PL charge City for alleged breaches of financial rules

[Dribble]

I keep repeating myself but city are accused of overstating revenue which is accounting fraud and is illegal in all countries including the UK for good reasons

Are you saying we had less money & assets than stated in our audited accounts & annual returns?

 

[WRicko]

Are you saying we had less money & assets than stated in our audited accounts & annual returns?

Yes what did you think they were accusing us of ? What do you think was meant by all this related party / Disguised equity investment / inflated sponsorship ?

 

[KS55]

Yes what did you think they were accusing us of ? What do you think was meant by all this related party / Disguised equity investment / inflated sponsorship ?

Surely that can’t be right. I think we are accused of disguising the source of funds rather than overstating them.

 

[Dribble]

Yes what did you think they were accusing us of ? What do you think was meant by all this related party / Disguised equity investment / inflated sponsorship ?

Here's the thing, & there's two ways of looking at this:

A. Our stated assets & money was more than we actually had?

B. Our stated assets & money is as we stated?

A is fraud & concealment, B is as you would expect. Our situation has to be one or the other. Which?

 

[WRicko]

I wouldn't normally resurrect a post this far back in a thread, but this is a crucial issue in terms of how the allegations against City will be disposed of. It's important to ensure that the thread correctly states the lagal position because most users of this forum won't have first-hand knowledge of the relevant matters and rely on what others with ostensibly greater knowledge have posted. In view of this, I'd be grateful if you could cite a source for your unyielding statement above.

My own view of the situation has always been somewhat different. I believe that the PL's allegations are subject to a six-year limitation period from the cause of action (section 5 of the Limitation Act 1980). However, where a claim is based on matters allegedly entailing fraud or concealment on the part of a defendant, the six-year period runs not from the cause of action but from when the claimant discovers the fraud or concealment.

This is because the PL Rules are expressly stated to be subject to English law and they operate as a contract between each individual member club and the other member clubs as well as between each individual member club and the PL itself. Thus, the nature of the proceedings between the PL and Manchester City is such that they're subject to the provisions of the Limitation Act 1980, the statute that governs prescriptive periods for bringing legal actions across a range of civil-law matters in England and Wales (not the whole UK).

The provisions of the 1980 Act that are relevant to contractual affairs between the PL and MCFC are sections 5 and 32, referred to above. In addition, section 8 of the 1980 Act stipulates a 12-year limitation period for certain contracts but has no relevance to City's case.

The 1980 Act and other pieces of legislation do provide that a court has the right to disapply the limitation period in specific categories of cases. Examples are cases involving personal injury and defamation (both by virtue of specific provisions of the 1980 Act itself), claims against public authorities based on human rights considerations (by virtue of the Human Rights Act 1998) and equal pay or discrimination-based claims (by virtue of the Equalities Act 2010). There are various others, too.

I'm aware of - and can find - nothing, however, that creates such a discretion in a case such as City's. If I'm missing something obvious, please enlighten me.

Are you saying the limitations apply because we have be accused of fraud or concealment ? I would say that’s what we are accused of. Or are you saying that it would require an outside body criminal court etc to rule that we had done so before the limitation could be disapplied

 

[BerkshireBlue]

Are you saying we had less money & assets than stated in our audited accounts & annual returns?

That's what the Premier league have charged us with

 

[Norbiton]

That's what the Premier league have charged us with

I don’t think it is, but who knows? It’s surely where the money came from rather than it not being there

 

[Dribble]

That's what the Premier league have charged us with

Not to my knowledge they haven't...

 

[BerkshireBlue]

Not to my knowledge they haven't...

They definitely have.

1. In respect of each of Seasons 2009/10 to 2017/18 inclusive, the Premier League Rules applicable in those seasons that required provision by a member club to the Premier League, in the utmost good faith, of accurate financial information that gives a true and fair view of the club’s financial position, in particular with respect to its revenue (including sponsorship revenue), its related parties and its operating costs,


this is saying we have committed accounting fraud which is where the criminal act has occurred

 

[Dribble]

They definitely have.

1. In respect of each of Seasons 2009/10 to 2017/18 inclusive, the Premier League Rules applicable in those seasons that required provision by a member club to the Premier League, in the utmost good faith, of accurate financial information that gives a true and fair view of the club’s financial position, in particular with respect to its revenue (including sponsorship revenue), its related parties and its operating costs,


this is saying we have committed accounting fraud which is where the criminal act has occurred

It doesn't. They're questioning the source of the Etisalat sponsorship money paid to City in 2012, 2013.

They've accused City of getting Sheikh Mansour to pay the £30m, saying we disguised his equity funding as sponsorship from Etisalat. We had, & still have a sponsorship agreement with Etisalat.

