Portsmouth: All Kinds Of Everything Which Need Investigating

Portsmouth: All Kinds Of Everything Which Need Investigating

By on Jul 23, 2010 in English League Football, Finance, Latest | 11 comments

The problem with the media’s attempted coverage of Portsmouth’s saga is that the saga is little to do with Portsmouth, or football, at all. And in newspapers carefully compartmentalised into home, foreign, business and sports news… and celebrity shite, the off-the-field tale of Portsmouth doesn’t belong exclusively within any one compartment. The story is most digestable in the increasingly familiar concept of Premier League overspending – “living the dream”, and so on.

“Provincial Portsmouth” made the leap from second-tier stalwarts to two-up against AC Milan…and back again, thanks to huge dollops of money coming in and then running out. We’d seen similar at Leeds and they ended up with Ken Bates, but nobody heeded what was surely the starkest warning modern football could provide. But the story is more than that, more than one story, in fact. There have been three discrete narratives. The funding of the club from 2006 by an unspecified “Mr. A. Gaydamak.” The ludicrous Sulaiman Al-Fahim, about whom, you’ll be glad to hear, I think I’ve written enough (Where is he now? I neither know nor care). And the Israeli businessmen of varying backgrounds and legitimacy who have all been wronged one way or another by Gaydamak (we know which one this time) and have tried to use Portsmouth Football Club to right those wrongs.

Much of this has been in the public domain for ages. Every name to appear on the Portsmouth saga’s cast list has been linked to Arcadi Gaydamak, the multi-nationality businessman and father of Portsmouth’s last “owner” but 94, Alexandre “Sacha” Gaydamak, by a cursory “Google.” A number of Portsmouth fans have been working diligently on this for years and thanks to their efforts, Portsmouth’s administrators UHY Hacker Young have had an investigation into Portsmouth’s recent finances on their “things to do” list from the day they were appointed. All the investigation needs to do is join the various dots which have appeared in papers, TV and the blogosphere and come up with a chronological narrative of what happened behind the scenes at Portsmouth, and why, in order to avoid a repeat.

Yet, five weeks ago, a disturbing article appeared in the Portsmouth News newspaper, which suggested that the club’s many creditors might consider an investigation too costly. Creditors would have to pay for the investigation out of the money they were due over the next five years, under the terms of the Company Voluntary Arrangement (CVA). And if the investigation wasn’t going to cover its own costs by discovering extra funds to be made available to creditors, the article argued, it wouldn’t be worth having. How this judgement could be made without any investigation happening, wasn’t explained by the article’s author, Michael Powell, a general news reporter and consumer affairs columnist.

Indeed, the CVA proposal was tailored to allow such an investigation could take place. Had a “standard” CVA been passed, a proverbial line would have been drawn under the “antecedent transactions” of the old company. So where did Powell’s suggestion come from? And in whose interests would it be not to have an investigation? Thanks to the afore-mentioned Portsmouth fans, the investigation would start from a point considerably beyond scratch. Arcadi Gaydamak’s fame has spread far and wide over many years of “unorthodox” business dealings, which have led him to become a favourite of Private Eye magazine in this country and investigative journalists all over the globe. He is most (in)famous for his dealings with South-West African republic Angola, mostly arms dealings during their decades-long civil war. Gaydamak made much of his reputation and riches from his connections, alleged and real, with Angola. He was branded an illegal arms dealer, in a case involving a lot of important French people, which was predictably dubbed “Angolagate.”

The details are two articles in themselves. Suffice to say he didn’t come out of his Angolan dealings a poor man – his involvement in settling Angola’s $5.5bn debt to Russia is also a matter of some legal conjecture. And even a Premier League which so welcomed Thaksin Shinawatra’s money might have considered Arcadi Gaydamak “dodgy.” But it was his son Alexandre (“Sacha”) who embarked upon a Portsmouth adventure towards the end of 2005. And here is where any future investigation into Portsmouth’s finances (lack thereof) really starts. Sacha Gaydamak reportedly paid £15m for a 50% stake in Portsmouth in early 2006, although he didn’t acquire any shares in the club until some weeks after the early-January fanfare surrounding his arrival.

A number of journalists, both football and financial, looked long and hard at Sacha’s finances to find a spare £15m knocking around, as scurrilous allegations that “Daddy’s” money was funding the deal were spreading as fast as the internet could carry them. Sacha’s companies, however, were not making anything like the necessary sort of money to buy and then fund a Premier League club with a Harry Redknapp-wage bill. Indeed, many weren’t making any money at all. It quickly transpired that Sacha was borrowing extensively from various sources, none of whom were his father. Private Eye reported in mid-February 2006: “His position appears to be secured by a 10 January deed and legal charge covering ‘all monies’ advanced to the club – said to be up to £15m so far.”

