PL charge City for alleged breaches of financial rules

[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 :)

 

[halfcenturyup]

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.

Evennif 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/

Personally, I prefer to listen to the lawyers on here on what is and isn't against the law.

 

[BerkshireBlue]

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.

Evennif 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/

I'm not sure what your argument angle is here. It's like you're trying to prove we didn't do it when we're actually talking about what the Premier League are implying by charging us in the first place. The Premier League are accusing us of committing accounting fraud with the charges. The second paragraph in the statement you wrote above even says exactly that.

 

[gordondaviesmoustache]

I'm not sure what your argument angle is here. It's like you're trying to prove we didn't do it when we're actually talking about what the Premier League are implying by charging us in the first place. The Premier League are accusing us of committing accounting fraud with the charges. The second paragraph in the statement you wrote above even says exactly that.

The PL are absolutely implying fraud with the charges. It is intrinsic to them. There is no other logical conclusion to draw.

 

[Stoned Rose]

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

Top liberties when we then went and won both UEFA and the PL’s competitions. In the same season.

 

[Stoned Rose]

The PL are absolutely implying fraud with the charges. It is intrinsic to them. There is no other logical conclusion to draw.

Listen to this fella he knows his stuff.

 

[gordondaviesmoustache]

Listen to this fella he knows his stuff.

I agree with this poster.

 

[halfcenturyup]

The PL are absolutely implying fraud with the charges. It is intrinsic to them. There is no other logical conclusion to draw.

This has been discussed in this thread many times over the last ten months and each time, everybody with a legal background has said this about the alleged breaches. Even an old accountant like me knows when to take legal opinions seriously. Much as I hate to admit it. :)

 

[Dribble]

Personally, I prefer to listen to the lawyers on here on what is and isn't against the law.

Even then you still seem to struggle with the basics mate. \0/

 

[halfcenturyup]

Even then you still seem to struggle with the basics mate. \0/

:) I don't think it matters anyway. They won't be able to prove anything conclusive against the evidence the club will provide.

 

[Chris in London]

Let me try.

(Again.)

The relationship between City and the PL is essentially contractual. One of the terms of that contract is that any disputes will be referred to an independent panel for determination. One of the other provisions is that we will provide accurate accounts.

The claim against City is that we have breached this contract. The way in which we are said to have breached it is serious, and is an allegation of criminal conduct. But the forum in which this dispute will be resolved is that provided for in the contract, and the contract is expressly subject to English law.

This has certain consequence.

One is that English law applies to questions of limitation. Note that an allegation of criminality does not change the limitation period, because, to repeat, the dispute between City and the PL is at its heart a claim of breach of contract. So the rules that say serious charges (like murder or fraud) have no limitation period is inapplicable because this is a civil case (albeit one that includes allegations of fraud.) To put the same point another way, the allegation of criminality does not lift this dispute out of the realms of civil claims.

So, as Petrushka has (repeatedly) argued (correctly) the general 6 year limitation period applies, with the proviso that the fraudulent concealment of the breach would mean that the six year period would only begin once the fraud is discovered.

Maybe this particular groundhog can now be laid to rest.

 

[halfcenturyup]

Let me try.

(Again.)

The relationship between City and the PL is essentially contractual. One of the terms of that contract is that any disputes will be referred to an independent panel for determination. One of the other provisions is that we will provide accurate accounts.

The claim against City is that we have breached this contract. The way in which we are said to have breached it is serious, and is an allegation of criminal conduct. But the forum in which this dispute will be resolved is that provided for in the contract, and the contract is expressly subject to English law.

This has certain consequence.

One is that English law applies to questions of limitation. Note that an allegation of criminality does not change the limitation period, because, to repeat, the dispute between City and the PL is at its heart a claim of breach of contract. So the rules that say serious charges (like murder or fraud) have no limitation period is inapplicable because this is a civil case (albeit one that includes allegations of fraud.) To put the same point another way, the allegation of criminality does not lift this dispute out of the realms of civil claims.

So, as Petrushka has (repeatedly) argued (correctly) the general 6 year limitation period applies, with the proviso that the fraudulent concealment of the breach would mean that the six year period would only begin once the fraud is discovered.

Maybe this particular groundhog can now be laid to rest.

Well yes, but are they actually charging the club with fraud?


:) Happy New Year, btw.

 

[Dribble]

I'm not sure what your argument angle is here. It's like you're trying to prove we didn't do it when we're actually talking about what the Premier League are implying by charging us in the first place. The Premier League are accusing us of committing accounting fraud with the charges. The second paragraph in the statement you wrote above even says exactly that.

This is what you originally said:

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

As others have pointed out to you, City & Etisalat had a valid sponsorship agreement. However a UAE based financier Jaber Mohammed paid £15m in 2012 & 2013 to Manchester City, in respect to the Etisalat sponsorship agreement.

Etisalat used Jaber Mohammed's financial services as a bridging loans to pay City.

Everything was fine until a sentence in a stolen email which alludes to a City employee asking another employee to see if HRH could source third party finance to cover a portion of Etisalat's payments. Enter Jaber Mohammed.

There's no evidence from what I'm aware that this email was acted upon by HRH. Also, it's reasonable to assume because Etisalat repaid the £30m to Jaber Mohammed & these transactions appeared in their accounts, it should be case closed, but no.

UEFA & the PL are STILL wanting to haul us over the coals, not because we've committed a crime, it's because they believe we found a way to traverse our way around their FFP which they introduced to cripple us, & other ambitious clubs like us from the beginning.

I'd be more arsed about your argument, if UEFA & the PL were the honest actors they make themselves out to be. They're not. It's a fight they started, & are seemingly willing to keep on fighting to quench the hatred the G14 & Hateful Eight have for City.

They've zero case in UK Law, & only a case when their private members rules are applied, so Fuck em!

 

[Dribble]

:) I don't think it matters anyway. They won't be able to prove anything conclusive against the evidence the club will provide.

This is my whole point. I can accuse you of whatever. Proving a crime has been committed is a totally different thing.

If all the PL & UEFA have to go on is a sentence in a stolen email from 2012, they're on flimsy ground.

It's evident to me they're not only pursuing these charges in the faint hope some will stick, but in the full knowledge that the reputational damage to City being called fraudsters who wouldn't have achieved success unless we cheated, will be the next best outcome.

It's working too. My Spuds supporting family already believe they'd have won a PL or two if not for us being FFP cheats. ¯⁠\⁠_⁠(⁠⊙⁠_⁠ʖ⁠⊙⁠)⁠_⁠/⁠¯