PL charge City for alleged breaches of financial rules

[Keith Moon]

On these allegations, in my view, even that level of "whistleblower" evidence wouldn't suffice.

Bottom line in a case like this is that the PL has to establish a proven, technical and factual conclusion that the original accounting was actually wrong (either deliberately or by negligence).

This can probably only be achieved in this case by an expert witness being more convincing than the defence expert witness having taken account of the written audited accounts and supporting docs that historically exist, factual witnesses and non-audit documents/evidence.

So, I'd say you'd need at least one witness of fact who supports the case with first hand experience of the matters in question actually being executed (not merely discussed or considered) and who would be potentially self-incriminating themselves in admitting their professional involvement in those matters. All pretty unlikely.

You'd also need documentary evidence of the execution of that scheme AND, therefore (or otherwise) a conclusion by the tribunal that defence witnesses were lying or unreliable and had, in some way and to the extent that they had been involved in the audit, misled the auditors. This doesn't seem to be a case where the judgment could fudge that issue by saying they had "faulty recollections". Some of the matters are not that old.

So whilst this sort of conclusion has occurred in some rare cases it feels a very high hurdle for the PL even on a balance of probabilities standard. All of this assumes the process in place is fair and in line with English law which I do expect it to be.

My only fear is that we're up against a panel of 3 x Prof. Dr. Ulrich Haas.

 

[Chris in London]

On these allegations, in my view, even that level of "whistleblower" evidence wouldn't suffice.

Bottom line in a case like this is that the PL has to establish a proven, technical and factual conclusion that the original accounting was actually wrong (either deliberately or by negligence).

This can probably only be achieved in this case by an expert witness being more convincing than the defence expert witness having taken account of the written audited accounts and supporting docs that historically exist, factual witnesses and non-audit documents/evidence.

So, I'd say you'd need at least one witness of fact who supports the case with first hand experience of the matters in question actually being executed (not merely discussed or considered) and who would be potentially self-incriminating themselves in admitting their professional involvement in those matters. All pretty unlikely.

You'd also need documentary evidence of the execution of that scheme AND, therefore (or otherwise) a conclusion by the tribunal that defence witnesses were lying or unreliable and had, in some way and to the extent that they had been involved in the audit, misled the auditors. This doesn't seem to be a case where the judgment could fudge that issue by saying they had "faulty recollections". Some of the matters are not that old.

So whilst this sort of conclusion has occurred in some rare cases it feels a very high hurdle for the PL even on a balance of probabilities standard. All of this assumes the process in place is fair and in line with English law which I do expect it to be.

Yes, I agree, evidence from a whistleblower is necessary but not necessarily sufficient in itself to demonstrate fraud - which, as discussed previously, they would have to prove in relation to all but the post 2017 charges. I can’t see how the tribunal could possibly fudge this if they find the charges proven - they would have to find, on sufficiently convincing evidence, a dishonest conspiracy involving both the club and the contracting party, at the highest levels in either case. And they would have to do that in pretty much all but the non-cooperation charges.

Which takes me back to the question we discussed earlier. When do you run a case that has so many legal flaws? Ignorance? Try-on, hoping to pressure the other side into cutting a deal? Pressure from the higher ups?

In my view it could be any of those, but each is considerably more likely as an explanation than “we have a whistleblower.”

 

[slbsn]

Yes, I agree, evidence from a whistleblower is necessary but not necessarily sufficient in itself to demonstrate fraud - which, as discussed previously, they would have to prove in relation to all but the post 2017 charges. I can’t see how the tribunal could possibly fudge this if they find the charges proven - they would have to find, on sufficiently convincing evidence, a dishonest conspiracy involving both the club and the contracting party, at the highest levels in either case. And they would have to do that in pretty much all but the non-cooperation charges.

Which takes me back to the question we discussed earlier. When do you run a case that has so many legal flaws? Ignorance? Try-on, hoping to pressure the other side into cutting a deal? Pressure from the higher ups?

In my view it could be any of those, but each is considerably more likely as an explanation than “we have a whistleblower.”

Aside from trying to cut a deal, I agree with all that and don't know. I don't think this is a play for a settlement. Too far gone in my view. Of course, the other explanation, is our analysis on what they need to make out is well wide of the mark.

 

[richards30]

My only fear is that we're up against a panel of 3 x Prof. Dr. Ulrich Haas.

