It is a comparison I have made before but it remains as true today as ever. If anyone outside Burnley has reason to be glad that the Rao family own Blackburn Rovers – bar Rovers’ idiotic ‘global advisor’ Shebby Singh – it is Birmingham City’s all-powerful, increasingly rich but still “acting” chairman Peter Pannu. All the available evidence suggests Pannu doesn’t care what anyone thinks about anything. But if he did, he would be glad that Rovers’ corporate governance travails have taken up so many national media column inches. Otherwise they may have been filled with disbelief at Pannu’s considerable drainage of Birmingham City’s finances over the last four years and the corporate governance failings that allowed the senior club official to gather in amounts ranging from £25,000 to £60,000 a MONTH for “consultancy services” to that club, consultations which, one imagines, could have taken place in the mirror.

How long the national media can focus elsewhere on Planet Football is unclear, especially now Pannu’s payments are attracting more than just moral outrage, thanks to the good work of the Blues supporters trust, the excellent fans’ website Often Partisan and the much-maligned local newspaper the Birmingham Mail. In January, a storm brewed over the £687,611 Pannu was paid for his Birmingham City directorship, after four years during which Blues’ ‘direction’ has mostly been south – on & off the field. Pannu’s attempts to clarify his ‘emoluments’ resulted in less clarity still, as he claimed that £437,611 were “pocket expenses” to the “Hong Kong staff that regularly comes to the UK” on Blues business. The Guardian newspaper’s David Conn delved a little deeper into all of this last month, having seen a series of e-mails between Pannu and Blues’ finance office in June 2010. His March 27th article, Birmingham City face questions as e-mails show Pannu’s demands for cash, revealed that Pannu had requested a £300,000 commission payment for his part in retrieving £3.1m from former club owners David Gold and David Sullivan.

Pannu’s central claim was that he had an agreement with Blues’ largest individual shareholder Carson Yeung. This gave him more power than the Pope and, he said, 10% of “whatever I bring into the club by way of earnings and profits.” When the club’s finance office, quite properly, questioned this previously unheralded, personally-lucrative arrangement, Pannu was not best pleased. He said he would “get something in writing” confirming the arrangement, insisting that “this is not theft.” But he felt the finance office was “questioning my integrity,” adding a cheery “I expect you not to question my authority in future.” The story made the briefest reference to “an invoice” for one of Pannu’s many payments “on notepaper of his own Hong Kong-registered company Asia Rays Ltd.” And one of Blues parent company Birmingham International Holdings’ (BIH) many announcements to Hong Kong’s stock exchange had also made the briefest reference to Asia Rays (ARL).

On 19th September 2012, BIH announced Pannu’s appointment to a holy trinity of roles: Executive Director, Chief Executive Officer and Managing Director. Buried under this headline news – in the proverbial “oh, by the way” column – was: “The Board wishes to further disclose that there existed a consultancy agreement which was entered into on 22 September 2009, and as varied by deed on 28 December 2011, between (BIH) and Asia Rays Ltd, of which Mr Pannu is the director and shareholder. The agreement is still subsisting and is valid through to 30 September 2014.” What, I wondered on Twitter, had ARL been paid under this tardily-announced arrangement? “Good question, Mark. Thanks a lot,” David Conn replied. And in a follow-up Guardian story on the club’s response to his initial revelations, Conn noted that “neither the club nor (BIH) has said how much Pannu is paid under that agreement.” Well, now we know. BIH has had notorious and frequent problems producing accounts properly and timeously over the last few years, so much to the consternation of auditors BDO that they preferred the fire of Rangers to the frying pan of Birmingham City.

There are now suggestions that Pannu’s financial arrangements have been at a major cause of these delays and departures. And now that BIH’s accounts backlog has been cleared – with their six-monthly results to 31 December 2012 published last month – attention has focused perhaps more on Pannu than Blues’ still deeply-worrying financial situation (they still have to borrow against future transfer revenue for BIH to remain “a going concern”). The latest revelations, in a statement on 23rd April to Hong Kong’s stock exchange, have either been spectacularly ill-timed or deliberately well-timed, depending on your perspective, given that Yeung’s trial in Hong Kong for money-laundering, as notoriously and frequently delayed as BIH’s accounts, starts next week. In addition to his £687,611, Pannu was paid £405,000 via ARL, under the terms of the 2009 agreement. This agreement was for ARL to provide “post-acquisition due diligence services” – a timely reminder of Yeung and co’s poor pre-acquisition due diligence – and “general legal consultancy services.” The statement also described previous failures to reveal either the agreement’s details or its very existence as an “inadvertent oversight,” as opposed to the advertent oversight a cynic might suspect (these multi-million pound consultancy agreements can easily slip one’s mind, so I checked to see if I had one – alas not).

