When A Chairman Isn’t A Chairman: Part Three Of The Riddler Trilogy
If the Insolvency Service (IS) had wanted to really punish Preston North End “chairman of football” Peter Ridsdale for his recently-revealed derelictions of directorship duties, they would not have stopped at barring him from holding company directorships for seven-and-a-half-years. They would surely have barred him from any personal PR-activities. No setpiece interviews by compliant journalists about how Leeds United wasn’t his fault, or how he ‘saved’ Barnsley and Plymouth Argyle (and CERTAINLY nothing about any five-figure monthly salary he might or might not have been paid at Plymouth while Argyle office staff went unpaid). In fact, if the IS had banned Ridsdale talking about himself in any conceivably public forum, it would guarantee that Ridsdale would not be a naughty financial boy again. Ridsdale was this week found by “Company Investigations North, part of the IS” to have “acted improperly and in breach of his duties” as a “director of WH Sports Group Ltd.”, WHSG was his “football consultancy firm” which went pop in April 2009, during his particularly fraught time as Cardiff City chairman.
This is financial law euphemism for Ridsdale trousering WHSG’s money. The Manchester-based branch of the IS found that Ridsdale “caused” (!) £347,000 of WHSG’s money to end up in “personal bank accounts in his own name” between May 2007 and April 2009. The money was “for services provided to a football club” and was only discovered when said club, Cardiff, provided the information, as Ridsdale “failed to disclosed the relevant transactions” to WHSG’s liquidators – another breach of his directorial duties. Oh… and he also ‘caused’ non-payment of corporation tax, PAYE, National Insurance Contributions and VAT and non-filing of company accounts – which couldn’t have been that onerous an exercise as the firm was set up by Ridsdale “to provide sports and leisure consultancy services to football clubs,” and immediately prior to May 2007 Cardiff were their only clients. WHSG’s liquidation story broke on May 30th 2009, as an exclusive in the News of the World newspaper (NOTW) which, for younger readers, used to be an occasionally scurrilous Sunday tabloid.
“PR-Pete’s” initial response was to treat it as a scurrilous Sunday tabloid exclusive. “The innuendo of a failed business is not only misleading but bears no relation to the circumstances surrounding either the company’s original reason for existing or the reasons for being liquidated,” he told the local Cardiff press on June 1st. He added that WHSG was “a vehicle for consultancy fees from Cardiff City Football Club prior to me going on the club’s payroll in October 2007.” And he explained that the firm only ever existed because of former club chairman Sam Hammam, who had hired Ridsdale in the first place (and if familiarity is starting to breed contempt in certain parts of South-West England, I’ll understand). Ridsdale claimed: “I would not work for Sam Hammam when he was at the club and I was paid consultation fees,” although he failed to clarify what effective difference this arrangement made, before adding: “When Sam left…(in January 2007)…I said I would prefer to be on the payroll, and the fees stopped…this was a way to ensure total transparency at the football club,” he continued, words which would shame him now, if he was capable of the emotion. “WH Sports Group had no other income and no reason or means to continue to trade.”
However, this was typical “PR-Pete”, in that what he said was true… but not THE truth. There were at least 374,000 reasons to continue to trade – the £374,000 the firm appeared to owe HMRC when it went under. “Peter Ridsdale is facing a probe,” noted the NOTW in its next edition, evoking some painful imagery. It added that WHSG “folded with debts of nearly £410,000” and declared, presciently, that “The Cardiff chairman could be disqualified from being a company director for 15 years if found to have acted improperly in the collapse of his firm.” Ridsdale insisted that all the firm’s creditors would be “paid in full” and that the tax the company owed was “being discussed and agreed and will be discharged by me personally,” which suggested that he had a spare few hundred thousand pounds lying around in personal bank accounts. He insisted, according to the NOTW, that this payment “in full” would avoid an investigation. The company itself, though, had no obvious problems finding the cash, according to Cardiff City’s accounts, as WHSG had received £1,369,490 from the club in the financial years, 2006/07 and 2007/08.
Some observers were a little perplexed as to how WHSG could “earn” £1.37m over two fraught years in Cardiff’s financial history, which saw club debts rise by almost as much, to £33m. Commenting on a £500,000 bonus the firm received, football finance blogger the Swiss Ramble asked in March 2010: “Does this mean (Ridsdale) was effectively given a bonus for increasing the club’s debt?” The more financially literate among Cardiff’s support were perplexed, too, when Ridsdale claimed WHSG met its end through a Members’ Voluntary Liquidation, i.e. that it was a solvent company wound up. One contributor to the Media Wales on-line forum posted on June 5th 2009 that when WHSG was wound-up on 22nd April 2009, “Ridsdale and his wife (Sophie, the only other WHSG director, banned for three-and-a-half years for her sins) signed a sworn affidavit in front of a solicitor” that the company’s final “Statement of Affairs” was “full, true and complete” and “showed the company to be heavily insolvent – i.e. it hadn’t been wound up on the basis Ridsdale is claiming.”
