 4 Comments »

More controversy at Halesowen Town

Posted by John Beech on July 12, 2010

Halesowen Town has been a much troubled club over the past few years, much of it associated with erstwhile owner and manager Morrell Maison, and the club passing into Administration (see many postings passim).

The latest problem relates to current manager Matt Clarke and player Scott Rickards, although the allegation which the FA charge relates to is to do with an alleged betting scam during the 2007/8 season when both were still at Redditch United (1).

Meanwhile the long-running saga of the takeover by the Ingram brothers drags on, and the club has been told by the FA that it will miss out on this year’s FA Cup as the takeover has yet to be ratified.

An earlier press report suggests that the ban is because the club did not compete in an FA competition last year (2).  If this is correct, what a ridiculous state of affairs!  It means that a one-year ban for a breach of one rule must automatically become a two-year ban under a second FA rule!  The club will, however, be allowed to play in the FA Trophy according to the latter report.

If ever a club deserved better luck with the company it has found itself in, it must surely be the Yeltz.  Any insight on why the takeover has yet to be completed would be appreciated.

Posted in Corruption, Football Association, Governance, Ownership | Tagged: , , , | Leave a Comment »

‘Blowing the Whistle’

Posted by John Beech on May 11, 2010

There is a thin line between tax avoidance – the perfectly legal exploitation of the rules of taxation in order to minimise the amount of tax to be paid – and tax evasion – stepping beyond that line into an illegal act in order to escape due tax, and it’s a line that few even approach. Not so in the beautiful game/ugly business.  The attempt to form a CVA by Portsmouth’s Administrator has already raised an issue in this area over the payment to players’ companies of image rights rather than the payment of conventional salaries which are liable to the normal rates of income tax.  Tax issues are also the basis of recent moves by HMRC against Harry Redknapp, Milan Mandarić and Peter Storrie.

Worried that any discussion of the finer points of taxation, and the related subject of club ownership based in offshore tax havens, is going to be unutterably dry and bordering on the incomprehensible?  Wrong!

A new report called ‘Blowing the Whistle: Time’s Up for Financial Secrecy‘ has just been published by Christian Aid, who worked with the Football Supporters Federation and Supporters Direct in its compilation.

The report can be summarised thus:

This report looks at the finances of league football in the UK and the Republic of Ireland – throwing into sharp relief the boardroom shenanigans that have brought a number of clubs to their knees – and it analyses the impact of financial secrecy on football and the developing world.

We are not suggesting that anything illicit or untoward is taking place in the clubs that we identify. We also recognise that some people will use tax havens to reduce tax, rather than conceal information, and that tax reduction will sometimes reflect a genuine shift of economic activity, rather than hidden tax abuse. Our concern, however, is that the opaque nature of tax havens masks the truth, whether or not there is anything to hide.

With the World Cup in mind, we also present the host country South Africa as a case history, looking at what financial secrecy means to the most powerful economy on the African continent.

Among the findings are:

Manchester United, recently pipped to the Premier League title, [is] still top a new Football Secrecy League.

A further 14 Premier League clubs and another 10 from around Britain and Ireland are effectively based in tax havens.

It also explains how financial secrecy means trade-related tax-dodging costs poor countries $160bn every year.

This is one-and-a-half-times the global aid budget, and enough, if used according to current spending patterns, to save the lives of 350,000 children under five.

The clubs are named by the way.

The style of the report is eminently accessible – you certainly don’t need to be an accountant to understand it – notwithstanding that it was researched by two Fellows of the Institute of Chartered Accountants in England and Wales.  Download it now!

Also out is a report called Player and Referee, Conflicting Interests and the 2010 Fifa World Cup by South Africa’s Institute of Security Studies which, through a series of case studies looks at some worrying aspects of the imminent event (direct download here).

Both reports are available directly through links on my LINKS webpage, in a section of Reports which I will be expanding in the immediate future.

Posted in Corruption, Governance, HMRC, Ownership | Tagged: , , , | Leave a Comment »

Money laundering

Posted by John Beech on July 1, 2009

A new report (1) by FATF, an intergovernmental body (2), draws attention to a number of cases of money laundering which have taken place in the football industry.

To be clear, money laundering includes not only the popular image of piles of numbered banknotes from a robbery that need to be converted in clean money, but ranges through various white collar crimes related to ‘bungs’ and ‘kick backs’, to tax evasion.

Only last week an instance came through the English courts involving former directors of Derby County (in no way associated with the present management team) and there were some guilty verdicts (3). Back in the nineties, Stephen Vaughan, now at Chester City (see 4 and 5) was investigated with respect to the laundering of drug monies, but no charges were brought (6).

I doubt that money laundering is in any way a widespread problem in English football, but what the report highlights is its vulnerability to becoming a vehicle for money laundering. Specific reasons, the report argues, for this include the culture of secrecy (7) and the way that criminals are drawn to sport, and football in particular, because of the celebrity lifestyle associated with the ‘big rollers’.

Perhaps another reason that ethical issues may be pushed to one side is also cultural: the compelling idea that ‘the club is everything’ and ‘winning is everything’, even that ‘staying up is everything’.

However much governance is tightened up, there is a need to tackle the problem at its causes rather than tackling the symptoms. The fact the causes are essentially ones related to organisational culture make the solutions especially challenging.

Posted in Benefactors, Corruption, Organisational culture | Tagged: , , | 2 Comments »

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