That's the "accurate financial information" they've accused us of lying about.

 

[BerkshireBlue]

It doesn't. They're questioning the source of the Etisalat sponsorship money paid to City in 2012, 2013.

They've accused City of getting Sheikh Mansour to pay the £30m, but we disguised it as sponsorship from Etisalat.

That's the accurate financial information They've accused us of lying about.

And that's the very definition of inflating your revenue which is accounting fraud

 

[Prestwich_Blue]

And that's the very definition of inflating your revenue which is accounting fraud

But we had a Heads of Agreement with Etisalat, who later reimbursed ADUG. CAS were quite clear that everything was OK with the Etisalat contract.

 

[BerkshireBlue]

But we had a Heads of Agreement with Etisalat, who later reimbursed ADUG. CAS were quite clear that everything was OK with the Etisalat contract.

I'm not saying we're guilty of it I'm saying that's what the Premier league has charged us with

 

[bluenova]

They definitely have.

1. In respect of each of Seasons 2009/10 to 2017/18 inclusive, the Premier League Rules applicable in those seasons that required provision by a member club to the Premier League, in the utmost good faith, of accurate financial information that gives a true and fair view of the club’s financial position, in particular with respect to its revenue (including sponsorship revenue), its related parties and its operating costs,


this is saying we have committed accounting fraud which is where the criminal act has occurred

Are they accusing us of breaking their own rules, but not actually committing fraud?

If we say we're sponsored by Best Noodles, and we get a nice fat £20m cheque each year from Best Noodles deposited in our account, then that's fine.

If our owners are actually paying Best Noodles £20m a year, in order to pass it on to us, and that's declared in our owners, and Best Noodles accounts, then there may be ways to do that perfectly legally. However, if the PL find out, then they will argue that it breaks their rules.

 

[WRicko]

Surely that can’t be right. I think we are accused of disguising the source of funds rather than overstating them.

First off I don’t think we can be sure of the details of what we are accused of.
I also think that there is an argument to say even if we are only accused of disguising the source of funds rather than inflating it is still false account and also fraud. There is an argument to say we are defrauding rivals by giving ourselves an unfair advantage by being able to spend more than the rules allow assuming we did anything of course

I also think you could argue that inflating and disguising the income are very similar it might depend on the way it comes about but you wouldn’t disguise where money comes from unless you wanted to inflate it. I think for example some of the argument about these charges is not that the money came from companies connected to the owner like with King Power at Leicester which we didn’t declare as such but that the owner boosted what came from them they would argue that that was done to get more money than it was worth it’s not like Etihad etc are short of cash

 

[Gesario]

First off I don’t think we can be sure of the details of what we are accused of.
I also think that there is an argument to say even if we are only accused of disguising the source of funds rather than inflating it is still false account and also fraud. There is an argument to say we are defrauding rivals by giving ourselves an unfair advantage by being able to spend more than the rules allow assuming we did anything of course

I also think you could argue that inflating and disguising the income are very similar it might depend on the way it comes about but you wouldn’t disguise where money comes from unless you wanted to inflate it. I think for example some of the argument about these charges is not that the money came from companies connected to the owner like with King Power at Leicester which we didn’t declare as such but that the owner boosted what came from them they would argue that that was done to get more money than it was worth it’s not like Etihad etc are short of cash

 

[Kinkys Left Foot]

Currently nobody, apart from the two parties to the case, "knows" exactly to what the charges refer to. As invested fans and some more experienced legal and accounts based professionals have commented, we can have a very good guess though as we have the point source of the investigation, which is the emails, as well as the distinct wording, in some parts, of the charges.

Despite and more likely because of the length of the investigation it would appear that no smoking gun evidence has been "revealed", although this is currently surmised, our position (fans) is that it cannot be found as it doesn't exist.

We also can refer to the charges made by UEFA and the CAS decision and judgement as a source of information as confirmation of the allegations of the alleged financial malfeasance.

It would seem that both the Etihad and Etisalat sponsorship deals are clearly the contractual arrangements the PL are alleging constitute those leading to a breach of the rule below.

1. In respect of each of Seasons 2009/10 to 2017/18 inclusive, the Premier League Rules applicable in those seasons that required provision by a member club to the Premier League, in the utmost good faith, of accurate financial information that gives a true and fair view of the club’s financial position, in particular with respect to its revenue (including sponsorship revenue), its related parties and its operating costs,

We know CAS heard the evidence regarding the Etihad deal from both parties, that evidence is laid out in the judgement. The plaintiffs argument, based solely on the emails, was we disguised sponsorship money as owner investment. That substantial parts of the money to fulfil the contract between City and Etihad was paid by ADUG, our owners company. We refuted that and offered substantial rebuttal evidence to those allegations with testimony under oath by City executives and testimony from Etihad executives. Also separate accountancy audited evidence by a third party. We all know CAS found in our favour and the judgement clearly states that their was insufficient evidence to support the allegations of conspired, sustained fraud between all these parties and that the panel was not satisfied of the truth of the allegations to a comfortable satisfaction.

