Chester City: The Death Rattle – Part 13
Another seven days have passed. There are now less than twenty-four hours until the Football Conference meets to decide the future of Chester City. It’s yet another potentially pivotal moment in the season, but there is little reason to have any confidence that the authorities will put the club out of its misery and expel it from the Blue Square Premier. As mentioned on here before, they have had several opportunities to do this and have failed to do, which they have uniformly rationalise to anybody (watching observers could be forgiven for thinking that the football authorities hold supporters in almost complete contempt). And with vultures still circling, hoping that a slick enough sales pitch would be enough to steal The Deva Stadium from the supporters of the club (who they would, of course, subsequently expect to turn out and pay money to watch their team), there is no reason for complacency on the part of Chester Fans United.
It seems absurd, but it is true nevertheless, that the organisation which done the most to get rid of the Vaughan family from the game isn’t the Football Conference or the Football Association, but HMRC. Last summer, they successfully challenged the old Chester company’s CVA in court. The Football Conference’s decision to allow them to start the season with a new company was in flagrant breach of its own rules (to the extent that it was given a suspended fine by the FA). Everybody concerned had an opportunity to get rid of them at that point, and they chose not to. Somehow or other, they decided that some sort of wider interest was served by keeping them in. Whose interests this was – other than the Vaughans themselves or the possibility that some sort of illusory veneer of respectability was being applied to the BSP season – has never been disclosed. Nobody from “within” the game has given anybody on the outside looking in a convincing reason why they should be trusted with anything, given their handling of affairs at Chester.
More puzzling still is the question of how Stephen Vaughan Senior still seems to be pulling the strings at The Deva Stadium, when he now fails the Football Association’s Fit & Proper Persons regulations and has done now for almost three months. Having been investigated by HM Customs & Excise over money laundering in 1998, Vaughan was disqualified by the Insolvency Service from acting as a company director for eleven years from the 25th of November 2009 after admitting “carousel fraud”. Carousel fraud is a very particular type of fraud, in which a company “buys” goods and then “sells” them on the same day in order to reclaim VAT illegally. Here’s the undertaking that he agreed in full:
- Mr Vaughan caused Widnes Rugby League Football Club Limited to purchase clothing from a UK company, in three transactions worth a total of £2,877,228 plus VAT of £505,265. The clothing goods were sold on the same days of purchase to a Spanish company for a total of £3,002,855. The three transactions took place in June, 2006.
- These transactions were carried out in a manner which involved Widnes Rugby League Club in Missing Trader Intra Community (MITC) VAT fraud, also known as ‘carousel fraud.’
- He caused these transactions to take place when he knew the club was insolvent.
- Payment for the goods purchased was not made to the alleged supplier, but was instead made into a third party’s bank account in the Netherland Antilles.
- He failed to inform the other directors of Widnes Rugby League Club of these transactions.
- He also failed to disclose to other directors a loan of £392,000 made to the club in August 2006.
Stephen Vaughan Senior, though, is not a director of Chester City 2004 Ltd. He was a director of Chester City Football Club Ltd, who had their CVA thrown out on appeal last summer and have effectively been dormant ever since. He is, instead, a “shadow” director, meaning someone that is not a director but upon whose instructions the directors of a company operate. It’s the reason why the Insolvency Service’s disqualification from directorship is worded thus:
“…may no longer act as either an active or inactive director, or exercise control over an individual who is a director, of any company”
The Football Association aren’t as daft as to not be aware that shadow directors exist, of course, and this is the reason why the Fit & Proper Persons Test is worded thus:
- a person in accordance with whose directions or instructions the persons constituting the management of the Club are accustomed to act; or
- a person who exercises or is able to exercise direct or indirect control over the affairs of the Club. For the purposes of this definition, a person shall be regarded as being able to exercise direct or indirect control over the affairs of the Club in particular but without prejudice to the generality of the preceding words if that person owns or is entitled to acquire 30% or more of the share capital or issued share capital of the Club or the voting power in the Club.
Vaughan should have been given twenty-one days to offload his shareholding in the club. Has he done this? Is it in any way reasonable to say that he in no way “exercises or is able to exercise direct or indirect control over the affairs of the Club”? Would it, considering everything, be fair to say that the FA are at the very best sailing close to breaking their own definition of the Fit & Proper Persons Test? Anyone that wishes to explain this is more than welcome to do so, because Stephen Vaughan Senior has continued to be involved at Chester City for almost three months since his disqualification from acting as a company director and for two months since he should have ceded any involvement in the running of the club, and he is doing a damn good impression of still being in charge of the club.
Meanwhile, another group has come forward, this one from Denmark, claiming to be interested in buying the club in its current constitution. Quite asides from the damage that they are doing by giving the Vaughans the capacity to turn up at meetings with the Football Conference or in court and state that they need a little more time to finalise a sale of the club when everybody knows that the only way forward for football in the city of Chester is a supporters-owned, community focussed club run by local people, there are reasons to be very concerned about their involvement. Their initial press statement claimed that:
The consortium is in daily contact with the Chester City FC’s official fan club CFU, and we are keeping them informed of every progress in the negotiations.
This, however, was little short of a lie. CFU has been clear – very clear – about what they want and they seem to have the overwhelming support of their membership. The Danes went a step further on their website, stating that they had the “100% support” of CFU – comment that was quietly removed after words from CFU themselves. They also seem to be understating the size of the club’s debt somewhat on the website. Consider what we wrote about the level of the current company’s indebtedness last week and this statement, taken from the website:
The club currently has a debt of about 250,000 Danish Kroner in tax debt. Besides that it owes a similar amount to additional creditors, who do not file for a bankruptcy petition, but are willing to enter into an instalment agreement. This is, among others, local businesses who definitely are interested in the survival of the club.
It is categorically not true that “the club owes a similar amount to additional creditors”. The 250,000 Danish Kroner is the amount that is required to be paid in order to stave off the winding up order. Chester City (2004) Ltd’s current total indebtedness is £703,000 (6,027,709 Danish Kroner), of which £485,000 (4,158,600 Danish Kroner) is owed to “the Vaughan family”. Investors in this particular little scheme may be interested to know that Chester’s current football debts (which have to be paid, in full and on time) amount to £64,300, or 552,530 Danish Kroner. On top of all of this – and as with the Norwegian Facebook group that we discussed last week, they did a considerable amount of media groundwork at home – including a piece on Danish television – before even having the common courtesy to contact anyone from the supporters’ side of the Chester divide.
There was good news for CFU on Monday night, when BBC London’s Non-League Show spoke to a local council member who spoke encouragingly of his contact with CFU and of his desire to keep a club going in the city as a benefit to the community. The council hold the ownership of The Deva Stadium, and are therefore critical to any group wishing to resuscitate football in the city. Meanwhile, CFU holds a meeting at the Guild Hall in Chester tomorrow night. Much of what the meeting will be about will be determined by the Football Conference’s decision tomorrow. Many have long since lost hope of the football authorities doing anything to help the supporters of this club, but there is still time for them to do the right thing, put Chester City out of its misery, draw a line under the past and let the future begin.