Watford & The Doctored Letter

by | Oct 25, 2016

The headlines may well turn out to be worse than any eventual sanction that the club faces, but there can be little question that those headlines are very damaging indeed, and that the ultimate matter of what happens next to Watford Football Club after the revelations made in the Daily Telegraph this morning is out of the club’s hands. The Telegraph reported that, when the club transferred its ownership from Giampaolo Pozzo to his son Gino in the summer of 2014, a forged document – a letter from the HSBC Bank – was used to prove to the Football League that Hornets Investment, the vehicle used to own the club, had the finances available to be able to do so. But this isn’t merely a matter that asks questions of the senior management of the football club involved. It also raises issues confirming the continuing issues that the game’s governing bodies have regarding the ownership of clubs, and whether they are doing all that they can to ensure that said owners are indeed “fit & proper”.

Hornets Investment had been 75 per cent owned by Giampaolo Pozzo and 25 per cent by his son Gino until the summer of 2014, but a “restucturing of business interests” meant that Gino was to become the sole owner of the company, and therefore the de facto sole owner of Watford FC. No more exact reasoning for this decision to restructure has been made public at the time of writing. It has been reported that Credit-Suisse, the bank with which Hornets Investment normally did business, had provided a letter confirming that the company had sufficient financial resources with the bank, but that this letter was rejected by the Football League as it was out of date. It has come to light that there were two copies of the fabricated document dated a week apart which were passed on to the Football League and were considered acceptable by the governing body.

This morning, however, the Telegraph reported that the club’s executive chairman, Raffaele Riva, worked with an as yet unnamed third party to ensure that the required documents were sent to the Football League, and that it was this third party who obtained the letter, but with no intention of it being used as a part of any formal process of filing with the documents with the Football League at that time. It is not known why two letters have been seen with different dates on them, and it is not clear why the matter has taken more than two years for the matter to come to light. Furthermore, it is known that the HSBC Bank has never had any dealings whatsoever with Hornet Investment, but the reasons behind why this bank was used for this letter remain similarly unclear. And on top of all of that, the small matter of why Credit Suisse refused to provide an updated copy of the original letter that the Football League had determined to be out of date is similarly unclear.

With the matter in the hands of both the Football League and the police, it is unsurprising that the official statement on the matter released by the club this morning was light on detail:

Watford Football Club was recently contacted by the EFL in relation to matters concerning a proof of funds document for £7m provided to the EFL by Hornets Investments Ltd in 2014 in order to ratify a change in Hornets Investments Ltd shareholding.

The Club had no prior knowledge of any concerns about the authenticity of the document and Hornets Investments Ltd has invested over £20m into the Club since the proof of funds 2014 document.

The Club takes this matter extremely seriously and has instructed independent solicitors to carry out an investigation into relevant matters and provide the EFL with the solicitor’s report early next month. The EFL has indicated it is happy with this course of action.

In light of the ongoing investigation it would be inappropriate to comment further at this time.

This doesn’t, however, mean that the club doesn’t have serious questions to answer. The forgery of a letter from the bank is a criminal matter – hence, of course, the involvement of the police – and it may well end up that the person who created these letters, presuming that they can be positively identified, might yet end up dealing with the Crown Prosecution Service in the fullness of time. The defence that they didn’t intend that the letter actually be used as proof of funds in this multi-million pound matter doesn’t sound particularly strong if the letter subsequently was used in this manner.

The extent of the sanction that the club may end up facing may well, of course, come to depend on the extent to which the Football League believes the version of events put forward by the club, but it should be remembered that the ultimate responsibility for this will most likely come to rest with the directors of Hornets Investement. To put it another way, stating that “It wasn’t me, guv” and having someone who was only ever tangentially involved with the club and isn’t any more taking full responsibility for it is unlikely to cut much ice. Similarly, the argument put forward in the initial statement, that “Hornets Investments Ltd has invested over £20m into the Club since the proof of funds 2014 document”, doesn’t seem particularly watertight. The rules seem pretty clear. The club had to provide proof of funding in the summer of 2014, not the autumn of 2016, although there is a possibility of at least some degree of clemency on the part of the Football League should the Pozzos be able to definitively prove that yes, they did have the funding in place at the time of the transfer of ownership. It’s difficult to imagine that the League won’t want any further documents to be triple-signed and rubber-stamped, though.

Regardless of the scale – if there are any, of course, it’s entirely possible that a definitively authentic proof of funds from the bank and absolute assurances that this was merely an administrative error could well satisfy the Football League – of any sanctions, it is unlikely that any penalty could be applied to the club until such a time that it be relegated back into the Championship from the Premier League. There is a slim possibility that the Premier League could take an interest in the matter from a reputational perspective, but this seems unlikely. Otherwise, all concerned are in uncharted territory. Only two Premier League clubs have ever been docked points before, Middlesbrough in 1997 for failing to fulfil a league fixture and Portsmouth in 2010 for entering into administration. In addition to this, Tottenham Hotspur were punished for financial irregularities committed under the club’s previous owners during the 1980s and were fined £600,000 as well as being docked twelve league points and being banned from the 1994/95 FA Cup, though this was later revoked. The range of sanctions on offer to the Football League ranges from financial penalties to points deductions, but it may well be that the removal of Raffaele Riva from his position and proof of funds from that summer would be enough to satisfy them.

Of greater concern to some supporters will likely be how something so fundamental came to be missed by the Football League. We might have expected that there would be a requirement on the part of football clubs, when providing documentation confirming millions of pounds in funds, to provide a document that has been stamped and certified as authentic by the bank concerned. There is, as has been documented on these pages on numerous occasions over the last few seasons, considerable unhappiness among supporters over the relativve laxness of ownership rules, and increasingly at the behaviour of those that own our clubs. If the Football League was misled by this document, we might well reasonably ask, on how many other occasions might something like this have occurred? Only a response of “No, this was definitely a one-off” could reasonably be considered to be an acceptable answer to this question, but it’s difficult to have a great deal of confidence that this is the case when we consider that no checks whatsoever seem to have been made to verify the authenticity of this letter and the calibre of people who have been running some clubs in this country, for some time.

Bonds of trust are important, in professional football. Supporters should be able to trust that those runnning their clubs are doing the right thing by them and that, should this not be the case, the governing bodies of the game have the power and the will do actually do something about it. The last couple of years or so have seen a rapid erosion of the trust that supporters hold in the Football League which was accelerated by their “Whole Game Solution” nonsense and their reformatting of the Football League Trophy. This broader issue is, of course, nothing to do with Watford Football Club, but there is a possibility this evening that those that have been running the club over the last couple of years will end up as collateral damage, should the Football League choose to exert its authority in this case. This may not be fair – and unless any sanction brought against the club is extremely light or non-existent Watford supporters certainly won’t believe it to be fair – but it’s difficult to avoid the conclusion that, ultimately, this is a situation that is ultimately of the making of its senior management.

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