This money was repaid via more loans, from bankers Singer and Friedlander, that summer. And Sacha kept on borrowing, including a £24m sum from South Africa’s Standard Bank which played a starring role in the saga right up until last summer. So, was this the business plan that he’d put to previous owner Milan Mandaric to persuade him to sell? Were the Premier League told that the whole takeover was to be underpinned by debt from the proverbial day one and the actual week one? This seems unlikely. When the questions were flying around about how and if Sacha could afford Portsmouth and its wage bill, the questioners were not directed towards a complex range of institutional lenders but Sacha’s own “fortune.”

Final buy-out figures varied between £30-47m and Sacha insisted that not only did he have no “financial or business links” with his father but also that he bought Portsmouth with “my money from ten years working in finance and real estate.” No concrete evidence of this money has ever been produced. And Gaydamak real estate interests were reportedly family interests in which the afore-mentioned unspecified “Mr A. Gaydamak” was the “ultimate controlling party. At about… no, make that exactly this time, Arcadi Gaydamak was being questioned by Israeli police’s International Crimes Unit about a money-laundering operation centred on Bank Hapoalim in Tel Aviv, where Gaydamak had numerous accounts.

Gaydamak withdrew vast sums of money just prior to his accounts at the bank being frozen, which led to suspicions that he’d been tipped off about the action. He also used ultra-defensive legal means to stop the police getting any information on these accounts. According to Gaydamak, “Jewish oligarchs are moving money to banks in Luxembourg and Switzerland.” A short time later, a number of accounts at Luxembourg’s Sella bank were frozen, in connection with the Bank Hapoalim case. Gaydamak was believed to have had accounts there too. In 2005, Gaydamak announced that he’d agreed to donate $50m to the “Jewish Agency,” for work they were undertaking amongst Jewish communities in Russia and Ukraine. Israeli police reportedly tried to dissuade the Agency from accepting Gaydamak’s money. In January 2006, Gaydamak withdrew the pledge, later changing his mind but only ultimately donating $10m. No connection has been established between freezing this donation and the freezing of many of his bank accounts in Israel and Luxembourg, just as no connection has been established with Sacha’s simultaneous inability to fund Portsmouth’s takeover from “his” “finance and real estate” wealth.

In a March 2010 interview with ruthless investigative journalist Henry Winter of the Daily Telegraph, club chief executive Peter Storrie said that Sacha Gaydamak’s Portsmouth tenure ran into early problems because “everything got frozen in Israel.” But Winter didn’t follow this up, so it couldn’t have been important. In 2008, Sacha decided he’d had enough Premier League glory and looked to sell the club. Protracted negotiations with the buffoon-ish Al-Fahim in the summer of 2009 were going nowhere. And Storrie appeared to be on hand to save the day with a consortium of “seriously wealthy” people ready to take over. Unfortunately for Storrie, his consortium included one or more people who were involved in legal disputes with Arcadi Gaydamak. Given that half the Jewish world appeared to have had some beef or other with the “controversial Franco-Russian businessman,” this was possible.

But Sacha decided he would rather sell Portsmouth to the clearly inadequate Al-Fahim than to Storrie’s people, which, as Sacha had no business links with his father, was nonsensical. Unfortunately for Gaydamak, Al-Fahim’s inadequacies meant that Storrie’s “people” were in charge soon enough. And, even more unfortunately, the “one or two” people with Arcadi Gaydamak connections turned out, quite by chance, to be the whole bloody lot of them… except the consortium leader, “Saudi property developer” Ali Al-Faraj, who couldn’t have had a connection to Gaydamak as he didn’t appear to have a connection to any living creature other than his “brother” Ahmed. Just as Sacha was looking to bail out of the Premier League, his father was in a spot of legal bother over money he owed to people called Roni Mana (or Maneh, depending on the newspaper), Levi Kushnir and Balram Chainrai. Kushnir and Chainrai owned Ameris Holdings, a property development company, and had agreed to sell it to Gaydamak. Gaydamak was due to pay them by July 2008. He didn’t. Chainrai and Kushnir sued for a reported $21m.

Gaydamak didn’t deny that he owed the money. But a year later, the courts had to order him to pay $23m (the previous amount owed, plus interest and court costs). At about… no, make that exactly this time, Chainrai and Kushnir got financially involved with…Portsmouth FC, despite Kushnir angrily dismissing rumours of involvement as “stupid,” just days beforehand. Gaydamak still delayed payment. And the longer he did so, the more involved Chainrai became with Portsmouth. Chainrai certainly appeared more concerned with protecting his investment than with anything as mundane as Portsmouth’s relegation troubles. Indeed, he was reportedly the most reluctant football club owner ever when he took over in February.

