Birmingham City’s handsomely remunerated but still acting chairman Peter Pannu recently responded to media focus on his financial affairs with a lengthy statement on the club’s website. It said much about the man, his attitude and the Blues’ off-field problems – little of it good. This morning 200% reproduces the statement, with Mark Murphy’s comments interspersed in bold. Of course, with Pannu having plenty to say, and Mark having at least as much to say about what Pannu has to say, there’s about 4,000 words to wade through. So, Mark has divided the article into two parts. Isn’t that nice of him? Part One, below, is about the consultancy agreement between Blues’ parent company, Birmingham International Holdings (BIH) and Asia Rays Ltd (ARL), a company owned and directed by Pannu. I wonder how they landed that job….
Following recent media reports, Birmingham City Football Club’s Acting Chairman Peter Pannu today wishes to clarify his position on several matters.
Recently there has been quite a few articles in the local and national UK media that has caused me concern. It has come to our attention that these were possibly prompted and/or instigated by some of the ex-directors of Birmingham International Holdings Limited.
These directors, including Mr. Li Yiu-tung, were disqualified under the Articles of Company and removed from the group due to continued absence from the group’s board meetings and due to other allegations which are subject to inquiries by the Hong Kong authorities. Likewise, the previous INED and the previous company secretary had to move on due to criminal prosecutions against them. Their removal was part and parcel of the resumption exercise that required the clearing of dead wood from the system and for rectification of the past shortcomings in the group based on internal control reviews conducted by the new board in Hong Kong.
The “quite a few” articles were largely about the “consultancy agreement” of the paragraph heading. Pannu, however, ignores their focus, the money he received during Blues’ financial year to 30th June 2012 and the three years it took for the agreement with ARL, to reach the public domain. Pannu’s remuneration as “acting” club chairman, company CEO and Managing Director and ARL’s sole director, shareholder and, as far as can be ascertained from public record, member of staff dealing with Birmingham, topped £1m, more than the majority of Premier League (EPL) CEOs. But Pannu doesn’t like to talk about money – not his, anyway – preferring instead to focus on the failings, not disputed in the media, of ex-directors he believes “possibly” to have provided source material for the articles.
BIH’s statement to the Hong Kong Stock Exchange (HKSE) on Mr. Li’s “disqualification”, dated 11th January 2013, says the his “office” be “vacated” because he “had not attended” any board meetings “for more than six consecutive months.” BIH “Articles of Company” allowed the board to “resolve that his office shall be vacated.” Pannu may be well aware that “disqualification” implies serious misdemeanour – as was the case with Rangers ex-owner Craig Whyte. Mr. Li’s disqualification seems less serious, even if it is indicative of BIH’s generally poor corporate governance. And the announcement makes no reference to “other allegations…subject to inquiries…” That Blues fans appear to have been notified of them before BIH shareholders must be another of the “inadvertent” oversights which kept Pannu’s consultancy agreement out of the public domain for three years. After all, Pannu says the allegations and inquiries exist, so exist they must.
You may all recall that Mr. Li was the director who executed the Xtep deal that produced zero income for the club and the associated problems with that contract that led to us finding a new shirt sponsor where income was finally brought back into the club. These were all identified in the auditor’s report once I became the director at the club in our YE 2012 accounts. It was not easy to go against the tide in protecting the interest of the club particularly when I only joined the UK board in July 2011 and the HK board in September 2012.
Readers of club statements, upon which Pannu consistently urges fans to rely, “may recall” that Pannu’s predecessor as BIH CEO, Vico Hui was the director publicly associated with, and blamed for, the infamous X-Tep deal. Pannu himself told fans in June 2012 that the “associated problems with that contract” were “personally handled by Mr. Vico Hui and Mrs. Pauline Wong.” Not for the first time, he seeks to distance himself from BIH’s early problems. However, while lacking a formal directorship until July 11th 2011, Pannu has been central to club activities since Carson Yeung fronted the club purchase in October 2009. Indeed, contemporary photographs place Pannu literally at the centre, with the Birmingham Mail helpfully reproducing another such picture two weeks ago. Pannu, you “may” also “recall,” was labelled “vice-chairman, executive and finance” in January 2010 press releases in which he lauded a club sponsorship arrangement as “a very exciting deal”. Completists “may” also wish to “recall” the company involved in that “exciting deal.” X-Tep.
The disgruntled ex-director(s) are now passing out internal confidential document(s) to the press, who are unfortunately being used to make frivolous allegations and it is clear that they have an axe to grind and simply want to disrupt our operations.
Why do embattled individuals so frequently choose this line of counter-attack? “Shooting the messenger” usually, as it does here, just confirms the veracity, not the “frivolity,” of the information underpinning the allegations.
Frankly, we have better things to do and I can actually ignore all the scurrilous reports.
At least Pannu has his priorities right. There is a company mess to sort out and a football club to run. So better to call a halt here, rather than bang on for another 1500 words…what?…
However, I feel it has come to the point that I need to briefly point out where the reports are not clear and perhaps misleading.
Mr. Pannu’s definition of “briefly” is about to prove as “perhaps misleading” as any reports, which themselves have been downgraded from “scurrilous” to “not clear” and “perhaps misleading” in the blink of a paragraph.
