Massimo Cellino case at Leeds United exposes frailty of fit and proper test - Guardian 20/1/15
David Conn
Given supporters’ many dissatisfactions with the new generation of owners buying historic clubs as personal investments, it should feel like a victory that the Football League has asserted its rules and barred Massimo Cellino from owning Leeds due to his criminal conviction for dishonesty.
Cellino, a multimillionaire mostly resident in Miami from where he runs his family’s flour firm, and Leeds also face a further misconduct charge for refusing to give the League a copy of the written reasons for his conviction in Sardinia. In them, the League’s professional conduct committee has finally confirmed, the judge in Cagliari, Sandra Lepore, found he evaded tax on his yacht, the Nelie, with “macchiavellica simulazione” and “intento elusivo”.
The League’s committee, chaired by Tim Kerr QC, found itself delving into several different Italian-English dizionarios, and concluded neither of Lepore’s descriptions did much to help Cellino’s defence that he had not been dishonest. Cellino had argued the yacht was owned by a company, Freetime Miami LLC, and he was authorised to use it as the manager of the company, so no VAT was payable.
The judge found Cellino was the only shareholder and director of Freetime, that it was set up for the sole purpose of buying that yacht, and the yacht was exclusively for Cellino’s personal use. She found, as the Guardian revealed when it saw the judgment, Cellino was the real owner and Freetime was just a “schermo societario fittizio”, a fictitious shell company, established purposely to enable Cellino to evade VAT on imports.
The fact that despite repeated requests Cellino would not hand the League the written reasons did not, presumably, weigh any balance of doubt in his favour, although it has worked to reduce the length of his ban, until after the conviction is spent, on 28 March.
The governance of clubs has progressed a long way since the game had no rules whatsoever requiring “fit and proper” people in charge, as recently as 10 years ago. The 31-page appeal ruling by Kerr, weaving through Italian law and language, with pricy lawyers on each side, is evidence of the effort to properly enforce the rules. Any regulations to encourage decent people to be in charge of clubs would surely bar people who get themselves convicted for criminal dishonesty – and yet, somehow, this does not feel like a victory to many Leeds fans and football people.
There are several reasons. It is messy, as Cellino was allowed to take over, by Kerr’s unsatisfactory ruling last year, reasoning that although he was already convicted, Kerr could not say at that point it involved dishonesty because Lepore had not produced her written reasons. Barring crooks is a lot easier if done before they take over, rather than once they are shaping the club in their own image.
With Cellino completely in charge, this ban looks fiendishly difficult to enforce – this is the next challenge for the League. The committee, which included the League chairman Greg Clarke and former rail regulator Richard Bowker flanking Kerr, was explicit that Cellino himself owns Leeds “through corporate vehicles controlled by him and his family”.
The rules bar him from being a director – which is the easier part – and from owning 30% or more of Leeds. A barred person must not simply be able to pass ownership to a friend or family member as a charade, nor must he continue to exercise any influence. Any ceding or sale of the shares must be permanent; the ban and rules are meaningless if shares are held in trust or safekeeping until a conviction is spent.
It also feels odd that Cellino will simply walk back in when that happens and the ban is served by 10 April. He has shown no remorse – he would argue, presumably, that he has no need to because he is still appealing in Italy – and has two more similar tax evasion prosecutions coming up, yet the rules will allow him to take over again in less than three months.
This is messy too because despite his predictably erratic ways including the sacking of two managers and employment of the inexperienced Neil Redfearn, and Leeds scrabbling just above the relegation zone, a sizeable chunk of the support has taken to Cellino. He is understood to have put £20m into the club – £8m in equity, £12m in loans – to try to bail out yet another dire financial morass which is the default fate of the modern Leeds United.
Fans cast back at the club’s trials since its first financial collapse in 2002 and question why Cellino is the only owner to have faced any censure – and this for something to do with a yacht in a marina a long way from Yorkshire. The League’s employment of Shaun Harvey as chief executive – fresh from faithfully serving the Ken Bates regime at Elland Road, with its 2007 administration, undeclared offshore owners and adverse court findings of libel and harassment of the former director Melvyn Levi – has mystified Leeds fans. It has also led to suspicion, although the League has insisted it is only enforcing its rules and that Harvey has absented himself from the decision-making.
That leads to the overall way in which this feels like a mess: many supporters argue it is not actually protecting the club from damage, but hitting the one owner who has significantly invested – although Gulf Finance House, the much-maligned Bahraini bank, did put in £20m in loans. The “fit and proper person” rules are narrowly defined, not shaping the game with any vision for good ownership. They are seen by many in Leeds to be not operating in the best interests of a club which has been in dire need of help for years, but as unfairly singling Cellino out as a wrong ’un.
The League needs to learn from this, because what should be seen as an admirable enforcement of necessary rules, is instead being resented, and the once mighty Leeds are marching on into another crisis.