In March 2010, Portsmouth’s newly-appointed administrator, publicity-fiend Andrew Andronikou suggested that Chainrai was the only potential club owner who “ticks all the boxes.” “I do believe he has the club’s interests at heart,” Andronikou added, without evidence. And he suggested that there were no other obvious options, despite the emergence of a consortium fronted by property developer Rob Lloyd just two weeks previously – a consortium which certainly ticked all the Portsmouth boxes – mystery backer, mystery funding etc…

At about, no, make that exactly this time, an Israeli court issued a bankruptcy warning against Arcadi Gaydamak in response to a petition filed by Chainrai and Kitol Holdings and International Development Limited (Levi Kushnir’s company). Last month, the issue was settled out-of-court, lifting the threat of bankruptcy from Gaydamak. Whether there were any Portsmouth developments, other than the passing of the CVA, at about or exactly this time, has yet to emerge. Much of what I’ve written above would not withstand accusations of “re-hash.” The real digging has been, and continues to be, done elsewhere. Regular articles by Mike Hall on Pompey-fans.com offer greater insight and perception. And he has unearthed any number of other connections along the lines of the above.

At a recent public meeting, Hall said Portsmouth had “become involved in a dispute between a bunch of people arguing between Israel and Moscow over who owes what.” And whether or not you agree with him (I do, as you’ll have gathered), the issues above and the issues he raises surely justify investigation, whatever the cost. The ease with which Portsmouth Football Club became a venue and battleground for others’ financial issues is a scandal. The promised investigation should only be a start.

I am extremely grateful to Pompey fan ‘S.J. Maskell’ for allowing me to benefit from her in-depth and invaluable research, and for taking the time out to talk to me at last month’s ‘Supporters Direct’ Conference in order to set me straight on a number of key Pompey issues.

These and SO many other Pompey fans have shown great fortitude as their club has been used and abused while this country’s football authorities have looked on. They deserve much, MUCH better.

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    11 Comments

  1. Lots in this article but also masses left out. How doe you look at Pompay’s problems without reference to the court case involving former owner Manderic, ex mangager Redknapp and the perminant feature of all Portsmouth’s issue Peter Storrieteller? IMHO Storrie is a Ridsdale writ large and all issues (not withstanding the interesting parts you mention, indeed my site mentioned the Swiss Court case last year after finding out about it via Google) flow through him. The Administrator hasn’t helped too much either with some interesing bending of the rules ala KPMG in 2007. The lack of a cohereant response from the Pomapy fans hasn’t helped (and yes as a Leeds fan we can’t talk) and the recent statments from the Pompay Trust attacking HMRC and almost demanding their club be left in the hands of the man who put them in administration in the first place (and seemingly supporting the Administrator) was very short sighted IMHO. You say the deserve much better, I say that when you sit on your hands during the good times, despite the lingering smell of something fishy, you can’t except anything but a long road back to normality once the facade breaks. Its 10 years since the slide started at Elland Road and its still not resolved, it will be just as long at Fratton Park.

    Clarkeonenil

    July 23, 2010

  2. You didn’t hear a peep out of pompey fans when Gaydamak Jr took over despite it being an obvious front for Gaydamak Snr.

    Gaydamak Jr even listed pompey as one of his assets!

    They profited from blood money and smugly enjoyed it and therefore I’m quite happy to watch them reap what they’ve sown.

    David

    July 23, 2010

  3. You’re absolutely right that I’ve only looked at a few of the 94 aspects of the Pompey situation – there isn’t enogh paracetamol in the south-east of England to deal with the headache I’d have got if I’d tried to tackle every issue in 2000 words.

    The “Storrie” situation will, please God, be the subject of rigorous examinations by the courts, for example (stop laughing).

    I was looking at things from the narrow viewpoint of the liquidator’s investigation and the threat it appears to be under. As I say, the “real digging” and “greater insight” is available elsewhere.

    The points you make about other protagonists are valid too. But as I say, there are SO many Pompey fans who deserve much better. And I stand by that.

    Mark Murphy

    July 23, 2010

  4. Nice one Mark.

    To those of you who want to sling insults at fans who sit on their hands – you tell me how we could have done better??

    The Premier League thought Sacha Gaydamak ‘Fit and Proper Person’, chosing to ignore his father’s history, and let him buy the club. They also thought the notoriously absent ‘Ali al Faraj’ fit and proper.

    There are other club owners whose money you could similarly call into question – where are their protesting fans?

    We have been embroiled in this dispute for a long time now – the facts are complex. We still don’t know the whole story – and the libel laws get in the way unless we have concrete proof. Mr. Average-I-Just-Want-to-Watch-Football-not-get-involved-in-politics just does not want to know. We get enough flak from our own fans – some of whom still want to argue that Mr Chainrai has ‘saved’ the club. And they have lived through what has gone on.

