The Guardian Is Banned From The Bates Motel

By on Oct 20, 2009 in English League Football, Finance, Latest | 10 comments

It was something of a disappointment that there wasn’t a big empty space in this morning’s edition of the Guardian’s sports section. It would have been the most fitting response to Ken Bates’ decision to ban the newspaper from Elland Road as a result of reports written by David Conn about the increasingly murky issue of the ownership of Leeds United. The take-over of Leeds United by Bates during the summer of 2007 was, of course, shrouded in controversy. When the club went into administration and a CVA couldn’t be agreed, a sale could only be agreed through the administrators to Bates himself after the intervention of Astor, an unsurprisingly British Virgin Islands-registered company who somehow or other had come to be owed £12.7m by the club, and a second company called Krato Trust (registered at Nevis in the West Indies), both of whom stated that they would only approve a sale to Bates’ Forward Sports Fund.

The Football League’s displeasure was made pretty clear when they deducted the club fifteen points at the start of the 2007/08 season, and this deduction ended up costing Leeds United pretty dearly – it cost them automatic promotion and they were beaten in the League One play-off final by Doncaster Rovers – but it seemed that Bates had managed to wrest control of the club until earlier this year. The club’s administrators, KPMG, claimed to have carried out “extensive enquiries” as to whether there was any link between Astor and Bates and found nothing. As far as the Football League was concerned, there were just two shares in the (Cayman Islands-registered) Forward Sports Fund – one held by Ken Bates, and the other by his financial advisor, Patrick Mullin. Leeds went on to surprise everybody by announcing a £4.5m profit at the end of 2008.

Then, however, everything started to unravel. Leeds United brought a court case on Jersey against a company called Admatch which they claimed owed them £190,000, but Admatch contested the claim, stating that they were still owed money from the Leeds United company that collapsed in 2006. Robert Weston, the owner of Admatch, obtained a court order demanding that Leeds confirm once and for all who the current owners of several of the off-shore companies involved in Leeds United are. After the court had rejected the first submission from Leeds’ solicitors after Weston complained it was inadequate. The judge, deputy bailiff Michael Birt was pretty damning in his assessment of the information given at the time by Leeds’ solicitors.

The court made an order and your client has not complied with it. You are not compliant with who the beneficial owner is. We will go through the chain of companies and see who is the beneficial owner. If it gets to the stage where some percentage of the company up the chain is owned by another company where you do not know who the owners are, then someone must go on oath and say so.

Eventually, the truth came out under oath. There weren’t two shares in Forward Sports Fund, held by Ken Bates and Patrick Mullin. There were actually 10,000 and, according to Bates (and under oath), any suggestion to the contrary was an “error”. At this point, The Football League became involved again and summoned the club to explain itself to them. Two weeks ago, their case with the League was adjourned pending further investigation. Bates’ “error” is a pretty serious one. The issue of whether there was a link between Astor and Forward Sports Fund has been batted backwards and forwards for the last couple of years. Former chairman Gerald Krasner, for example, had pointed out at a creditors’ meeting in 2006 that Astor “has an interest in Forward Sports Fund”. The club claimed that whilst there had been a link between the two companies, this had been severed before the club went into administration in 2007.

The only thing that we can say for certain is that we don’t know who the current owners of Leeds United are. It is surely not an unreasonable demand for the Football League to know where the ultimate beneficial interest lies, and it would also not be unreasonable for them to ask how Bates’ “error” came to be made, when he first realised that an “error” had been made, and what steps were taken to remedy it as soon as he realised this “error”. That this information has entered into the public realm has been thanks to the courts in Jersey and David Conn, who has fought through a myriad of unbelievably complex legal paperwork to report the story as lucidly as could possibly be hoped for.

Such petulant behaviour from Bates is probably to be expected, but what is slightly depressing is the extent to which he is now dragging his club down. Simon Grayson has built a young, entertaining team at Elland Road yet only just over 19,000 people made the journey there on Monday night to see them stretch their lead at the top of the League One table by beating Norwich City 2-1, and the protests that maybe should have taken place during the summer of 2007 seem likely to start soon. Moreover, the shenanigans behind the scenes over the last couple of years at Elland Road may have serious ramifications for the club. If the Football League was to take the opinion that Bates had lied to them, they may choose to take very serious action against the club.

