Ken Bates Loses The Closest Thing He Ever Had To ‘Honour’

By on Aug 1, 2013 in Finance, Latest | 8 comments

It would be delicious if Kenneth William Bates’ career in football were to come crashing to an ignominious end because of a business deal double-cross. The prospect of one final day in court awaits Bates, if he is true to his word and sues Leeds United’s owners, Dubai-based ‘investment firm’ Gulf Finance House Capital (GFHC) – a subsidiary of the Bahrainian-based Gulf Finance House (GFH) – for wrongful dismissal. And being a stubborn pain in the arse is one of those rare contexts in which Bates usually is true to his word. This is one reason why the temptation to write Bates’ football obituary right here is being resisted (in truth, its already half-written, in anticipation of that magical day – a draft article to which I return for cheer when necessary). After all, 200% asked whether had we entered the last days of Ken Bates’ empire ten months ago. It is also true that GFHC have little more going for them, superficially, than not being Bates. And if Bates wanted an institution to pay him millions for his Leeds shareholding, only for them to have to return it because of failure to honour agreements with him, then GFHC were ideal candidates.

However, immediately after his sacking as Leeds’ honorary president (the closest “Bates” will ever get to “honour”), Bates was so ‘flustered’ that he spoke to Guardian and Observer journalist David Conn, who became persona non grata at Leeds’ Elland Road ground for daring to ask pertinent questions about the club’s ownership. And in the Observer and an ‘emotional’ interview on TALKSPORT radio station, both last weekend, Bates let slip a few of the truths which underpinned his entire tenures at Chelsea and Leeds. Four months ago, Private Eye magazine, a frequent, cynical visitor to Bates’ business history, noted that on December 21st 2011, Leeds “issued 32 preference shares to Lutonville Holdings, an offshore company linked to Bates.” These cost £3,092,894 but were “redeemable”, according to club accounts for 2011/12, “upon a change of control” of parent company, Leeds City Holdings (LCH). They were “redeemed” when GFHC took control of LCH, exactly a year later – after very protracted takeover negotiations (shares experts can surely confirm that this timing was pure co-incidence). Their £4m price “netted Bates £1m tax-free profit,” noted the Eye, clearly believing Bates’ “link” to Lutonville to be direct.

Bates, as per usual, denied any such direct link when Conn presented further details of its club-based revenue streams. The accounts noted that Lutonville was “a related-party” to the club “by virtue of its connection to Outro,” the tax-haven vehicle Bates used to “finally” buy a 72.85% stake in Leeds in May 2011. But Lutonville received a tidy six-figure sum while awaiting their share redemption, including a bizarre-seeming £100,000 “set-up fee” for the share deal, and £40,000 quarterly “monitoring fees,” the details of which were “not in front of” Bates when Conn asked about it – though Bates should surely have known what Lutonville were “monitoring” without having to look it up. Lutonville also loaned United £1m in March, which Bates said he “arranged,” even though, as Conn noted without missing a beat, Lutonville is “not his company.” Bates claimed this money should have been, but wasn’t, repaid in June. So, Bates “is planning to sue for it”…though Lutonville is not his company.

Conn’s article told of a club with considerable financial ‘challenges,’ which made the central issue to Bates’ sacking more galling still. Bates’ explanation for his private jet extravagance “whenever he needed” was that Leeds had always funded it. So that’s alright, then. Other expenses Leeds had ‘always’ funded, including £60,000 annual “office expenses in Monaco,” which Bates could surely have covered either by working from home (I’m guessing the rooms would be big enough) or from the taxes he avoided by living in Monaco in the first place. Intriguingly, Conn also reported that Leeds paid well-known solicitors to the damned, Carter Ruck, “£1.26m between 2010 and 31 May 2012,” adding that “it is unclear what they relate to.” It was surely money wiser spent than anything Carter Ruck received for their contribution to a subsequent legal spat between Bates and Gary Cooper, chairman of Leeds United’s Supporters Trust (LUST).

