PL charge City for alleged breaches of financial rules

[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?

 

[halfcenturyup]

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. :)

Joking aside, I quote this from the last time I got blasted:

Jesus Christ! Not this again.

Though the CAS saved us, UEFA found us guilty of lying, in our audited accounts and various financial submissions to them, about the source of GBP 50 million annually such that we presented it as income that could legitimately be expended under the FFP rules on transfers and player wages among other things when those funds in fact constituted owner investment that couldn't be spent on those items under the rules.

That UEFA made such a determination is there in black and white in the CAS award. MCFC certainly considered that the allegations were tantamount to accusations of fraud on the part of the club: see point 13(a) of City's case reproduced in para 61 of the Award and point 48 of City's case reproduced in para 61 of the Award.

As for UEFA's view on the matter, on page 11, under the heading "Disciplinary measures", it's stated that MCFC's conduct constituted "a series of very serious breaches, over [a four-year period] which were committed intentionally and concealed". Moreover, when the club offered its defence to UEFA, it did so "putting forward a case that ADUG knew to be misleading". So they outright accused the club of systematic, dishonest conduct, and of lying about that conduct in an attempt "to circumvent the objectives of [UEFA's FFP] Regulations".

Thankfully the CAS stated many times (twelve, if I remember correctly) in its award there was "no evidence" of our having done what UEFA alleged we had. However, make no mistake, the allegation was that we lied and falsified our accounts to facilitate extra spending of GBP 50 per season.

The PL charges, as far as anyone can judge from information in the public domain, repeat the accusation. In particular, the PL's statement of charges featured the following allegation (reproduced from here, with the emphasis mine) that City have breached:



The references in that accusation to the duty to act "in ... good faith" and to produce financial information giving a "true and fair view" in addition to the specific mention of "sponsorship revenue" suggests that the PL's charge is exactly the same as UEFA's in this regard. Those formulations really don't lend themselves to any other credible interpretation.

Below, I reproduce section 17 of the Theft Act 1968, which deals with the fraud-based offence of false accounting:



We may have been vindicated by the CAS, but UEFA found MCFC as a club guilty of conduct that inevitably entailed the commission by individual officers and employees of the club of the offence under section 17 of the 1968 Act (see the summary of UEFA's case above) because they:

1. would have had to have acted dishonestly (they're sophisticated businesspeople who fully understood UEFA's rules and, according to UEFA, knew what they were doing);
2. would certainly have been acting with a view to gain ... for another (the other being the club, and such gain taking the form of allowing the club to spend £200 million that otherwise wouldn't have counted as income for FFP purposes, as referred to in para 206 of the CAS Award); and
3. would have supplied various sets of accounts and other documents that were "misleading, false or deceptive" because they'd have provided documents including but not limited to our annual accounts that duped UEFA into thinking we had an extra £50 million available to us annually while still meeting the requirements of FFP.

The wording of the PL's charges against MCFC clearly signpost that, again, we're in this territory. They're not likely to make insinuations with regard to bad-faith conduct and accounts not giving a true and fair view if all that's under discussion amounts to a legitimate difference of opinion as to how certain items should be accounted for under the relevant rules. The current media hysteria about the "charges" against us isn't due to them relating solely to accounting issues!

I ultimately think it was outrageous for UEFA to put forward the case against us it did based on the evidence it had. Our club was dragged through the mud as a result, but more importantly it was a serious attempt to inflict serious, lasting damage on our club. Now the PL seems to be repeating the exercise, and, if it's putting forward a similar case, it needs calling out on that.

As it stands, the PL seems to be happy to throw around accusations of incendiary seriousness. And if the PL wants to act in such a way, we should be highlighting that rather than diminishing it. LET THE PL FUCKING OWN ITS CONDUCT.

 

[BerkshireBlue]

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 bearing.

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

You can yes but if I gave you the money to pay me the money as a revenue then that is accounting fraud. It's making a business look healthier than it actually is. There's nothing wrong with an owner investing his own cash into businesses but making up transactions is fraud there's no two ways about it. Accounting fraud is a law in the UK. Look it up

 

[Dribble]

You can yes but if I gave you the money to pay me the money as a revenue then that is accounting fraud. It's making a business look healthier than it actually is. There's nothing wrong with an owner investing his own cash into businesses but making up transactions is fraud there's no two ways about it. Accounting fraud is a law in the UK. Look it up

Who made up a transaction? Etisalat & Manchester City entered into an agreement for sponsorship. City delivered on the terms of that sponsorship deal.

Are you saying there was no Etisalat sponsorship of Manchester City?

 

[BerkshireBlue]

Who made up a transaction? Etisalat & Manchester City entered into an agreement for sponsorship. City delivered on the terms of that sponsorship deal.

Are you saying there was no Etisalat sponsorship of Manchester City?

Like I keep saying I'm not saying we're guilty of it, I'm saying that's what the Premier League are saying what's happened. There's no way they can prove it in my opinion

But make no mistake they are accusing us of accounting fraud

 

[halfcenturyup]

You can yes but if I gave you the money to pay me the money as a revenue then that is accounting fraud. It's making a business look healthier than it actually is. There's nothing wrong with an owner investing his own cash into businesses but making up transactions is fraud there's no two ways about it. Accounting fraud is a law in the UK. Look it up

Agreed, except I would say, from an accounting point of view that, if the revenue is at a fair value and services have been provided for value against that revenue, then you aren't making your business look healthier than it is, because you could get equivalent fair value revenue from another party. I would go so far as to say, and I do frequently :), that it is the taking out of fair value revenue from the accounts that would make them misleading.

I accept, however, after several painful legal beatings, that, from a legal point of view, the allegation is that the club took action that had the effect of disguising equity as revenue in order to gain a benefit. This is a legal case, after all. I just question the allegation that the accounts don't show a true and fair view, which, of course, is the alleged breach.

 

[Dribble]

Like I keep saying I'm not saying we're guilty of it, I'm saying that's what the Premier League are saying what's happened. There's no way they can prove it in my opinion

But make no mistake they are accusing us of accounting fraud

Mate, we had a sponsorship agreement with Etisalat. We discharged our responsibilities in respect to that agreement, so where's the fraud?

What the PL & UEFA are contending is HRH funneled £30m in two payments in 2012 & 2013 to Jaber Mohammed, who then paid City on Etisalat's behalf.

Even if this were the case, again, no crime has been committed, BUT UEFA & the PL believe their private members club 'rules' have been breached. This is the case we face. \0/

 

[halfcenturyup]

Like I keep saying I'm not saying we're guilty of it, I'm saying that's what the Premier League are saying what's happened. There's no way they can prove it in my opinion

But make no mistake they are accusing us of accounting fraud

I would say "effectively" accusing the club of fraud. We don't know what the actual charges are.

It's not really a problem in my view. I doubt they can prove it even if it did happen, and even the implication of fraud shifts the burden of proof, or I should say the cogency of the evidenc, to the higher end. So bring it on :)