We could argue, perhaps, that there is one set of rules for the well-to-do and another for the rest of us. Peter Ridsale, latterly of Leeds United, Barnsley, Cardiff City, Plymouth Argyle and currently at Preston North End, has been disqualified from acting as a company director for seven and a half years following an investigation carried out by Insolvency Service into the collapse of into the collapse of his company WH Sports Group Limited (WHSG), which provided sports and leisure consultancy services to football clubs from 2003 on. This company collapsed into administration in 2009 owing almost £478,698, of which the overwhelming majority – £442,353 – was owed to HMRC in form or another. If that money had, say, been illegally claimed in benefits, the guilty party would probably looking at a lengthy jail term for his actions. Tax and insolvency law, however, are different.
The findings of the investigations – and the below is a list that was not disputed by Ridsdale himself – ran as follows:
- Payments totalling £347,000 for services provided by WHSG to a football club at which he was chairman, being paid into his personal bank account between May 2007 and March 2009 instead of to the company’s account.
- Non-disclosure of relevant transactions to the companys liquidator, who was subsequently told of these transactions by the football club itself.
- Failure to ensure that tax payments were made by the company. Unpaid tax at the time of the liquidation of WHSG included £166,421 in corporation tax, £102,279 in income tax and national insurance, and £173,653 in VAT.
- Failure to make sure the business filed accounts with Companies House on three consecutive occasions.
As we can see, this is a report the findings of which hardly paint his actions in a very favourable light. Indeed, Claire Entwistle, the Director of Company Investigations North at the Insolvency Service, commented that, “As someone who has had many directorships, Mr Ridsdale ought to be aware of the responsibilities that come with such a position.” In addition to Ridsdales disqualification, his wife Sophie has also been disqualified from acting as a company director for three and a half years from the 19th of October 2012. It is a squalid story in some respects, but this, we might ponder, is very much the nature of business these days. What, though, of his continuing in football?
Ridsdale was appointed as the “Chairman of Football” – one might even suspect that todays eventualities could easily have been the reason behind why he was given such an unusual title in the first place – at Preston North End in December 2011, and it is claimed that the “of football” aspect of this appointment, along with his claim to have informed the Football League of the events which came to pass today, will protect his position at Deepdale, though it is also worth noting that, apart from having a “Chairman of Football”, Preston North End doesn’t have a “Chairman.” The question of what the Football League or the Football Association might make of it all, however, has not yet been answered by the authorities. The club itself has, at the time of writing, yet to issue a public statement on the subject beyond stating that “We are aware of it but cannot say anything at the moment”, but the Football League has confirmed that it is to investigate his position, presumably with a view to establishing how his continuing position at the club levels with the Football Associations Fit & Proper Persons Test. The Football Leagues own regulations on the subject have this to say on the subject of what constitutes a Director:
‘Club Director’ means in respect of any Club any individual Person (and not any Entity) operating the powers that are usually associated with the powers of a director of a company incorporated under the 2006 Act (as a Company limited by shares or by guarantee). Without prejudice to the generality of the foregoing, the following individuals shall be deemed to qualify as a Club Director:
(g) a person in accordance with whose directions or instructions the persons constituting the management of the Club are accustomed to act;
(h) a person who exercises or is able, legally or beneficially, to exercise Control over the affairs of the Club
So, Part G above seems to clarify that merely being listed at Companies House as a director of a football club doesn’t mean that an individual shouldn’t be treated as one if they are effectively acting as one. The Football Association, for its part, specifically describes three types of Company Director in its publication, “A Guide To Directors’ Duties And Obligations”:
Executive Director: this is a director who carries out executive functions within the Company (for example as the Chief Executive Officer or Chief Financial Officer) and is usually a full or part-time employee. An executive director will usually perform operational and strategic business functions, will manage people, look after assets and enter into contracts on behalf of the Company.
Non- Executive Director: this is a director who is not an employee of the Company or a holder of an executive office. Such a director would usually devote part of their time to the affairs of the Company as an independent advisor or supervisor. A non-executive director will use their skills, experience and expertise to provide independent advice and provide a role in monitoring the Company’s executive management.
Shadow Director: this is any person in accordance with whose directions or instructions the directors of the Company are accustomed to act. Although such individuals may not be a registered director at Companies House, they are still subject to the duties set out below.
It is important to note there is no distinction in principle between the duties owed by executive and non-executive directors. However, a shadow director does not necessarily owe the company the full range of duties set out below. The duties of a shadow director can depend on their position and function within the Company.
It has been suggested that because can’t sign contracts, he can’t saddle the club with liabilities and cannot therefore be described as a Director of the club. It has also been noted that Ridsdale is employed by one of the companies owned by the Preston North End owner Trevor Hemmings, rather than by Preston North End itself. It is not for us to say whether this is enough for him to escape censure under the Fit & Proper Persons Test for his role at Preston North End, but the fact of the matter is that Peter Ridsdale does now fail it. The only question now is that of whether he is acting as a director under the FAs regulations in terms of his role at Preston North End. It is not a state of affairs that covers anybody in a great deal of glory.
In a broader sense, perhaps the Football Association and the Football League should be considering tightening the inconsistencies which allow this sort of situation to come to pass in the first place, perhaps by expanding the rules regarding disqualified directors to complete bans from all football for the duration of their disqualifications. If the wants to clean up its reputation with regard to its finances, few could argue that this wouldn’t be a step in the right direction for it to take. Meanwhile, Peter Ridsdale continues in his position at Preston North End and likely will do until he is instructed to do otherwise. From reading several different versions of his statements this afternoon, we cannot find any reference to him apologising for the £442,353 of tax that his company didn’t pay.
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