MP calls for inquiry into Leeds United
Lib Dem's Phil Willis wants government investigation
Court case shedding light on Bates' controversial deal
David Conn The Guardian, Wednesday 4 March 2009
The Liberal Democrat MP Phil Willis has called on the government and the football authorities to launch an investigation into the ownership of Leeds United and the conduct of the club's 2007 administration by KPMG, following declarations made by the club in Jersey court proceedings. Leeds are suing a Jersey-based company, Admatch, for £190,400 the club say they are owed, while Admatch's owner, Robert Weston, is arguing that he was left with £1.43m unpaid when one of the Leeds United went bust in 2006.
The court ordered Leeds to disclose who owns Forward Sports Fund, the company registered in the Cayman Islands which ultimately owns Leeds, and other offshore companies involved when the club went into administration. These relationships were controversial at the time of administration, because one offshore company, Astor Investment Holdings, agreed to waive repayment of debts totalling £17.6m if Ken Bates' and Forward's bid to buy back the club was accepted. Other, larger bids had to include Astor and Krato as major creditors, so the overall return to creditors was lower and Bates won. KPMG told the Guardian this week that the firm relied at the time on statutory declarations (sworn statements) from Bates, his solicitor Mark Taylor who is also a Leeds director, and Shaun Harvey, Leeds' chief executive, that "there was no connection between Astor and Krato with Forward Sports Fund".
It was then pointed out that Leeds's 2006 accounts had stated that Astor "has an interest" in Forward, but Bates' solicitor Mark Taylor said the connection had been severed before the club went into administration.
At a Jersey court hearing on 29 January, a letter from Leeds' solicitors, replying to Weston's questions, was read out, stating of Forward's formation: "One share was initially held by Astor Investment Holdings Limited, a unit trust fund based in Guernsey. Astor Investments then instructed professional agents to incorporate Forward Sports Fund, and Astor Investments then proceeded to loan money to Forward Sports Fund to undertake its investment in Leeds."
Willis said he was shocked by that: "We were told there had been an interest but I am dismayed to find that Astor actually owned the club originally. I believe KPMG should have made further investigations at the time to find out who the owners were. The FA and Football League should investigate, as should the Treasury because so much tax was left unpaid." Taylor rejected that, saying: "There is nothing to investigate." At the time he said Astor had favoured the Bates bid, writing off millions of pounds, because Bates and Harvey had football experience. KPMG, which made £693,200 in fees as Leeds' as administrators, declined to comment.
A complex web of Bates and Leeds is uncovered in Jersey
Links between Leeds United and an offshore holding company that were denied when the club was in administration are now coming to light
There is a certain symmetry to the fact that light has been shone on the mystifying offshore ownership of Ken Bates' Leeds United in a court case brought by the club in a tax haven, Jersey. At a hearing on 29 January, Leeds declared that Bates and a long-term business associate, Patrick Murrin, jointly own "management shares" in Forward Sports Fund, the company registered in the Cayman Islands, administered in Switzerland, which ultimately owns Leeds United.
Murrin and Mark Taylor, Bates' solicitor, both explained that that means they own the company. Murrin, a now-retired financial consultant based in Guernsey, was a director and representative of a large offshore shareholding at Chelsea while Bates was in control at Stamford Bridge.
The January hearing also produced the declaration that Forward Sports Fund was itself originally owned and formed by Astor Investments, a trust fund based in Guernsey with an address in Tortola, the British Virgin Islands. In May 2007, after Bates and his fellow directors had put insolvent Leeds into administration with debts of £38m, Astor agreed to write off a huge sum it was owed by the club, £17.6m, as long as Forward Sports Fund bought the club back and Bates remained in charge.
That gave Bates an enormous advantage over other bidders, who had to include Astor's £17.6m in any offer they made. In July 2007 the administrators, KPMG, did sell the club back to Forward, for £1.8m. With Astor waiving its £17.6m, Leeds' other creditors, including HM Revenue and Customs which was owed £7.7m unpaid tax and VAT, were paid off at 10p in the pound. Bates stayed on as chairman of the club which, with its debts cleared, announced a profit last year of £4.5m and on Saturday moved into the League One play-off places with a 3-2 win over Scunthorpe United, watched by 24,000 fans at Elland Road.
