The Allardyce Scandal or the Selective Indignations of English Football
Offshore funds, excessive tax exemption, conflicts of interests, obscure financial schemes... English football is overflowing with many more borderline or criminal behaviours than what the Allardyce case lets on, thanks to chronic deregulation and lack of control.
[Ceci est la traduction et la mise à jour de l'article "Affaire Allardyce: les indignations sélectives de l'Angleterre du foot" paru sur nos pages le mois dernier]
When they appointed Sam Allardyce, the FA’s intention was twofold: being the embodiment of Brexit by choosing an Englishman and calming things down thanks to a manager on good terms with the media. They failed on both account and ended up with a massive scandal that led to Allardyce being sacked and the 2006/2008 corruption case resurfacing. When Lord John Stevens, former policeman, published a report that flagged seventeen transfers as “suspicious”, the FA did their very best to bury it, including forwarding it too late to the FIFA. Thus, the dozens of agents and club officials involved got away with no conviction whatsoever.
A behaviour that has since come back to haunt the Federation. In 2011, the Parliament’s Culture Media and Sports Committee launched the “Governance of Football Inquiry”. “If you look across sport, it is very clear to me that football is the worst governed sport in this country, without a shadow of a doubt”, said sports minister Hugh Robertson following the inquiry. Five years later, things have not got any better. “The FA is pathologically unable to make good decisions”, commented David Webber, a governance expert from the University of Warwick.
It looks as though English football has not taken anything away from what happened in 2006, except maybe a heightened sense of impunity – of which Sam Allardyce may be the epitome, as he was caught red-handed for the third time in September. The first time was during the 2006 corruption case. The second time was when he was manager of West Ham and brought in six players represented by his own agent, Mark Curtis.
West Ham and the ghosts of Deportivo Maldonado
West Ham greedily seizes any opportunity offered by the laxity of the English authorities (inside and outside of football), and the result is bewildering. For this purpose, the club relies on two very special consultants: a lawyer, Graham Shear, and an agent, Jonathan Barnett. The former builds up the schemes, the latter funds them. In 2009, when he started sending Argentinian and Brazilian players to Europe via Uruguay, Shear invented a whole system. Uruguay was an obvious choice, since the country’s fiscal laws allow South-Americans clubs to pay less taxes on their transfers: 12% versus 35% in Argentina, for example.
In an effort to find a stop-over for his players in Uruguay, Graham Shear picked Deportivo Maldonado, a seemingly unremarkable club which plays in Uruguay’s second-tier championship. He associated to the club a limited company dedicated to transferring players and funds, a type of company exonerated from taxes when operating in sports in Uruguay. Graham Shear’s “invention” has gained so much momentum that there are now enough players involved to build a pretty competitive team, as shown by La Nación.
As an example of this, Jonathan Calleri, an Argentinian forward, arrived in West Ham on loan, as described by La Nación. According to the Argentinian newspaper, last December, Jonathan Barnett offered to buy Calleri from Boca Juniors on behalf of Deportivo Maldonado. The offer was accepted. Gustavo Arribas, an agent appointed by Deportivo Maldonado, started negotiating with Inter Milan to finalise Calleri’s transfer to Italy. A mission that was cut short when he was promoted head of the Argentine intelligence community by the new President – and former President of Boca Junior, Mauricio Macri.
Inter Milan eventually decided to cancel the Calleri’s transfer to avoid being accused by the FIFA of participating in a triangulation and TPO (Third-Party Ownership) scheme, which is strictly forbidden by the FIFA. After a six-month loan to FC Sao Paulo, Jonathan Calleri finished the season on loan to West Ham, in an oh-so-surprising move.
In a recent article by The Guardian, Graham Shear claimed that he only spent a few months as head of the Deportivo Maldonado’s limited company, while Jonathan Barnett denied all ties with the Uruguayan club. However, it should be noted that the limited company’s current president, Malcom Caine, co-owns a race horse with Jonathan Barnett, and that its vice-president, Santiago Duran Hareau, is a lawyer tied to two firms who are representing dozens of companies named in the notorious Panama Papers.
In effect, a player – Jonathan Calleri – was loaned from Deportivo Maldonado, a club associated to a limited company set up by Graham Shear. The operation was orchestrated by Jonathan Barnett, a friend of David Sullivan’s – who owns West Ham. According to La Nación, Calleri’s transfer to Boca Juniors was funded by Stellar Group, Jonathan Barnett’s company, which used to count Graham Shear as a partner. And at the end of the summer, Shear co-signed another loan operation for the East London club, as a lawyer and on behalf of Rights and Media Funding Limited, a rather abstruse company. It seems that as a club, West Ham rather enjoys the thrills of impunity .
Conflicts of interests and tax exemption behind closed doors
It does look as though English authorities are not all that attentive. Wayne Rooney, emblematic captain of the national team, is listed on the records of the same companies as three of his managers: Proctor House and Waverton Property LLP with Sam Allardyce, Cobalt Data Centre 2 LLP with Roy Hodgson, and Inside Track 3 LLP with Gareth Southgate. Before Roy Hodgson, who was manager just before Allardyce, was appointed, only two international players were represented by Key Sports Manager. Under Hodgson, they were twenty-five. Though this number includes all the teams, it is still staggering and it did raise some suspicions – although apparently not the FA’s.