Given supporters’ many dissatisfactions with the new generation of owners buying historic clubs as personal investments, it should feel like a victory that the Football League has asserted its rules and barred Massimo Cellino from owning Leeds due to his criminal conviction for dishonesty.
Cellino, a multimillionaire mostly resident in Miami from where he runs his family’s flour firm, and Leeds also face a further misconduct charge for refusing to give the League a copy of the written reasons for his conviction in Sardinia. In them, the League’s professional conduct committee has finally confirmed, the judge in Cagliari, Sandra Lepore, found he evaded tax on his yacht, the Nelie, with “macchiavellica simulazione” and “intento elusivo”.
The League’s committee, chaired by Tim Kerr QC, found itself delving into several different Italian-English dizionarios, and concluded neither of Lepore’s descriptions did much to help Cellino’s defence that he had not been dishonest. Cellino had argued the yacht was owned by a company, Freetime Miami LLC, and he was authorised to use it as the manager of the company, so no VAT was payable.
The judge found Cellino was the only shareholder and director of Freetime, that it was set up for the sole purpose of buying that yacht, and the yacht was exclusively for Cellino’s personal use. She found, as the Guardian revealed when it saw the judgment, Cellino was the real owner and Freetime was just a “schermo societario fittizio”, a fictitious shell company, established purposely to enable Cellino to evade VAT on imports.
The fact that despite repeated requests Cellino would not hand the League the written reasons did not, presumably, weigh any balance of doubt in his favour, although it has worked to reduce the length of his ban, until after the conviction is spent, on 28 March.
The governance of clubs has progressed a long way since the game had no rules whatsoever requiring “fit and proper” people in charge, as recently as 10 years ago. The 31-page appeal ruling by Kerr, weaving through Italian law and language, with pricy lawyers on each side, is evidence of the effort to properly enforce the rules. Any regulations to encourage decent people to be in charge of clubs would surely bar people who get themselves convicted for criminal dishonesty – and yet, somehow, this does not feel like a victory to many Leeds fans and football people.
There are several reasons. It is messy, as Cellino was allowed to take over, by Kerr’s unsatisfactory ruling last year, reasoning that although he was already convicted, Kerr could not say at that point it involved dishonesty because Lepore had not produced her written reasons. Barring crooks is a lot easier if done before they take over, rather than once they are shaping the club in their own image.
With Cellino completely in charge, this ban looks fiendishly difficult to enforce – this is the next challenge for the League. The committee, which included the League chairman Greg Clarke and former rail regulator Richard Bowker flanking Kerr, was explicit that Cellino himself owns Leeds “through corporate vehicles controlled by him and his family”.
The rules bar him from being a director – which is the easier part – and from owning 30% or more of Leeds. A barred person must not simply be able to pass ownership to a friend or family member as a charade, nor must he continue to exercise any influence. Any ceding or sale of the shares must be permanent; the ban and rules are meaningless if shares are held in trust or safekeeping until a conviction is spent.
It also feels odd that Cellino will simply walk back in when that happens and the ban is served by 10 April. He has shown no remorse – he would argue, presumably, that he has no need to because he is still appealing in Italy – and has two more similar tax evasion prosecutions coming up, yet the rules will allow him to take over again in less than three months.
This is messy too because despite his predictably erratic ways including the sacking of two managers and employment of the inexperienced Neil Redfearn, and Leeds scrabbling just above the relegation zone, a sizeable chunk of the support has taken to Cellino. He is understood to have put £20m into the club – £8m in equity, £12m in loans – to try to bail out yet another dire financial morass which is the default fate of the modern Leeds United.
Fans cast back at the club’s trials since its first financial collapse in 2002 and question why Cellino is the only owner to have faced any censure – and this for something to do with a yacht in a marina a long way from Yorkshire. The League’s employment of Shaun Harvey as chief executive – fresh from faithfully serving the Ken Bates regime at Elland Road, with its 2007 administration, undeclared offshore owners and adverse court findings of libel and harassment of the former director Melvyn Levi – has mystified Leeds fans. It has also led to suspicion, although the League has insisted it is only enforcing its rules and that Harvey has absented himself from the decision-making.
That leads to the overall way in which this feels like a mess: many supporters argue it is not actually protecting the club from damage, but hitting the one owner who has significantly invested – although Gulf Finance House, the much-maligned Bahraini bank, did put in £20m in loans. The “fit and proper person” rules are narrowly defined, not shaping the game with any vision for good ownership. They are seen by many in Leeds to be not operating in the best interests of a club which has been in dire need of help for years, but as unfairly singling Cellino out as a wrong ’un.
The League needs to learn from this, because what should be seen as an admirable enforcement of necessary rules, is instead being resented, and the once mighty Leeds are marching on into another crisis.