In April, broadcasting watchdog Ofcom upheld Cooper’s complaint of “unfair and unjust treatment and unwarranted infringement of privacy” by Bates in two interviews Bates gave to Yorkshire Radio (majority shareholder: K Bates) in February 2012. The case added to Bates’ gallery of thorough legal defeats which revealed his unsavoury character. Bates broadcast details of Cooper’s personal ticket purchasing history, which purported to show Cooper as a rare attendee at Leeds matches and therefore not authorised to speak for “the ordinary Leeds United fan.” The publication of Ofcom’s findings – entirely Cooper’s favour – revealed that Carter Ruck joined proceedings part-way through and made various representations on behalf of Yorkshire Radio, none of which “materially affected the outcome of the complaint.” You have to wonder what proportion of the £1.26m was similarly spunked up the legal wall.

If Bates released cats from bags in the Observer, he was more revealing still in an interview with Talksport’s Neil Ashton, which served up some juicy quotes for Monday’s local and national papers but was even more of a car-crash in audio. There were flashes of trademark Bates; particularly his considered analysis of GFHC’s thinking behind his sacking (”somebody’s got a screw loose somewhere”). But otherwise it was tired, tiresome self-justification. And when Ashton said “thanks, Ken”, as Bates stumbled over “one last thing”, it was in the manner of ending an unsolicited conversation with a stranger on a night bus. Aspects of his allegedly grubby treatment by GFHC were dictionary definitions of “the biter bit”; “there’s a degree of viciousness in this quite clearly,” he declared, with the authority of personal experience.

Bates said GFHC “revealed some of the details of my contract,” which “I suppose gives me freedom to do likewise.” But his claim that “the Guardian revealed …all the confidential information they’ve been receiving came from GFH” didn’t correspond with the Observer’s description (it being a Sunday) of “sources who have seen the club accounts” – which were no more confidential than the information Bates broadcast when “unwarrantedly infringing” Gary Cooper’s privacy. Bates whinged about GFHC’s communication (“not one person from GFH rang me,” he half-cried, like a jilted teenage schoolgirl). He dismissed their concerns over Leeds’ finances (“they knew exactly what they were taking on, it took them seven months to do due diligence”). He laid into GFHC’s own finances (“they claimed to have lots of money but when the chips are down, ‘have they’?” he asked, suggesting his own due diligence had taken closer to seven minutes).

His self-justification occasionally bordered incomprehensible. The club spending half-a-million quid over three years so that he could be in Leeds without paying UK taxes, “is cheaper than the existing deal… and is in sterling, which protects against currency fluctuations because all gas is bought in dollars.” And if Leeds’  current finances are wobbly, as Conn’s Observer piece suggested, then that is because GFH have apparently been running the show since last summer. “All major decisions,” Bates claimed, “were approved by a man called Saleem Patel,” who has been a public face of the takeover as GFH’s “chief investment officer.” Yet Bates has supposedly controlled clubs for anonymous, off-shore owners for years. So for him to allow Patel to make “every major decision” a year after ‘finally’ becoming majority owner seems unlikely.

But with the Observer suggesting Leeds needed “a cash injection since the takeover of between £13m and £15m,” Bates was probably keen to let someone else appear in control, especially true if it took focus from the expensive construction work on Elland Road’s East Stand. This has been funded by borrowing against future ticket and catering income. And financial alarm bells rang even louder when it was revealed that Bates mortgaged future season-ticket income through ‘Ticketus’ – the agency involved in Rangers’ financial collapse. So it was trademark hypocrisy for Bates to call his sacking “a diversionary tactic” because GFHC “haven’t been doing very well recently, running the club.” Bates apparently raised concerns with a senior GFH executive in February. But while the executive said “we must discuss them urgently”, he didn’t respond further. “I rang him five times over three days,” added Bates, back in jilted-teenager mode.

Asked about his Leeds “legacy” Bates waxed lyrical about Elland Road’s transformation from “crumbling ruin” to “ready for the Premiership” (sic) via “£20m over eight years,” then admitted that “all fans really care about is what happens on the pitch,” as Bates’ fiercest critics have consistently insisted. Then this: Leeds being “twenty-four hours from liquidation” when he became chairman “wasn’t the fault of the people I bought it from,” – the long-awaited admission that he himself bought Leeds in 2005, not some off-shore investors who sought anonymity and riches in football’s high-profile financial loony bin. The weekend’s interviews revealed that Bates’ football future won’t be as short as hoped when news broke of his sacking, and that much of it will be within the confines of due legal process. But that’s the beauty of it all, as Leeds’ tangled financial web is open to all sorts of legal interpretation. Bates could be right to sue…but lose on a loophole.