    So lay of it with your ‘got what we deserve stuff.’ And in fact, there were many who did ‘peep’. Were you on our message boards in 2006??

    You don’t know the half of it – even if you have read the above article. If HMRC and other government agencies do not get involved in investigating this whole mess properly they are implicitly saying it OK – its only football.

    And when its your club next – well I hope I don’t laugh at you.

    SJ Maskell

    July 23, 2010

  5. Sometimes sarcasm does work in print.

    ‘ruthless investigative journalist’

    Good work.

    Damon

    July 23, 2010

  6. Re David, I think “smugly enjoyed” is rather a bit harsh. Our mistake was trusting too many people far too much. We wanted to believe that Gaydamek was an honest guy, that the stadium and youth set was a way of creating a sustainable future. And when doubt came creeping into our heads, Storrie would come out fighting with “you calling me a liar?” and calm us all down. Most of us sadly bought it, and I challenge most fans of other clubs would’ve done the same.

    I read these patronising comments we get from rival fans who would most definitely try to turf out an owner that kept us up, got us 9th in the PL and won a cup trophy. I can see them now at Wembley saying “Gaydamek out!”, walk out protests as we beat Man Utd etc. These oh so wise fans – presumably not Saints, West Ham, Sheff Wed, Crystal P, Man Utd etc.

    I never wanted it to end like this but I won’t miss the parasites at our club both on (Defoe) and off the field (Redknapp). I won’t miss the concept of having to pay to watch Campbell’s face either!

    The sad thing is it almost worked. The stadium was getting closer. That youth set up getting stronger. Then the greed and the worse economic crisis in living memory got rid of that!

    Pompeylor

    July 23, 2010

  7. “ruthless investigative journalist Henry Winter of the Daily Telegraph”

    Ha! Such a creature scarcely exists in football journalism. The best they usually manage is “x is putting the money in”.

    This place is far better, more thorough and informed than any national newspaper.

    Martin

    July 27, 2010

  8. The fact that Gaydamak Jnr easily passed the Fit and Proper Person’s Test illustrates its patent inadequacy in almost every respect.

    But can anyone seriously think that the very people who would lose most from such a change would ever vote for the test to be much more stringent?

    Such a change will have to come from Government and/or public pressure via the media and there is precious little chance of either happening.

    Martin

    July 27, 2010

  9. In fact, the Football League and the Premier have tightened up the F&PPT to include a business plan and interview with prospective owners. This is the direct result of a meeting with SOS Pompey back in February.

    SOS Pompey were organising a protest to be held outside PL offices. As an alternative the PL offered a meeting instead. The meeting discussed the ownership situation, revealling that the PL had a great deal of intelligence on the matter, and the fans were able to make suggestions regarding the revamping of the test – some of which have been adopted.

    Whether the test is properly applied remains to be seen, of course.

    S.J. Maskell

    July 28, 2010

  10. I could write a “business plan”.

    Who checks them then? The likes of Ken Bates and Ron Martin presumably?

    Laughable.

    Martin

    July 29, 2010

  11. Good evening,

    It was of interest to me when I came across this article.

    I wish to clarify a point he raised from an article I wrote in regards to whether Portsmouth’s creditors will demand an investigation in to what happened behind the scenes at Pompey.

    I wrote the article after having the privilege of attending the closed-doors creditors meeting. Because my paper, Portsmouth News, appears on the creditors list as Johnston South (owed £20,000 for something) I managed to blag my way in to the meeting and quietly take notes in the corner.

    During the CVA meeting, the administrator Andrew Andronikou said any investigation would have to be led by the creditors. Creditors would have to pay for the investigation out of their own pocket or out of monies recovered from the investigation if it did turn up any antecedent transactions. (Andronikou is on £400/hr!)

    As you point out in your article, how this judgement could be made without any investigation happening, wasn’t explained at the meeting.

    Basically, it has been left up to creditors to decide whether they want to take a punt on an investigation and then cover the costs afterwards.

    In light of how much money some creditors have already lost courtesy of PFC, it appears unlikely an investigation will actually be forthcoming.

    The short of it is, the CVA says the administrators are not going to carry out any investigation off their own back. They want the creditors to pay for it.

    I hope this clears up a gap in the info in your article, which I have to say was a superb read.

    In the coming months I may revisit doing a story on the investigation and whether it will it ever happen. In my opinion, if there is not an investigation it would be a disgrace.

    My telephone number is on the same website as Mark found my story. I do so wish he had called me at the time of writing the article and I would have happily explained a bit more about the ins and outs of the Pompey saga. I’ve been working on it almost solidly for almost a year now so I’m sure I could have been helpful.

    All the best,

    Michael Powell
    Reporter,
    The News,
    Portsmouth

    Michael Powell

    August 13, 2010

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