Meanwhile, the Thorp Arch deal is off. Leeds City Council had been due to spend £6m buying Leeds United’s training ground back from its owners, a company called Barnaway with the view to leasing it back to the club. As recently as the 11th of October, they said, “After agreeing to purchase Thorp Arch in principle the council has yet to complete its due diligence checks. The council has access to the club’s accounts and bank statements, and the issue of its ownership will be part of those checks” and the deal seemed set to go ahead. The council, however, didn’t agree anything in the end, meaning that, while Leeds will stay at Thorp Arch for the time being, Barnaway now have the right to sell the land to the highest bidder.

Whether accidentally or deliberately, Ken Bates has misled the football authorities and most of the rest of us – not least supporters of Leeds United – as to the ownership of his club. In law, committing an “error” has no legal status as a defence and it will be interesting to see how the authorities interpret this “error”. In the meantime, most of the rest of us can see straight through the ban that has been thrown at the Guardian. The question that we have to ask ourselves is a fairly simple one. If we are to take sides over this matter, do we take the side of the newspaper or do we take the side of Ken Bates, accept that he didn’t lie to the authorities and that his “error” was a mere oversight?

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    10 Comments

  1. Terrific. Every bit as lucid as David Conn.

    Of course, if Bates and Murrin WERE the only two shareholders in FSF, Leeds 2007 CVA would not have been passed by the required majority of “unconnected” creditors, as they, FSF and Astor would have been connected as surely as the thigh bone is connected to the knee bone.

    It’s an old Bates trick, detailed in Tom Bower’s book ‘Broken Dreams.’ Make yourself a preferred creditor in advance of any administration, hide all connections between yourself and other creditors and, hey presto, one company on the cheap, debts all but wiped out.

    Bates hasn’t made any sort of ‘error’ other than to let the proverbial cat out of a Jersey court’s bag.

    What with him losing his libel case against former Leeds director Melvyn Levi, this has been an annus horribilis for the anus horribilis.

    Keep the pressure up everyone.

    Mark Murphy

    October 21, 2009

  2. “this has been an annus horribilis for the anus horribilis” – nice one!

    Jertzee

    October 21, 2009

  3. I bet Bates is good at poker.

    Tom Bowker’s book is a good read by the way.

    Paul

    October 21, 2009

  4. You would think Leeds would be getting some sort of PR advice at the very least – banning the Guardian just creates even more suspicion and doesn’t help Leeds’ reputation one bit.

    This lack of transparency needs to hounded out of football, alongside any dodgy dealing. Thank goodness for the likes of David Conn…

    Steve

    October 21, 2009

  5. Sorry, I meant Tom Bower.

    Other good books on a similar theme:-

    Football Inc. – How Soccer Fans are Losing the Game by Craig McGill

    Own Goal! – How Egotism and Greed are Destroying Football by Simon Freeman

    Great Balls of Fire – How Big Money is Hijacking World Football by John Sugden and Alan Tomlinson

    Paul

    October 21, 2009

  6. David Conn should be careful.

    Bates will publish his address and phone number in Leeds United programmes next…

    Martin

    October 22, 2009

  7. To paraphase the Bard “Who will rid us of this troublsome knight”

    Well I wish he would bloody hurry up!!!

    Jailhouse John

    October 24, 2009

  8. It’s not the Bard, it’s attributed to Henry II, about whom Shakespeare wrote no play (his history plays begin a little later, with John). There is a famous play about the related events, though as far as I know the “who will rid me…” phrase does not appear in it.

    ejh

    October 26, 2009

  9. If Bates publishes Conn’s phone number and address in the Leeds Programme. Perhaps Conn could just publish Bates phone number and address in the Guardian !!

    I would like to see a blank space in the Guardian where a report of a Leeds home game should be published.

    John Roberts

    November 23, 2009

  10. As an avid leeds united supporter it does make me nervous when reading articles such as this. However, I believe Ken Bates has found loopholes in the law and certain people find it in the nature to criticise what they do not understand. After reading Ken’s programme notes for the past couple of years, the preverbial ‘horse’s mouth’ can often will out. This is the case here and I have come to respect a successful businessman; even an eccentric one. It has been a common occurance in past years for the people surrounding the football world to criticise and hound Leeds United Football Club. The courts will find the truth, and hopefully the club can move forward once more, as they are currently doing on the pitch!

    apmearns

    January 5, 2010

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