It would therefore seem the PL want to test the same argument, allege the same conduct, this time breaking their rules of "submission of financial information" in relation to sponsorship revenue, in good faith (ie fraudulent accounts) with exactly the same evidence but in a UK court action on the balance of probability and expect a different outcome.

One could argue that position is reasonable if the original findings were legally perverse or subsequently found to be based on false or incomplete evidence where new cogent evidence has become available. Currently none of the above seems likely. Should we believe the PL position is therefore unreasonable? That of course will be the clubs' fans position.

The Etisalat issues are more complicated in that although evidence from both parties was heard at CAS, the emails versus our rebuttal evidence regarding the 2 x £15 million payments, no ruling by the panel was given, as the matters were deemed time barred by UEFAs own rules, once the panel had decided on the exact date from which to measure the required eligibility. That was neither date offered by UEFA or City but certainly a date which ruled the matters time barred. I think in addition CAS opined that UEFA offered no evidence in the matter despite Citys wealth of counter evidence.

Clearly as the matter has not been ruled on the PL may be seeking to include this as part of their "submission of financial information" in relation to sponsorship revenue breach.

It would seem that if so, they must establish, by submission of such cogent evidence, to allege fraudulent activity by City or its executives to bypass what would clearly be time barred by UK law under the limitations. If I'm correct in that assumption, we as fans are again wondering where is this evidence?

I've also been left wondering the fact that "fraud" is part of a criminal statute yet here it's attempting to be established in a civil case. When offering evidence to establish such "fraud" what burden of proof is required to establish the presence of the alleged "fraud" to negate the time barring issue?

I think it's clear our advocates will seek to have these alleged breaches time barred although it would appear not to be a thoroughly satisfactory outcome from a general publics opinion standpoint, if that were to be the case. Although I think we all know the great unwasheds opinion is already immovably formed thanks to the UK media and its red lackeys.

There are of course several other charges in relation to player and nanager remuneration causing fiduciary breaches but none seemingly as serious as the sponsorship issues in respect of creating false accounts and all of which UEFA were aware of but never challenged as a breach of FFP rules.

The judgement in this case is going to be an epic read. Let's hope like a good Thai massage it has a City happy ending.

 

[halfcenturyup]

Are they accusing us of breaking their own rules, but not actually committing fraud?

If we say we're sponsored by Best Noodles, and we get a nice fat £20m cheque each year from Best Noodles deposited in our account, then that's fine.

If our owners are actually paying Best Noodles £20m a year, in order to pass it on to us, and that's declared in our owners, and Best Noodles accounts, then there may be ways to do that perfectly legally. However, if the PL find out, then they will argue that it breaks their rules.

Calling @petrusha to the thread.

Sorry, I couldn't resist seeing someone else (other than me) get blasted for claiming the allegations may not amount to fraudulent accounting. :)

 

[Dribble]

And that's the very definition of inflating your revenue which is accounting fraud

Let me clarify. UEFA aren't saying there's anything wrong with the sponsorship, just who paid for it.

Can you cite me a UK Law where I couldn’t pay a bill for you? Well this is UEFA & the PL's rule, which has zero statutory or legal standing.

UK Law & UEFA rules are two very different things. The two can't be conflated.

 

[Dribble]

First off I don’t think we can be sure of the details of what we are accused of.
I also think that there is an argument to say even if we are only accused of disguising the source of funds rather than inflating it is still false account and also fraud. There is an argument to say we are defrauding rivals by giving ourselves an unfair advantage by being able to spend more than the rules allow assuming we did anything of course

I also think you could argue that inflating and disguising the income are very similar it might depend on the way it comes about but you wouldn’t disguise where money comes from unless you wanted to inflate it. I think for example some of the argument about these charges is not that the money came from companies connected to the owner like with King Power at Leicester which we didn’t declare as such but that the owner boosted what came from them they would argue that that was done to get more money than it was worth it’s not like Etihad etc are short of cash

What you're conflating is PL & UEFA 'Rules', with UK 'Law'.

Even if Sheikh Mansour did funnel sponsorship money to City, through Etisalat, in UK Law, as long as taxes are paid, what crime or fraud have City committed?