Bates’ recent legal track record is as bad as Arsenal’s trophy-winning one. Yet it has been relatively straightforward for legal people to expose Bates’ inadequacies in most of these cases. And GFH’s early months at Leeds suggest they are quite capable of having loused up Bates’ departure. If Bates doubted Gary Cooper’s credentials as a fans’ representative, he could have had hours of fun with those of lawyer David Haigh. A former Conservative Party activist whose sole foray into council elections resulted in a personal vote little higher than “him and his mates,” Haigh emerged as GFHC’s Deputy CEO and the takeover’s public face alongside Patel. Both strenuously deny that GFHC’s takeover initially involved a wealthy individual who withdrew financial support early this year, despite Bates, without challenge, publicly referencing “a very rich individual, very close to the government of Bahrain” as among GFHC’s backers, before the takeover. And GFHC’s ‘investment strategy’ earned those, and more, inverted commas in March when GFH’s 2012 accounts stated that they were “holding the club for sale, which they envisage completing within six months to a year.” ‘Within’ one day, GFH ‘clarified’ that “GFHC is looking for investment in part of…the club, not its entirety,” without clarifying how the club was divided for such purposes.

But Bates too must know that he’s on uncertain ground. He “checked, very interestingly, with the solicitor who wrote me the letter” (presumably his ‘dismissal’ letter) that he had authority to “commit” Leeds to his private jets, despite telling Neil Ashton that GFHC “drew up the contract, I only signed it.” Meanwhile, GFH’s accounts said the “bargain purchase” of Leeds, for $33m (c. £22m), “was due to pressure on the sellers to exit their holdings due to changes in their business plans.” So Bates, 72.85% owner of this “bargain purchase,” stood to gain £16m (and reportedly more if Leeds reach the Premier League’s TV-money-based riches). This would be tax-free (Bates is a capital gains tax-exile in too) and reminiscent of his pay-off from Roman Abramovich after the oligarch bought Chelsea in 2003. Bates also hung around after that takeover, not relinquishing the almost-redundant chairman’s role until March 2004. Then, though, Bates left willingly to spend more time with his money. Now, he seems ready for court, with “a fully-chronicled dossier” of agreements with GFHC, “which, of course, will be produced in good time.” Last week, I tweeted that “Bates claims his sacking is “unfair & ridiculous” treatment? Good. A strong taste of his own medicine. Hope he’s a victim of the…treatment he’s gloried in dishing out to others down the years. Hope he sues and loses.” Nothing in a weekend of wearied, emotive bluster from Kenneth William Bates has changed that view.

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    8 Comments

  1. Could not have been said better! We hate bates with all the energy that we can muster! In my view, a truly despicable man!

    David

    August 1, 2013

  2. Wow, what an ariticle. I learned the financial dirty tricks Bates dished to all our faithful Leeds fans in the last 8 years just in 30 min. No wonder it took GFH that long to complete the handover. Bates, a final word from all LUFC fans, just leave in PEACE, and go enjoy yourself, have a Piña colada on the beach in Monaco.

    The Giant Whites are waking up, but without you !!!

    dan

    August 1, 2013

  3. This, and the David Conn article, ought to be compulsory reading for every Leeds supporter who has ever spoken any words in support of the odious individual who has taken millions out of our club. It’s likely that no-one will ever know how many millions have been taken from us, but there’s a good chance that if the money had gone on players then we would already be in the Premier League, and he could have made even more money from the sale!!!!!

    LincolnshireWhite

    August 1, 2013

  4. Hope he does go to a English Court and is asked all the questions that fans/ tax people want to ask.

    We have finally got rid of that cancerous Chelski “person”

    We can move forward
    Look at the crowd on Sat over 30,000 the atmposhere will show it is a new start
    I know it will take time but at last we can take the first step forward in 8 years of Bates regime

    MOT

    PeterT

    August 1, 2013

  5. Great article , great read. Just hope this investment talk comes through. MOT

    James march

    August 1, 2013

  6. What a legend. A clever man who knows what he is doing. I will always raise a glass to him.

    john wade

    August 2, 2013

  7. Gillingham have also signed Cody McDonald from Coventry, after two previous successful loan spells at the club.

    James Tong

    August 2, 2013

  8. The sad thing is, once Bates finally extricates himself from all the legal bollocks with Leeds, he’ll soon be bored and start sniffing around another club to “save”.

    SW19 Womble

    August 2, 2013

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