At the time the club entered administration, questions were asked about whether Astor was in fact connected to Forward. KPMG said then it had made "extensive inquiries", and been satisfied that Astor did not own any interest in the club or Forward Sports Fund. More recently KPMG told the Guardian thatit had relied on sworn statements from Bates and the other Leeds directors.
At the time, the former chairman Gerald Krasner pointed out in a creditors' meeting that the club's 2006 accounts had stated the opposite, that Astor "has an interest in Forward Sports Fund". Taylor, who is a Leeds director as well as Bates' solicitor, clarified then that there had previously been an ownership connection between Astor and Forward, but they had been disconnected before the club went into administration.
Further detail about the network of offshore companies controlling Leeds emerged in the 29 January hearing. In the Jersey Royal Court, a letter from Leeds' solicitors was read out, which said of Forward: "One share was initially held by Astor Investment Holdings Limited, a unit trust fund based in Guernsey. Astor Investments then instructed professional agents to incorporate Forward Sports Fund, and Astor Investments then proceeded to loan money to Forward Sports Fund to undertake its investment in Leeds."
That revelation has provoked the Liberal Democrat MP Phil Willis to call for a government investigation into KPMG's conduct of the administration, and into the ownership of Leeds. "We were told there had been a connection but I am dismayed to find that Astor actually owned the club originally," Willis said.
"I believe KPMG should have made further investigations at the time to find out who the owners were. As so much tax was left unpaid, the Treasury should investigate. Football supporters also have the right to know who owns their clubs, and the Premier and Football Leagues should make sure that all their clubs have to fully disclose who is behind them."
Taylor told the Guardian this week that "the vast majority" of this had already been made public during the administration although he did not indicate where it had been disclosed. He said that Astor had indeed originally owned Forward, but between June 2006 and May 2007, when the club went into administration, the connection was severed because Astor sold Forward to Bates and Murrin. Taylor said he still does not know who Astor's owners are, but he knew one of the directors in Guernsey; at the time he said they supported Bates in the administration, even at great cost, because Bates and the Leeds chief executive, Shaun Harvey, have football experience.
In Jersey Leeds are suing for £190,400 that they claim a company, Admatch, based on the island, owes the club. Admatch's owner, the Jersey resident Robert Weston, argues he does not have to pay it because he is owed £1.43m by another Leeds United company, which went bust in 2006. Weston has succeeded in obtaining orders for £263,500 "security for costs" – money Leeds have paid into the Jersey court to cover Weston's costs if he wins.
Taylor said Leeds' own costs were "not as much as that" but still, in a promotion-chasing season, Leeds have already committed potentially more in costs than the £190,400 they will win if they are successful. Taylor maintained they were fighting the case "on a point of principle" because they were owed money; he was confident the club would win and have their costs paid by Weston. Weston declined to comment except to say: "We are in the middle of the case and we are quietly confident of ultimate success."
In the course of the case, Weston secured orders from the court that Leeds should disclose the ultimate owners of several of the offshore companies. Leeds' solicitors replied in writing on 5 December, but Weston complained the detail was inadequate, and at the 29 January hearing the judge, deputy bailiff Michael Birt, ordered Leeds to provide further detail.
"The court made an order and your client has not complied with it," Birt said to Leeds' solicitors. "You are not compliant with who the beneficial owner is. We will go through the chain of companies and see who is the beneficial owner," he ordered. "If it gets to the stage where some percentage of the company up the chain is owned by another company where you do not know who the owners are, then someone must go on oath and say so."
Leeds were given 21 days from 29 January to comply with this court order. That expired on 19 February, but Weston says he has still not received any further detail from Leeds. Taylor said Leeds complied with the order, by the due date. He said the facts are already clear: Leeds is owned by the Forward Sports Fund, incorporated in the Cayman Islands and administered from Geneva in Switzerland. It has two "management shares", he said, owned one each by Bates and Murrin. After Astor Investments sold Forward to Bates and Murrin, Astor had no remaining connection with Leeds or Forward.