However, the newspaper/supporters investigation revealed that BIH’s directors didn’t know about the agreement for two years. The Birmingham Mail said BIH directors were “finally told of the arrangement in October/November 2011.” The original announcement said the agreement had been “varied by deed on 28 December 2011” But, on 28 July 2011, the investigation revealed, Yeung had written to the club to inform them that ARL’s original consultancy fee of about £25,000 per month was being hiked up to £60,000 because of “additional legal duties imposed on the consultancy since my arrest for money-laundering.” For this to escape BIH directors’ attention for exactly five months was a fundamental failure of corporate governance, especially as BIH procedure was for two directors to authorise such transactions. And this failing is possibly more important than Pannu’s pay, although Conn noted that “only seven Premier League clubs, including Manchester United and Arsenal, paid their highest-paid director more” than Pannu’s £1.1m in 2011/12.

The corporate governance failure is probably also more important than the quality of ARL’s consultancy, about which one must wonder. In April 2010, Blues then-fledgling regime humiliatingly lost a court battle over a disputed £2.2m “success fee” due to London investment bankers Seymour Pierce. The “success” fee was due despite Seymour Pierce “failing” to facilitate Yeung’s initial Blues takeover bid in 2007. As I wrote then, “paying bankers a success fee for failing” was “hardly unusual these days.” And BIH’s case was not helped by them being unable to find or recollect an e-mailed draft contract which “expressly provided” for the success fee – an earlier “inadvertent oversight” perhaps. Nevertheless, there was precious little evidence of ARL’s expensive “legal consultancy services.” Although the agreement is for services, rendered or otherwise, to BIH, the investigation also revealed that, with Yeung’s assets frozen because of his arrest, BIH didn’t have the money to pay the fees. So the club has been covering the costs and deducting the money from a £14m loan made by BIH in the regime’s early days.

This loan has often been attributed to Yeung himself, which raised concerns that he was, as the Birmingham Mail reported, in “technical breach of his court restraining order which forbids him from disposing of cash.” However, the club’s lawyers referenced a “loan account between BIH and BCFC,” claiming it was “an entirely normal inter-company transaction.” Still, it was £65,000-per-month leaving a club with well-documented cash-flow problems. And it is disquieting that there is anything “entirely normal” about an “inter-company transaction” which is necessary because the largest individual shareholder is in a Hong Kong nick. Most damning for Pannu personally is the strong suggestion, from documentary evidence, that the agreement and all its surrounding intrigue was the main cause of all the delayed accounts and resigning auditors. As Daniel Ivery noted on Often Partisan: “Despite protestations that he is trying to fix the mess at BIH…I wonder if he is the solution or if he is the problem.”

For many Blues fans, Pannu was very definitely the problem long before this week’s revelations. And it will be fascinating to see what Pannu’s response will be. In the past, he has been dismissive of supporters. In August 2011, he responded to chants at a home game of “where’s the money gone?” by pulling out his wallet and waving a clutch of notes at the crowd. Some thought that funny at the time. Fewer do now, as it has become truer with each piece of financial information coming from club and parent company. And this week’s investigation cannot be dismissed so lightly; or at all, for that matter, not least because many revelations are backed by documentary evidence gathered in recent months. This was thanks, initially, to the Blues Trust’s detailed, thoughtful strategy for gleaning proper information, having admitted defeat in their efforts to get anything of the sort from Pannu.

The Trust noted, correctly, that Pannu had “only” a “moral obligation”  to keep fans informed but “has a statutory, legal obligation to regulators and shareholders.” And by early February it “obtained a list of shareholders,” planning to write to them all to highlight “the poor performance of the BIH board” and urge them to pressurise Pannu into meeting his statutory obligations. Within a couple of weeks, the Trust had “held preliminary discussions” with Hong Kong shareholders in order to “gain further insight” into BIH’s workings and were “building a positive dialogue with key company figures, whilst investigating” some of BIH’s “on-going issues.” Meanwhile, on Often Partisan, Ivery reported on talks with “high-placed sources in Hong Kong to develop a picture of what is happening with the parent company,” adding that “as suspected, it’s not pretty.” And, as if in response to repeated calls in readers’ comments sections to do some “proper journalism,” the Birmingham Mail story went to investigations editor, Jeanette Oldham, rather than the sports-desk.

The combination provided significant information, and threw up many pertinent questions which Pannu cannot dismiss if he wants to retain the faith of the company’s shareholders…and his lucrative Birmingham jobs and consultancies. It is simple enough to do as I did with my tweeted enquiry about ARL last month. It is another matter entirely to get into a position to hold the Blues hierarchy properly to account. The Birmingham Mail/Blues Trust/Often Partisan investigation has done just that. And while there’s plenty more work yet, all those involved in the investigation deserve huge credit. Pannu might not be able to rely on Blackburn as a distraction for very much longer.

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