The FA didn’t react either when Roy Hodgson, then manager of the national team, was listed as one of the (many) beneficiaries of tax evasion (throught the Cobalt scheme) publically denounced by the president of the Public Accounts Committee, Margaret Hodge. And Hodgson was far from being the only football figure on that list, since the likes of Arsène Wenger or Wayne Rooney were there too.
Margaret Hodge, now back to being a “regular” Labour MP, is back on the frontline to take down a secret agreement between the English tax authorities and the football clubs on players’ image rights. This agreement is estimated to save around £70 million in taxes to the six richest clubs and their players. Per year. Wayne Rooney is being investigated by the HMRC for the fourth time in five years, for a scheme that could cost him between £3.5 and £5 million pounds. Gareth Southgate, the current manager of the national team, is also under scrutiny.
This is starting to sound like a habit. In 2012, The Independent uncovered how football clubs managed to achieve complete or partial tax exemption, resulting in an overall tax rate of 2% in the Premier League. Arsenal, a club seen as thriving, is first in line, with less than half a million paid instead of £6 million, thanks to tax deductions.
Nearly £3 billion in offshore funds
Karren Brady, President of West Ham and newly appointed Conservative life peer in the House of Lords by David Cameron, juggles with taxes at will. This can probably explain why she voted for tax credit reductions for the poorest households while joining the board of Philip Green’s holding, well-known for his tax evasion skills. Since the start of this season, West Ham has been playing at the Olympic Stadium, a brand-new venue funded by the taxpayers’ money, while taking advantage of very favourable financial conditions. It seems there can never be too much tax exemption or too many offshore holdings in English football. A website, The Offshore game, has listed 38 holdings based abroad for a total of nearly £3 billion in offshore funds.
Since last June and a government decision for transparency, English companies have to declare who “holds a significant control over them”, i.e. who holds more than 25% of the shares and/or votes, directly or indirectly. In the Premier League, only three clubs have currently named natural people: Everton, Swansea and Stoke City. Four clubs – Arsenal, West Ham, Southampton and Burnley – have named holdings, which in turn haven’t specified who holds a “significant control” over them. The thirteen other clubs have yet to comply.
The only force going against the laxity of the authorities seems to be a growing demand for ethics from the fans, specifically through an independent audit of the overall functioning of English football. Proofs of the need for such an audit are overflowing on their social networks and in their fanzines and magazines. Fans of Everton, West Ham, Fulham and Reading have been denouncing the extravagant loans taken by their clubs for years.
And with good reasons, since the Premier League has accepted to pay the amounts of the clubs’ TV rights directly to companies, some of which are based in tax havens, such as Vibrac, Mousehole, Jg Funding Limited, or Rights and Media Funding Limited. The same TV rights that reach more colossal amounts each year.
These companies are tied together to create an obscure, tangled world that @WatchedToffee, an Everton fan, has investigated and decrypted in three remarkable articles [1, 2, 3] published on Everton Viral, a perfectly accurate depiction of what is plaguing English football.
An irreformable system?
It should be no surprise that both Graham Shear and Jonathan Barnett are once again featured. Shear for example, as a lawyer for Berwin, Leighton, Paisner, co-signed a number of loans to Premier League clubs (including West Ham) on behalf of, among others, Vibrac Corporation, an offshore company based at the following address: Vanterpool Plaza, Wickhams Cay 1, Road Town, Tortola, Virgin Islands.
The very same address as Powsfield Limited, a company dissolved in 2009 that held 95% of the shares of Selkan Limited, owned by Jonathan Barnett. The very same address as BCR Sports, a company owned by Robert Earl that held 23% of the shares of Everton FC until March 2016. Everton FC, who received four loans from Vibrac Corporation, from that very same address, all co-signed by Berwin, Leighton, Paisner, Graham Shear’s firm.
One might have thought this was a good time for an in-depth reform of English football governance. As a matter of fact, the Parliament’s Culture Media and Sports Committee is once again addressing the issue of governance in English football. The FA’s new president, Greg Clarke, was the first one to be questioned, specifically regarding his awareness of offshore loaning companies in English football. Clarke was appointed CEO of Leicester City on 27th December 2002. On 13th February 2003, the club took out a “floating loan” for Sports Co., Inc, a company set up nine days before in the State of Delaware.
But the Allardyce case isn’t the first scandal to hit English football. And all the other scandals before this one generated the same indignation and the same promises of radical reforms. So the key question is and remains: how much deregulation, tax exemption and lack of control are the authorities ready to renounce? Is that not the very nature of the English business model? Isn’t it just another case of the scorpion and the frog?
Translated by Marion Dupas.
 In 2008, David Sullivan and Karren Brady, respectively owner and president of Birmingham City at the time, were arrested and released on bail as part of the football corruption case. No charges were brought. And since then, football’s most controversial figures like William and Mark McKay, Mark Curtis or Jonathan Barnett have regularly been involved with West Ham.