But if we have proof then it’s irrelevant mate?

 

[applecentral]

As a former auditor, albeit many years ago and probably out of touch with modern practice, I'd like to clarify something. Our accounts do have to give a 'true and fair view' of our financial transactions and situation. But there's no definitive answer to, or statutory definition of, what 'true and fair' is.

But generally, for an auditor not to confirm that accounts were true and fair, there would have to be a material issue, not a few quid here or there. So even if the auditors knew about the alternative Mancini contract and felt that it should have been reported by City, in their accounts, I very much doubt they would qualify the accounts. I doubt they'd even know about it though, because it was a personal contract between Mancini and an unconnected third-party.

For a company like City, or an even bigger one, the auditors won't check every single transaction. They might satisfy themselves as to the adequacy of the financial systems for accurately recording income and expenditure and would examine relevant financial controls. A key one is whether an individual could both initiate, authorise and receive a large payment, without a second or multiple persons checking.

They most likely would (certainly in my day) have checked the larger items and that would include Etihad's sponsorship. So if our accounts showed £50m revenue from Etihad, they'd probably check that £50m was actually received. That might a single payment, or multiple payments. As long as they could track that £50m from the bank statements to the P&L account, I doubt they'd enquire much further.

But if they could only see £10m of that claimed £50m, they'd ask questions. The answer from the CFO might be that we're waiting for the other £40m,which was due shortly. I suspect they'd want to see that £40m come in before they expressed an opinion, or at the very least, have assurances from Etihad that this payment was due, relates to the period under review and a good idea of when it was due to be paid. They'd then have to make a decision as to whether the accounts were 'true and fair' (because £40m would be material) and even if they did sign the accounts off, they'd probably demand evidence of it arriving and maybe make some comment, or insist City made a relevant comment in those accounts.

Another scenario might be Etihad paying us £10m and the other £40m being from ADUG. They would presumably then question whether that was equity funding, and should therefore go into the balance sheet, rather than the P&L account. That would be subject to discussions with City senior management but I'd say the likelihood is that they would insist on it being reclassified, as it's material.

I think someone said earlier in this thread that it wasn't necessarily what was done, but what the intent was that would determine fraud. The valuation of stock affects profit. This has to be valued at the lower of cost or net realisable value, but cost may have a number of different components. It may be a very subjective judgement on what NRV is but it could be that a company is valuing stock, which it knows is completely worthless, at cost. That's likely to be fraudulent. There have been many cases where revenue from contracts signed or meant to be signed with customers has been knowingly overstated.

A high-profile case involves the software company Autonomy, who used to sponsor Spurs. https://www.bbc.co.uk/news/business-47691083. I think Mike Lynch is still fighting extradition but the UK courts have broadly supported HP's view that he and his CFO were guilty of fraud.

So just because a set of accounts aren't correct to the nearest pound, doesn't mean they aren't showing a true and fair view. And even if they're held not to be a true and fair view, there could be other reasons beyond a deliberate fraud why they might not be.

A very good post sir!

 

[applecentral]

You are repeating yourself a thousand times with what you as a non blue want to be true

Tell ‘em Kaz!

 

[Ric]

Which takes me back to the question we discussed earlier. When do you run a case that has so many legal flaws? Ignorance? Try-on, hoping to pressure the other side into cutting a deal? Pressure from the higher ups?

Is it possible that the sheer breadth of the charges is largely due to our non-compliance? I.e. the PL don’t necessarily think we’ll be found guilty on many of the alleged breaches, but decided to charge us regardless as we wouldn’t provide the evidence they requested? Perhaps making a point about how dimly they viewed our refusal to co-operate?

 

[slbsn]

Is it possible that the sheer breadth of the charges is largely due to our non-compliance? I.e. the PL don’t necessarily think we’ll be found guilty on many of the alleged breaches, but decided to charge us regardless as we wouldn’t provide the evidence they requested? Perhaps making a point about how dimly they viewed our refusal to co-operate?

I don't read the situation that way

 

[LeonardoDaVnci]

I've seen some posts saying this will all be resolved in a few months, others saying four years. Do we have any reliable sources re this ? and has the "hearing" actually started yet ?. I can predict with 100% certainty that as we approach season end if LFC are in 5th position Scouse Sports News will start the olde classic.... "if City are expelled from the CL then LFC will take their place"...absolute guaranteed...
..

