In May, I wrote parts one and two of an article on Birmingham City’s multi-titled, multi-remunerated Peter Pannu. And I promised a part three. Only last week did I realise that part three never made it from my clapped-out PC to the site. And the article, along with my research notes, disappeared into clapped-out PC-heaven. Well, my clapped-out PC is a little less clapped-out now (whether the same could be said for its owner is debatable). And I’ve made new notes. So here’s something for “Pete,” who wondered, on July 5th, if my next Blues’ piece was “ever going to come out.”

On the surface, Birmingham City’s takeover battle is a standard one between a deeply unpopular, incompetent current regime and a populist, popular bidder. Scratch that surface and you uncover complexities with the current regime, which make it even more deeply unpopular, and a bidder who appears just as clueless. The biggest achievement of largest shareholder Carson Yeung and Peter Pannu’s regime remains turning predecessors David Gold and David Sullivan into “the good guys.” Regular readers will know of my distaste for those “gentlemen.” Yet very little undertaken by West Ham’s current custodians was as worthy of utter contempt as Yeung and Pannu’s running of the club.

City have never been an established Premier League club – as Daniel Ivery of hugely-informative website Often Partisan noted, you aren’t really a Blues fan until you’ve seen at least one relegation. But Hong Kong-based parent company Birmingham International Holdings (BIH) has run Blues so badly that consecutive relegations cannot be ruled out. Naturally, BIH’s situation wasn’t helped by Yeung’s arrest in June 2011 and subsequent indictment on five counts of money-laundering covering a period during which he “rose” from Kowloon hairdresser to multi-millionaire.

Prosecutors have tried to demonstrate to a Hong Kong District Court since May 3rd that these events were connected. Yeung has been charged with “dealing with property known or believed to represent proceeds of indictable offences.” And that “he knew or had reasonable grounds to believe, that these funds, in whole or in part, represented the proceeds of an indictable offence.” Yeung’s case looks difficult. The onus of proof, as suggested by the indictment’s phraseology (“believed,” “had reasonable grounds”), rests with Yeung. Potential witnesses for Yeung’s defence “refused to answer my calls,” for reasons unexplained. And former associates included Cheung Chi Tai, allegedly the boss of triad gang Wo Hop To (which must sound more threatening in Chinese).

The trial has produced some “unusual” explanations for Yeung’s wealth between 2001 and 2007. By charging for expensive haircuts, winning hugely on casino baccarat tables and having the luck, with “securities”, of an Irish devil with a million lucky horseshoes, Yeung became a multi-millionaire – claiming £17m profits from share dealing in 2001 – while claiming that he and his late father made only £172,000.
Yeung’s legal strategy has also been “alternative.” He initially insisted he would not testify in his own defence. However, in July, while the trial was adjourned, Yeung sacked his defence team and decided to testify after all, when the case resumed in mid-October, having been granted permission to re-open his defence case.

In-between times, there were numerous attempts to halt proceedings, claiming he couldn’t mount a proper defence because of old evidence – after the police took so long to arrest him – or new evidence becoming available during the trial (those waiting for “borrowed” and “blue” evidence were left disappointed). And he also succumbed to mystery chest pains on July 10th which apparently necessitated immediate gastrointestinal surgery. However, the trial had already taken twice as much court time as originally envisaged and scheduled. And trial judge Douglas Yau ruled that Yeung would appear in court unless he was in a coma or in intensive care. Surprisingly, ahem, Yeung recovered extremely quickly.

If the court proceedings have occasionally bordered on farce, events in Birmingham have long-since crossed that frontier. Solihull-based Italian former agent and QPR chairman Gianni Paladini has been the centre of Blues takeover speculation for about 15 months. Last autumn, an indignant Paladini told Tom Ross of local radio station Free Radio that he had “done all the work, agreed a price” for Blues, adding “If you want to see the proof, I’ll show it to you…I’ve got an agreement with (Pannu’s) lawyer which I’ve signed.” And on October 17th this year, Ross gave Paladini almost an hour of Free Radio free air-time to claim that he had again “done the deal” and to whinge for England, repeatedly asking listeners “What more can I do?”  He said “the deal has been agreed between his lawyer and my lawyer” that “I haven’t changed one penny of what we agreed” last year, a reported £25-30m, and “we put £9m on top, £5m if we get promoted and £4m if we stay in the Premier League.” But delays had “upset me and my family…it cannot go on and on…there is nothing I can do any more…what can I do?…I have to move on…what can I do more on this?…”…and so on for ages.