So, at the time of Leeds' administration, Astor waved goodbye to millions to see the club still owned and run by Bates, even though they had no connection to him. Taylor added that Bates, 77, himself now resident on Avenue Princess Grace in the tax haven of Monaco, has no current intention of selling Leeds and ceding control at Elland Road. "I think he's quite enjoying it at the moment," said Taylor
Lib Dem's Phil Willis wants government investigation
Court case shedding light on Bates' controversial deal
David Conn The Guardian, Wednesday 4 March 2009
The Liberal Democrat MP Phil Willis has called on the government and the football authorities to launch an investigation into the ownership of Leeds United and the conduct of the club's 2007 administration by KPMG, following declarations made by the club in Jersey court proceedings. Leeds are suing a Jersey-based company, Admatch, for £190,400 the club say they are owed, while Admatch's owner, Robert Weston, is arguing that he was left with £1.43m unpaid when one of the Leeds United went bust in 2006.
The court ordered Leeds to disclose who owns Forward Sports Fund, the company registered in the Cayman Islands which ultimately owns Leeds, and other offshore companies involved when the club went into administration. These relationships were controversial at the time of administration, because one offshore company, Astor Investment Holdings, agreed to waive repayment of debts totalling £17.6m if Ken Bates' and Forward's bid to buy back the club was accepted. Other, larger bids had to include Astor and Krato as major creditors, so the overall return to creditors was lower and Bates won. KPMG told the Guardian this week that the firm relied at the time on statutory declarations (sworn statements) from Bates, his solicitor Mark Taylor who is also a Leeds director, and Shaun Harvey, Leeds' chief executive, that "there was no connection between Astor and Krato with Forward Sports Fund".
It was then pointed out that Leeds's 2006 accounts had stated that Astor "has an interest" in Forward, but Bates' solicitor Mark Taylor said the connection had been severed before the club went into administration.
At a Jersey court hearing on 29 January, a letter from Leeds' solicitors, replying to Weston's questions, was read out, stating of Forward's formation: "One share was initially held by Astor Investment Holdings Limited, a unit trust fund based in Guernsey. Astor Investments then instructed professional agents to incorporate Forward Sports Fund, and Astor Investments then proceeded to loan money to Forward Sports Fund to undertake its investment in Leeds."
Willis said he was shocked by that: "We were told there had been an interest but I am dismayed to find that Astor actually owned the club originally. I believe KPMG should have made further investigations at the time to find out who the owners were. The FA and Football League should investigate, as should the Treasury because so much tax was left unpaid." Taylor rejected that, saying: "There is nothing to investigate." At the time he said Astor had favoured the Bates bid, writing off millions of pounds, because Bates and Harvey had football experience. KPMG, which made £693,200 in fees as Leeds' as administrators, declined to comment.
A complex web of Bates and Leeds is uncovered in Jersey
Links between Leeds United and an offshore holding company that were denied when the club was in administration are now coming to light
There is a certain symmetry to the fact that light has been shone on the mystifying offshore ownership of Ken Bates' Leeds United in a court case brought by the club in a tax haven, Jersey. At a hearing on 29 January, Leeds declared that Bates and a long-term business associate, Patrick Murrin, jointly own "management shares" in Forward Sports Fund, the company registered in the Cayman Islands, administered in Switzerland, which ultimately owns Leeds United.
Murrin and Mark Taylor, Bates' solicitor, both explained that that means they own the company. Murrin, a now-retired financial consultant based in Guernsey, was a director and representative of a large offshore shareholding at Chelsea while Bates was in control at Stamford Bridge.
The January hearing also produced the declaration that Forward Sports Fund was itself originally owned and formed by Astor Investments, a trust fund based in Guernsey with an address in Tortola, the British Virgin Islands. In May 2007, after Bates and his fellow directors had put insolvent Leeds into administration with debts of £38m, Astor agreed to write off a huge sum it was owed by the club, £17.6m, as long as Forward Sports Fund bought the club back and Bates remained in charge.
That gave Bates an enormous advantage over other bidders, who had to include Astor's £17.6m in any offer they made. In July 2007 the administrators, KPMG, did sell the club back to Forward, for £1.8m. With Astor waiving its £17.6m, Leeds' other creditors, including HM Revenue and Customs which was owed £7.7m unpaid tax and VAT, were paid off at 10p in the pound. Bates stayed on as chairman of the club which, with its debts cleared, announced a profit last year of £4.5m and on Saturday moved into the League One play-off places with a 3-2 win over Scunthorpe United, watched by 24,000 fans at Elland Road.