 

[Chris in London]

Is it possible that the sheer breadth of the charges is largely due to our non-compliance? I.e. the PL don’t necessarily think we’ll be found guilty on many of the alleged breaches, but decided to charge us regardless as we wouldn’t provide the evidence they requested? Perhaps making a point about how dimly they viewed our refusal to co-operate?

Maybe, you never what's going on in someone else's mind, but I don't see it like that.

The one area where we are bang to rights, I think, is on the non-co-operation. My guess is that we took a strategic decision, on advice, not to co-operate until made to and to take the pinch on the inevitable charge of non-co-operation. They make their point about non-co-operation - which in fairness is a valid one - by hitting us (or asking the independent panel to hit us) with a massive fine. CAS said the fine in similar circumstances should be €10m when about 20 grand seems to be the going rate for blatant racism or smashing up your opponent's team bus. So 10m was a whopper.

I think if it came out that we have been charged with 5 legitimate counts of non cooperation and over 100 counts that the FA knew were going to fail, that I think brings their whole organisation into disrepute.

And for anyone thinking 'yeah but it will never come out,' I think that's what Matt Hancock said.

 

[M18CTID]

Maybe, you never what's going on in someone else's mind, but I don't see it like that.

The one area where we are bang to rights, I think, is on the non-co-operation. My guess is that we took a strategic decision, on advice, not to co-operate until made to and to take the pinch on the inevitable charge of non-co-operation. They make their point about non-co-operation - which in fairness is a valid one - by hitting us (or asking the independent panel to hit us) with a massive fine. CAS said the fine in similar circumstances should be €10m when about 20 grand seems to be the going rate for blatant racism or smashing up your opponent's team bus. So 10m was a whopper.

I think if it came out that we have been charged with 5 legitimate counts of non cooperation and over 100 counts that the FA knew were going to fail, that I think brings their whole organisation into disrepute.

And for anyone thinking 'yeah but it will never come out,' I think that's what Matt Hancock said.

Hopefully City have saved all the WhatsApp messages that show the PL in a bad light!

 

[Chris in London]

I've seen some posts saying this will all be resolved in a few months, others saying four years. Do we have any reliable sources re this ? and has the "hearing" actually started yet ?. I can predict with 100% certainty that as we approach season end if LFC are in 5th position Scouse Sports News will start the olde classic.... "if City are expelled from the CL then LFC will take their place"...absolute guaranteed...
..

Reliable sources? No. But we have some reasonably clear pointers.

First, I'm discounting Tolmie's point that the club think this is going to be done and dusted quickly. Not because I think he's wrong, but because if it is done and dusted quickly its either because we have cut a deal - not likely - or there has been a massive climbdown of humiliating proportions by the PL.

Next, you've seen the number of charges and the range of issues they cover. Each and every one of those will have to be looked at carefully in order to determine whether the club is guilty of the breaches of PL rules alleged. That will take a significant amount of time.

Just to work the maths through, imagine it took in 'court' half a day to debate each charge. That's over fifty days, so over ten weeks of 'court' time. Just juggling the diaries so that our team, the PL team and the panel are all available over the same ten week period will take some doing, and in practical terms that means it won't happen soon. I should stress that half a day on each count is, in my view, a massive understatement, I just use that figure to illustrate the problem.

Then there is the preliminary work that needs to be done. There have been a number of discussions about what the PL needs to prove and what evidence they need to prove it. It would be a matter for the independent tribunal how they go about deciding this case, but I would be very surprised if they didn't want both sides to set out chapter and verse as to why each one of the alleged breaches is made out, or not made out as the case may be. That process of them first, then us, setting out our stalls is going to take time. Lots of it.

Then there is the question of what evidence is needed. Much of this will be contained in the material already disclosed, but if we say rely on something not covered in the investigation - eg documents from our sponsors or other third parties (eg Mancini) that so far the PL has not had access to, they would be entitled to raise questions about that and/or seek further documents. They are entitled to prior warning of what our case is, in other words, and to ask whether there are other documents that might relate to the defence we are mounting.

Finally, these allegations are incredibly serious. As I see it, the PL is by implication asserting that some very heavy duty players - Khaldoon, HHSM himself, many other senior officers at both MCFC and our sponsors/commercial partners, have all conspired to cook the books. The seriousness of the allegations means, in my view, that the panel will, when considering its decision, look with very great care at all of the allegations. The process of coming up with a decision in a case like this is going to take some time.