The statement revealed debts of corporation tax, £146,643, PAYE and National Insurance, £111,153 and VAT, £115,639 – a total of £373,465 which looked uncannily familiar to NOTW readers. The company’s total liabilities were £409,900 – a figure equally familiar to them – including fines levied by Companies House for late filing of accounts. The forum poster said, correctly as we now know, that the level of these fines suggested “persistent and serious filing breaches” and concluded, like so many before and since, that Ridsdale “has been, at best, economical with the truth,” to an extent which “raises questions as to (his) ability to be chairman of Cardiff City.” Such questions soon had higher-profile chums, as season 09/10 was peppered with winding-up petitions against the club for non-payment of its taxes. Early in 2010 fans’ ire was diverted towards Ridsdale and Cardiff’s board for suggesting that early purchase of 2010/11 season-tickets would fund January Transfer Window expenditure, when the money eventually staved off (yet) another HMRC winding-up petition.
But WHSG continued to lurk in the background. Ridsdale departed Cardiff in May 2010, leaving behind an occasionally complex trail of debt, as the Bluebirds lost their promotion play-off final, thereby missing out on the Premier League riches which could have paid down the debts (and which many believe was Ridsdale’s Plan A, B and C for doing so). And the Guardian newspaper’s Matt Scott reported on WHSG’s failings in his ‘Digger’ column on May 26th, highlighting an entry in WHSG’s 2007 accounts, signed off by Ridsdale on March 3rd 2009, of £500,000 under “fixed asset investments.” “There was,” Scott continued, “no sign” of this figure when WHSG went into liquidation eight weeks later. He added that this liquidation process “cannot be concluded, 12 months after it began,” because, according to the liquidators, there was an “investigation in progress.”
The “fruits” of that investigation, we now know. Ridsdale said that “the fees stopped” after Hammam’s January 2007 departure. But he didn’t join Cardiff’s payroll until October 2007. And WHSG didn’t stop raising invoices for their services as, according to the IS, Ridsdale “caused” £347,000 of WHSG-invoiced money to arrive in bank accounts in his name “between May 2007 and April 2009.” And the News of the World stories in May and June 2009, of which “PR-Pete” was so dismissive, were largely accurate. Indeed they were only out in their under-estimation of liabilities to HMRC, which the IS this week revealed to be “£166,421 in unpaid Corporation Tax, £102,279, in unpaid PAYE and NIC, and £173,653 relating to unpaid VAT,” nearly £70,000 higher than their stories had suggested. Almost inevitably, ‘PR-Pete’, the ‘Spinmeister’ was spinning like a top before nightfall. His ban wasn’t really a ban but a “voluntary undertaking… as a result of ongoing issues with a personal matter,” although the issues are hardly on-going – he put £347,000 of his company’s money into his own bank accounts before said company went bust owing HMRC £442,353 and…er…that’s it.
He is, he says, still seeking to settle with HMRC – so much for “paying creditors in full…by the beginning of July” as he promised in May…2010. Cynics might say that a combination of a certain £347,000 and the money he was paid during his involvement with Argyle last year would just about cover the £442,000 owed. But you won’t find such cynics round here. He added that his “lawyers are looking into professional advice he and his company were given while he was at Cardiff,” which seems a pointless exercise, unless it turns up correspondence saying “Dear Pete, trouser that third-of-a-million quid will you? And when the company goes pop, don’t tell anyone, certainly not the liquidators, or the taxman will be after it. Kind regards, your professional advisors. And his position at Preston North End is safe because “I am chairman of football at Preston but am not a director, nor at any time have I sought to be one.” This was, of course, because when he Joined North End last December the IS investigations were on-going and his disqualification was a distinct possibility.
It says much about modern football that Ridsdale’s ban… sorry… ”voluntary undertaking” has been largely filed in the “Oh, by the way” column and has been knocked down the football story pecking order by “Roy Hodgson’s Tube gaffe,” which sounds as distressing as Ridsdale’s “probe.” And at the time of typing, the Football League are “looking into” the matter and their first finding will almost certainly be that their “fit and proper persons” test has no relevance to Ridsdale’s situation. The question never seems to be ‘if’ the test is irrelevant but ‘how.’ I’d love to be proved wrong here. Sadly, I wasn’t wrong about Ridsdale twice in recent years. Asked by 200% to speak to a local radio station when Ridsdale was appointed not-a-director, I advised Preston fans to watch carefully if Ridsdale got near the club’s money (the club currently insist they do not allow Ridsdale to “commit” them “to financial liabilities”), and my notes on the launch of Ridsdale’s 2007 book United We Fall – Boardroom Truths About The Beautiful Game quote him as saying that “I am very keen that nobody thinks I’m lining my pockets.” In brackets after this quote, I have noted “doesn’t mean he’s not.” And now we know he was.
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