At the time the club entered administration, questions were asked about whether Astor was in fact connected to Forward. KPMG said then it had made "extensive inquiries", and been satisfied that Astor did not own any interest in the club or Forward Sports Fund. More recently KPMG told the Guardian thatit had relied on sworn statements from Bates and the other Leeds directors.
At the time, the former chairman Gerald Krasner pointed out in a creditors' meeting that the club's 2006 accounts had stated the opposite, that Astor "has an interest in Forward Sports Fund". Taylor, who is a Leeds director as well as Bates' solicitor, clarified then that there had previously been an ownership connection between Astor and Forward, but they had been disconnected before the club went into administration.
Further detail about the network of offshore companies controlling Leeds emerged in the 29 January hearing. In the Jersey Royal Court, a letter from Leeds' solicitors was read out, which said of Forward: "One share was initially held by Astor Investment Holdings Limited, a unit trust fund based in Guernsey. Astor Investments then instructed professional agents to incorporate Forward Sports Fund, and Astor Investments then proceeded to loan money to Forward Sports Fund to undertake its investment in Leeds."
That revelation has provoked the Liberal Democrat MP Phil Willis to call for a government investigation into KPMG's conduct of the administration, and into the ownership of Leeds. "We were told there had been a connection but I am dismayed to find that Astor actually owned the club originally," Willis said.
"I believe KPMG should have made further investigations at the time to find out who the owners were. As so much tax was left unpaid, the Treasury should investigate. Football supporters also have the right to know who owns their clubs, and the Premier and Football Leagues should make sure that all their clubs have to fully disclose who is behind them."
Taylor told the Guardian this week that "the vast majority" of this had already been made public during the administration although he did not indicate where it had been disclosed. He said that Astor had indeed originally owned Forward, but between June 2006 and May 2007, when the club went into administration, the connection was severed because Astor sold Forward to Bates and Murrin. Taylor said he still does not know who Astor's owners are, but he knew one of the directors in Guernsey; at the time he said they supported Bates in the administration, even at great cost, because Bates and the Leeds chief executive, Shaun Harvey, have football experience.
In Jersey Leeds are suing for £190,400 that they claim a company, Admatch, based on the island, owes the club. Admatch's owner, the Jersey resident Robert Weston, argues he does not have to pay it because he is owed £1.43m by another Leeds United company, which went bust in 2006. Weston has succeeded in obtaining orders for £263,500 "security for costs" – money Leeds have paid into the Jersey court to cover Weston's costs if he wins.
Taylor said Leeds' own costs were "not as much as that" but still, in a promotion-chasing season, Leeds have already committed potentially more in costs than the £190,400 they will win if they are successful. Taylor maintained they were fighting the case "on a point of principle" because they were owed money; he was confident the club would win and have their costs paid by Weston. Weston declined to comment except to say: "We are in the middle of the case and we are quietly confident of ultimate success."
In the course of the case, Weston secured orders from the court that Leeds should disclose the ultimate owners of several of the offshore companies. Leeds' solicitors replied in writing on 5 December, but Weston complained the detail was inadequate, and at the 29 January hearing the judge, deputy bailiff Michael Birt, ordered Leeds to provide further detail.
"The court made an order and your client has not complied with it," Birt said to Leeds' solicitors. "You are not compliant with who the beneficial owner is. We will go through the chain of companies and see who is the beneficial owner," he ordered. "If it gets to the stage where some percentage of the company up the chain is owned by another company where you do not know who the owners are, then someone must go on oath and say so."
Leeds were given 21 days from 29 January to comply with this court order. That expired on 19 February, but Weston says he has still not received any further detail from Leeds. Taylor said Leeds complied with the order, by the due date. He said the facts are already clear: Leeds is owned by the Forward Sports Fund, incorporated in the Cayman Islands and administered from Geneva in Switzerland. It has two "management shares", he said, owned one each by Bates and Murrin. After Astor Investments sold Forward to Bates and Murrin, Astor had no remaining connection with Leeds or Forward.
So, at the time of Leeds' administration, Astor waved goodbye to millions to see the club still owned and run by Bates, even though they had no connection to him. Taylor added that Bates, 77, himself now resident on Avenue Princess Grace in the tax haven of Monaco, has no current intention of selling Leeds and ceding control at Elland Road. "I think he's quite enjoying it at the moment," said Taylor
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