These admissions suggested that Pannu in particular was not taking Paladini seriously. And Paladini insisted that “I tried to contact him many times. Not once has he replied. I went to Hong Kong to speak with him…I couldn’t find him.” Ross claimed that he “had already emailed Peter Pannu and said ‘listen, I understand that a deal has been agreed. I know one or two things from various quarters” (Ross long insisted a takeover was imminent). “Would you discuss (this) with me?’ I’ve not heard back. But if he wants to come in and explain…”
Instead, the club issued a statement immediately after the interview, claiming Paladini’s remarks were “misleading and unhelpful,” which fell short of outright rebuttal, and that “Carson Yeung is not interested in a full disposal of the football club,” which, significantly, “had already been relayed to Mr Paladini’s representatives,” something which somehow slipped Paladini’s mind.

Five days later, BIH told Hong Kong’s Stock Exchange (HKSE), in response to “certain press articles” that “no written agreement has been reached or signed with any party in relation to the disposal of all or part of the company’s equity interest in Birmingham City PLC and/or Birmingham City Football Club. The Company has no immediate plans to dispose of a controlling equity interest in Birmingham City PLC and/or Birmingham City Football Club.” So someone was… ahem… ’mistaken.’ And Paladini’s apparent irrelevance could…should have been exposed by Ross. But he and Paladini are old pals. So it was left to a listener, “Chris” to ask even the most vaguely pertinent question. And even he couldn’t get at the truth.

Chris asked “what’s your cut off point?” for negotiations. Paladini replied: “But I already done the deal…my lawyer, his lawyer, it’s on the paper. Peter Pannu came back after the game with Bolton (October 5th) with the deal. My lawyer was telling me we had done the deal. In fact, I had a bottle of champagne to celebrate with friends.” “With Peter Pannu’s lawyers, or Carson Yeung’s lawyers,” Chris asked. “The club’s lawyers,” Paladini replied, seemingly contradicting his opening claim that the deal was with Pannu’s lawyers.  There were no supplementary questions, however. So we were left to guess at how Paladini intended to obtain the BIH shareholder approval his “deal” needed.

Indeed, BIH weren’t specifically mentioned. Whatever authority the “club’s” lawyers had, it certainly didn’t stretch to selling BIH’s main asset (and its only income-generator).  And if Paladini realised the full extent of the sale process, he wasn’t telling. For him, the deal was “already done.” But Blues fans have little faith in little else and Paladini retains an unmerited popularity and support simply because he is neither Yeung nor Pannu. This was made particularly clear by listeners’ contributions to the programme. Another Chris put it as ‘directly’ as possible without taking Free Radio off the air, telling Yeung and Pannu. “Just get out of our city and get out of our club. You are not welcome around these parts.”

“It’s absolutely, disgustingly rude, Tom, the way he’s been treated” said ‘Gordon.’ And, nipping in a reference to Blues’ unofficial anthem, he added: “Keep right on, mate, and get the club.” ‘Pat’ was keener still: “Please, please hang on in there, because we really need you.” Paladini had “the best interests of the club at heart,” naturally, and “loves the club.” And one touchingly naïve 13-year-old said “I believe in you, Gianni, and I hope you can run my club, so that my club can live on.” But whatever papers Paladini signed, last year and this, have not remotely impacted on Yeung. And the Daily Mail story about Yeung demanding £20,000 just to grant Paladini an audience suggests the League against Cruel Sports can add “stringing Paladini along” to their campaign targets.

BIH’s accounts to June 30 2013 – late and qualified as per – will not have increased faith in Yeung or Pannu. The company lost £10m on a football club-only turnover of £23m, despite huge cost cuts (bar certain executive remuneration, natch). And “events after the reporting period” have focused on improving BIH’s liquidity through a share issue, two seven-figure loans and debt re-organisation. On July 27th, BIH borrowed HK$20m from (groan!) BVI-registered company U-Continent Holdings “for general working capital purposes” and “to immediately improve the Group’s liquidity position.” Of course, the Group’s liquidity position would have to be grim indeed for HK$20m not to immediately improve it. That said, BIH were in to U-Continent again on November 18th for another HK$15m. And HK$600k of the first loan went straight back out under the terms of a “finder’s agreement” with BIH director Ma Shui Cheong’s firm Splux Ltd.

