http://www.guardian.co.uk/sport/david-conn-inside-sport-blog/2009/sep/30/leeds-united-ken-bates-jersey
Riddle of Leeds' ownership remains shrouded in mystery
Who exactly owns the Elland Road club is still wrapped in secrecy after four
years of Ken Bates' chairmanship
A Jersey court was told by Ken Bates in January, Leeds United's chairman
since 2005, that he jointly-owned the club's holding company. In May Bates
said that his statement had been "not correct".
The ownership of Leeds United has been routed via a network of offshore
companies ever since Ken Bates arrived at Elland Road as the club's new
chairman in 2005, and now mystery surrounds it again.
Bates told the Royal Court of Jersey in January this year that he himself
jointly owned the club's holding company, the Cayman Islands-registered
Forward Sports Fund, with his long-term financial advisor, the Guernsey
accountant Patrick Murrin. It has since emerged that in May Bates swore an
affidavit in the same court, stating that it had been "not correct" and "an
error on my part" to say he was the joint owner of his club.
Contrary to what he and his solicitor Mark Taylor, also a Leeds director,
had told the court in January, there are in fact 10,000 shares in Forward,
and Bates does not own any of them. Forward's administrators, based in
Geneva, have refused to say who the owners of those shares are.
The ownership of Leeds, then - the Yorkshire club finally on the rise in
League One after years of financial horror - is unknown. That begs a serious
question over whether the club's current owners have ever been passed as
"fit and proper" people according to Football League regulations, and
therefore whether the takeover of the club by Bates has actually been
ratified.
Bates first became the chairman of Leeds, which was in grim financial
meltdown, in January 2005. He emerged as the chairman again in 2007, after
he and his fellow directors, Taylor and the chief executive, Shaun Harvey,
had slashed the club's debts by placing it in administration owing creditors
£35m. Forward Sports Fund, which originally bought the club in 2005, also
bought it from the administrators, ultimately paying 17p in the pound to
those owed the millions.
The ownership of Leeds has been illuminated gradually in the Jersey court,
where Leeds are suing a company, Admatch, which Bates claims owes Leeds
money. Admatch is counter-suing, arguing that it was owed considerably more
when another Leeds United company was put into liquidation. Admatch's owner,
Robert Weston, who is personally representing his company against Bates'
lawyers, has made it an issue in court to seek the identity of the club's
ultimate owners, and he has won a series of judicial orders forcing Bates to
declare who they are.
In January, Leeds' Jersey lawyers told the court that Bates and Murrin, who
has worked closely with Bates for 30 years, owned one "management share"
each in Forward. Taylor subsequently told the Guardian that there were no
other shares in Forward and that meant Bates and Murrin were the fund's, and
therefore the club's, joint owners.
Neither Leeds nor the League would divulge this week the names which the
club has submitted as the club's owners to be passed as "fit and proper",
according to the League's requirements. It would, though, be logical to
assume that Bates and Murrin were presented as the joint owners.
It has since emerged that on 6 May, Bates swore an affidavit following
another Jersey court order for him to disclose Forward Sports Fund's
"ultimate beneficial ownership". In that sworn statement, Bates said he had
approached Murrin in January 2005 "to enquire whether investors, represented
by him, would consider backing me by making an investment in Leeds United".
Bates suggested to Murrin that an investment vehicle be formed and: "Patrick
Murrin arranged for the incorporation of FSF, a fund incorporated in the
Cayman Islands."
Bates, in his statement, said he left the financing of Forward to Taylor,
who negotiated with Murrin for Forward to lend Leeds £4.4m.
"As far as I was aware there were two management shares issued in Forward,"
Bates swore in his affidavit. "One was issued to Patrick Murrin, and the
other to a Mr Peter Boatman, a representative of a Geneva based fiduciaire
[trust administrators], representing the interests of the investor group.
This information has only just come to light and the information contained
in our advocate's [lawyers'] letter, dated 5 December 2008, which stated
that I had the other of the management shares in Forward, was not correct
and was an error on my part."
Bates went on to say that although he manages "the direction of Forward on a
day-to-day basis . the ultimate decisions rest with the participating
shareholders".
His affidavit concluded: "Neither I, Mark Taylor or Shaun Harvey are able to
confirm who the ultimate beneficial owners of Forward are."
Attached to the affidavit was a letter from Taylor, dated 27 April, to
Château Fiduciaire, Forward's Geneva-based administrators, in which Taylor
said the Leeds directors believed Forward had two management shares, owned
by Bates and Murrin, and there were no other shares in the company.
Château Fiduciaire replied nine days later, saying there were two management
shares, issued to Murrin and Boatman, and neither carried voting or
ownership rights. "Ten thousand participating shares are also in issue," the
letter said. "Understandably, it is not the policy of this company, a fully
regulated Swiss fiduciaire, to release information on ultimate ownership
without an appropriate court order, valid in Switzerland."
The revelation by Bates that he made "an error" when he said he jointly
owned Forward, and the Château Fiduciaire letter, means the ownership of
Leeds, still one of English football's potential giants, is undeclared. The
Yorkshire club apparently belongs to the holders of 10,000 shares in a
company registered in the Cayman Islands, administered in Geneva by trustees
who refuse to reveal the owners' identity.
That represents grounds for the Football League to investigate, according to
the Liberal Democrat MP, Phil Willis, who has consistently campaigned for
greater transparency in the ownership of Leeds and clarity in the way the
2007 administration was handled.
"Leeds United is a fantastic football club whose loyal and dedicated
supporters have stuck by it through thick and thin," Willis said yesterday.
"They have a right to know who owns their club and that those people are fit
and proper. The Football League must revisit this case to ensure that its
rules, that owners must be passed as fit and proper, have been met."
Neither Bates nor Taylor responded to questions from the Guardian about how
the error was made over the Leeds ownership, and who the club has submitted
to the league as its owners.
In another court action this summer, the former Leeds director Melvyn Levi's
libel claim against Bates in London, Bates confirmed that he has never put
any of his own money into Leeds United. Levi won that case, which Bates is
now seeking leave to appeal.
The Premier League asks its clubs to publish all owners of 10% or more of
their shares, but the Football League does not make ownership details
public, claiming it is unable to do so due to the Data Protection Act. The
revelation that Leeds United's owners are unknown, and offshore, comes as
the League board prepares to decide whether to pass as fit and proper Notts
County's takeover - by a group of investors, not yet fully identified, in a
fund administered from Switzerland.
ASTOR QUESTION
The mystery over Leeds United's owners raises a question, too, over the most
controversial aspect of the club's 2007 insolvency. Bates, as the chairman,
and Forward Sports Fund were supported in buying the club back from the
administrators by another offshore company, Astor Investment Holdings. Astor
was prepared to write off £18m it was owed, as long as Bates and Forward
remained in charge, an offer not made to any other bidders, and so crucial
to Bates retaining control.
The administrators said then they were satisfied there was no connection
between Astor and Forward, or Bates, which would have required a separate
vote, without Astor, to be taken. Mark Taylor clarified then that there had
previously been an ownership connection, but it had been severed when Astor
sold Forward to Bates and Patrick Murrin.
Now it has been revealed that Forward never was sold to Bates nor Murrin.
Asked how, in fact, the connection between Astor and Forward was severed,
Taylor did not respond.
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