So when you add all that together, if this fights all the way my assessment is that nothing will happen this season, or next season, and it may be some time into the season beyond that as well It could be a lot longer. My assessment is that it will not be sooner than 18 months and it might be 3-4 years.

 

[wolviedinho]

Interesting but as you say with no actual hard proof it's useless. Otherwise any old ex employee with an axe to grind could say they witnessed all sorts of shenanigans, it's just hot air.

Essentially the premier are saying the hacked emails show Mansour funnelled money into Etihad. The language in those hacked sliced up emails can be interpreted many way but and this is what the league don’t understand just as Uefa had to find out at CAS, the actual physical paper trail shows one company paying another for a particular service. The accounts match up for both parties. Unless the league has asked MCFC for the bank statements and city have said fuck off. Etihad also has no reason to show its bank transactions. So they come to the conclusion it’s bent and start throwing charges about.

Hacked emails show a discussion but only that. The accounts show a true representation of the sponsorship received by etihad ah but that’s been doctored with!

Round and round we go.

 

[LeonardoDaVnci]

Reliable sources? No. But we have some reasonably clear pointers.

First, I'm discounting Tolmie's point that the club think this is going to be done and dusted quickly. Not because I think he's wrong, but because if it is done and dusted quickly its either because we have cut a deal - not likely - or there has been a massive climbdown of humiliating proportions by the PL.

Next, you've seen the number of charges and the range of issues they cover. Each and every one of those will have to be looked at carefully in order to determine whether the club is guilty of the breaches of PL rules alleged. That will take a significant amount of time.

Just to work the maths through, imagine it took in 'court' half a day to debate each charge. That's over fifty days, so over ten weeks of 'court' time. Just juggling the diaries so that our team, the PL team and the panel are all available over the same ten week period will take some doing, and in practical terms that means it won't happen soon. I should stress that half a day on each count is, in my view, a massive understatement, I just use that figure to illustrate the problem.

Then there is the preliminary work that needs to be done. There have been a number of discussions about what the PL needs to prove and what evidence they need to prove it. It would be a matter for the independent tribunal how they go about deciding this case, but I would be very surprised if they didn't want both sides to set out chapter and verse as to why each one of the alleged breaches is made out, or not made out as the case may be. That process of them first, then us, setting out our stalls is going to take time. Lots of it.

Then there is the question of what evidence is needed. Much of this will be contained in the material already disclosed, but if we say rely on something not covered in the investigation - eg documents from our sponsors or other third parties (eg Mancini) that so far the PL has not had access to, they would be entitled to raise questions about that and/or seek further documents. They are entitled to prior warning of what our case is, in other words, and to ask whether there are other documents that might relate to the defence we are mounting.

Finally, these allegations are incredibly serious. As I see it, the PL is by implication asserting that some very heavy duty players - Khaldoon, HHSM himself, many other senior officers at both MCFC and our sponsors/commercial partners, have all conspired to cook the books. The seriousness of the allegations means, in my view, that the panel will, when considering its decision, look with very great care at all of the allegations. The process of coming up with a decision in a case like this is going to take some time.

So when you add all that together, if this fights all the way my assessment is that nothing will happen this season, or next season, and it may be some time into the season beyond that as well It could be a lot longer. My assessment is that it will not be sooner than 18 months and it might be 3-4 years.

Many thanks for the info. It's been mentioned, before the independent panel of just three people have a really onerous responsibility when they rule on these charges. How the panel do this could also be significant, eg look at a similar charge for all relevant years or just cover all separate charges chronologically. The documentation of the hearing/ruling could run to 1000s of pages. The total legal bill will be huge, I'd reckon around 10million, truly insane amount, approx 10% of a Grealish.

 

[burning blue soul]

Will the judgement of the CAS case be allowed to be referenced in the new hearing?
Will the CAS judgement carry any advantageous weight at all in the PL case?

 

[radcliffe1309]

Many thanks for the info. It's been mentioned, before the independent panel of just three people have a really onerous responsibility when they rule on these charges. How the panel do this could also be significant, eg look at a similar charge for all relevant years or just cover all separate charges chronologically. The documentation of the hearing/ruling could run to 1000s of pages. The total legal bill will be huge, I'd reckon around 10million, truly insane amount, approx 10% of a Grealish.