Meanwhile, a BIH internal review revealed that “transactions between (the club) and Yeung in the sum of £15m” were among “funds allegedly received from Yeung” but “(mostly) remitted from third parties.” It also noted “a general lack of documentation within the company” in relation to such third party funding. Nonetheless, BIH announced on November 12th that Yeung was converting “his” £15.255m debt to equity, increasing his company holding from 26.4% to 27.6%. (Yeung’s £15m wasn’t the only paperwork-light debt. Blues ex-chairman Vico Hui is supposedly owed HK$5.2m. But the company’s auditors “were unable to obtain sufficient information to verify the amount and repayment terms”).

All this, however, is designed to get BIH relisted on the HKSE. Plans to sell 25% of the club are not designed for manager Lee Clark’s transfer budget. And NONE of this, not even the £15m loan, was addressed by Paladini on Free Radio on October 17th – unless the £15m was in Paladini’s £25-30m bid. These financial arrangements also require shareholder approval. And a shareholders’ general meeting is currently set for January 14th. However, a shareholders’ circular (outlining the plans) is already a fortnight late. Meanwhile, Pannu has taken a monastic, for him, vow of silence, bar one setpiece interview for Blues’ website, published on October 2nd. This purported to “catch up” with Pannu while he was in Birmingham. But consistent reference to club staff “back in England” suggested otherwise. And his words suggested the rift between him & Yeung which has been rumoured in Hong Kong. Asked directly if Yeung had “plans to sell the club” Pannu could only say “I believe it may be his ultimate intention” and that “details haven’t been brought to the board’s attention.”

Despite this, however, Pannu remains well-remunerated. BIHL’s latest annual report revealing that Pannu received loose change short of ONE… MILLION… POUNDS from the cash-strapped/starved company in the nine months up to June 30 2013 (HK$12.541m). There have been so many reviews of BIH’s corporate governance this year that being both its chief executive and managing director could be fraught occupations – although it might not be good corporate governance practice to combine the roles. And, as part of his BIH remuneration, his consultancy firm, Asia Rays (ARL), received HK$5.92m for the year to June 30. ARL played no announced part in the afore-mentioned reviews of BIH practices. But they must have been unexpectedly busy elsewhere, as BIH told the HKSE in April that “the aggregate amount to be paid by the company to ARL for the year ended 30 June 2013” would be HK$4.8m.

Pannu is also still paid £687,611 for what “his” staff do at St. Andrews. So if he is being sidelined by Yeung, he will at least have plenty of money with which to spend more time. Back in court the prosecution and defence have finally reached their final submissions before Judge Yau considers his verdict. Initial hopes of an autumn verdict were dashed by July. And despite the latest forecast being specific, 28th February isn’t regarded as a much better bet than February 30th.

Should Yeung be convicted, he will presumably fail the Football League’s ‘owners and directors’ test. However, so enfeebled do such regulations become when faced with the relevant realities, that “presumably” is a necessary part of that sentence On the surface, then, the “standard” takeover battle shows no sign of reaching a standard conclusion. Blues are of subsidiary importance to BIH’s corporate health.  If club costs require further reduction to stabilise company finances, Clark may decide that his managerial future lies elsewhere. And any axe will fall on playing costs because Pannu is as likely to take a financial “haircut” as he is to need an actual one.

There will be takers for Clark. He will be excused any failings at St Andrews because of off-field matters. And his managerial reputation remains enhanced by his Huddersfield team’s record-breaking 43-match unbeaten run rather than damaged by, as one Clark critic noted, the run starting in League One and finishing in League One.  However, there aren’t yet takers for Blues. Apparently Yeung is “personally in preliminary discussions with some buyers from Asia.” But seasoned readers of BIH statements have been reading that for years. The future is as clear as the kind of ‘local’ cider pubs can only serve in half-pints. And money is running out as fast as the patience of the powerless fanbase.  One Free Radio listener told Tom Ross: “Tom, my blood is boiling.” He is not alone.

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