The local media report on the consultancy agreement, which is often termed as a “secret” deal, is so out of order that we are seeking legal advice on the matter. The consultancy agreement was constructively known to the board members. For directors in HK, who claimed salary but did not come to work and stayed permanently in China most of the time and were disqualified as a result of that, they may have been aloof to it and that is not at all surprising.
The “local media report” was based on the exhaustive (exhausting?) consultancy agreement details provided in a BIH statement to the HKSE on 23rd April, and on leaked, undisputed “internal, confidential” company documentation. So if the report is “so out of order,” Pannu should address his concerns to the report’s primary source…dialogue that may only require a mirror. And the agreement is often termed “secret” because it WAS a secret from the HKSE from September 2009 until it was revealed in a 19th September 2012 BIH statement to them…even though the agreement was “subject to (HKSE) announcement and reporting requirements” since Pannu formally became a director in July 2011.
“Seeking legal advice” is a term usually designed, as appears the case here, to imply some “illegality”. It is therefore meant as both a rebuttal and a warning not to report in such a manner again. However, if it is “so out of order”, one would expect legal “action” to be instigated, rather than “advice” merely “sought.” Still, Pannu could “seek advice” from whoever provides “general legal consultancy services” to BIH… dialogue that may only require a mirror. Oh, and by the way, the 19th September 2012 statement also noted that Pannu “will be entitled to a directors fee to be determined by (BIH) with reference to his duties and responsibilities in the company and the market benchmark.” Presumably the £687,611 he received for his “duties and responsibilities” to the club will be taken into account when the loss-making company decides on the wisdom and affordability, or otherwise, of recommending further (over)payment to him.
Legal advice and tax advice both in the UK and HK had been sought during the audits which confirmed the validity and binding nature of the agreement and the arrangements and Mr. Yeung’s authority, express and ostensible had been confirmed. The previous board members all had actual and constructive notices of the agreement as well before the agreement was signed by Mr. Yeung; the board members having met with the consultancy in HK many times before September 2009. I was not privy as to how BIHL operated at the time when the consultancy was entered into in September 2009 as I was not in any employment with BIHL/BCP/BCFC at that time and neither was I bothered about their indoor management style.
Again, Pannu is, perhaps willfully, missing the point. The arrangement’s “validity and binding nature” is the problem, not the dispute. And it seems curious he wasn’t “bothered about their indoor management style” in September 2009, even as ARL began providing “general, legal consultancy services” to them.
Even Mr. Li himself was involved in various projects with the consultancy that entailed discussion and co-operation with China Southern Airlines on a project in the UK and other business flights to Shenyang as well as the preliminary studies regarding the redevelopment of the club’s stadium. It is absurd to suggest they were not aware of it.
It is not, however, “absurd” to suggest that the HKSE were not “aware of it” for three years, and for 13 months after they legally should have been.
The parent company’s announcement on the consultancy, which is open to the public, extensively deals with the disclosure points regarding the consultancy and it is clear the parent company passed various resolutions (including the INEDs) ratifying the agreement.
Disingenuous-and-a-half. The parent company’s announcement OF the consultancy, last September, “extensively” dealt with nothing at all. It merely passed off as “inadvertent oversight,” the company’s failure to disclosed the deal to the HKSE when legally required. BIH’s “announcement ON the consultancy”, last month, which extensively dealt with all aspects of it, only followed media pressure on Pannu.
People must understand, which the report chose not to disclose, that there is nothing “secret” about the agreement and, as announced by the company, Mr. Yeung had personally paid for the consultancy fee from the start in 2009 until his arrest in 2011 whilst the vast sums and benefits generated by the consultancy had gone to the club. Could the shareholders have asked for a better deal?
Mr. Yeung’s personal financial involvement in the deal was, again, only announced by the company following media pressure. From “the start in 2009” until a 27th March 2013 article by Guardian journalist David Conn, this involvement was a “secret” from the authorities…which, as any “general, legal consultancy” worth its salt (let alone £405,000 in the last financial year) would surely know, should not have been so. And what are “the vast sums and benefits generated by the consultancy”? The “vastest” sums which have “gone to the club” since the consultancy began are EPL broadcast payments (for which ARL were not responsible), parachute payments, triggered by Blues’ relegation (for which ARL might be wise NOT to take responsibility) and sales of key players (likewise).
The main “benefit” has been to allow Blues to scrape by as a “going concern.” So if ARL generated other “vast sums and benefits”, Blues would appear to have “vast” cost control issues; maybe such as, to pick a potential problem purely at random, highly-paid acting chairmen and general legal consultants. Could the shareholders have asked for a better deal? Well… yes.
It is rather disappointing that the local media failed to clarify these matters with the parent company and proceeded to publish a piece which is quite inaccurate and scandalous. Guess these facts will not make the report that juicy and I can understand that.
So, the reports – initially scurrilous, then perhaps unclear and misleading – are now “quite inaccurate and scandalous.” Moody, aren’t they?
Coming up in part two: Threatening auditors, belittling shareholders, patronising supporters, managing AGMs and stalling club sales.
You can follow Mark on Twitter by clicking here.
You can follow Twohundredpercent on Twitter by clicking here.