Very good

 

[LeonardoDaVnci]

Will the judgement of the CAS case be allowed to be referenced in the new hearing?
Will the CAS judgement carry any advantageous weight at all in the PL case?

Not a legal expert so can't answer personally, however the subject of legal precedents also crossed my mind. For example the deals between AFC and Emirates Airlines and the King Power deal with LCFC are very similar to Ethihad Airways and MCFC. Also does the former Chairman and CEO of Ethihad have to travel from Oz to repeat his witnesses statements. Same applies to former City execs.

 

[HelloCity]

It seems to be accepted that one potential reason for these charges is because of pressure from certain clubs being placed on the PL. It has also been said that the PL would not have listed all these charges flippantly (if that’s the right term to use here).

However, let’s just say that the first sentence is true and that there isn’t substantial evidence to secure a verdict of the most serious charges and that instead these charges are simply to set a nouse around the clubs neck for several years.

With that in mind these are the potential impacts that these charges may be designed to bring:

- It means that people doubt our success as being real. Bad PR etc.
- It could put potential transfer targets off from joining the club.
- It could put potential sponsors off from partnering with the club.
- It may even put some fans off from supporting the club.

These points all benefit our rivals in some degree or form.

If I’m the PL and an organisation which has openly said it doesn’t want one club dominating, that Utd being unsuccessful is bad for the division and that a new name should be on the trophy every few years then the desired impact of these charges could be as follows:

- The manager responsible for City’s dominance chooses to walk away fed up of the constant stories and fights (he won’t though).
- With some top players not joining due to the charges we don’t reach our true potential and become less dominant.
- Our opposition grows in stature and becomes more successful due to them being able to sign players we could not.

From what I can see, there are major benefits to having these charges around City’s neck for both our rivals & the PL regardless of whether they have enough evidence or not.

 

[Bez]

It seems to be accepted that one potential reason for these charges is because of pressure from certain clubs being placed on the PL. It has also been said that the PL would not have listed all these charges flippantly (if that’s the right term to use here).

However, let’s just say that the first sentence is true and that there isn’t substantial evidence to secure a verdict of the most serious charges and that instead these charges are simply to set a nouse around the clubs neck for several years.

With that in mind these are the potential impacts that these charges may be designed to bring:

- It means that people doubt our success as being real. Bad PR etc.
- It could put potential transfer targets off from joining the club.
- It could put potential sponsors off from partnering with the club.
- It may even put some fans off from supporting the club.

If I’m the PL and an organisation which has openly said it doesn’t want one club dominating, that Utd being unsuccessful is bad for the division and that a new name should be on the trophy every few years then the desired impact of these charges could be as follows:

- The manager responsible for City’s dominance chooses to walk away fed up of the constant stories and fights (he won’t though).
- With some top players not joining due to the charges we don’t reach our true potential.
- Our opposition grows in stature and becomes more successful due to them being able to sign players we could not.

Despite the PL investigation before the charges we have been able to sign Haaland, Grealish et al. Plus our commercial revenues have grown and we have had new investment in the club. Thankfully, City have a good story to tell and can present the facts to potential signings and potential investors/partners. Let's hope this garbage does not impact us going forwards.

 

[Chappie]

It seems to be accepted that one potential reason for these charges is because of pressure from certain clubs being placed on the PL. It has also been said that the PL would not have listed all these charges flippantly (if that’s the right term to use here).

However, let’s just say that the first sentence is true and that there isn’t substantial evidence to secure a verdict of the most serious charges and that instead these charges are simply to set a nouse around the clubs neck for several years.

With that in mind these are the potential impacts that these charges may be designed to bring:

- It means that people doubt our success as being real. Bad PR etc.
- It could put potential transfer targets off from joining the club.
- It could put potential sponsors off from partnering with the club.
- It may even put some fans off from supporting the club.

If I’m the PL and an organisation which has openly said it doesn’t want one club dominating, that Utd being unsuccessful is bad for the division and that a new name should be on the trophy every few years then the desired impact of these charges could be as follows:

- The manager responsible for City’s dominance chooses to walk away fed up of the constant stories and fights (he won’t though).
- With some top players not joining due to the charges we don’t reach our true potential and become less dominant.
- Our opposition grows in stature and becomes more successful due to them being able to sign players we could not.

From what I can see, there are major benefits to having these charges around City’s neck for both our rivals & the PL regardless of whether they have enough evidence or not.

There's a lot of "if" in the above.