Massimo Cellino tax case: how a yacht became vital to Leeds United’s future - Guardian 24/9/14
An Italian judge’s ruling that Massimo Cellino is guilty of ‘Machiavellian’ tax evasion could throw Leeds back into chaos
Cellino’s Leeds reign under renewed threat after tax ruling
Football League earlier called tax case a ‘cloud’ over Leeds
James Riach
According to an Italian court document, in June 2012 Massimo Cellino sailed into Cagliari harbour, the captain of an elegant white yacht adorned with the stars and stripes of an American flag. Sardinian revenue officers on sea patrol for the Guardia di Finanza were curious and undertook a routine check of the vessel, a check which has, remarkably, become entwined with the future of Leeds United.
Cellino was found guilty of evading almost €390,000 (£305,000) of import tax duty on the boat earlier this year, a first-grade conviction in Italy that he is appealing. Now, however, an Italian judge has ruled that this was a “Machiavellian simulation” which could have serious ramifications for the Championship club, who have recently been heading into calmer waters themselves despite a wretchedly turbulent year.
The Football League, which initially blocked Cellino’s takeover earlier this year, must decide whether judge Sandra Lepore’s written reasons for the guilty verdict are sufficient to deem that the maverick Italian acted “dishonestly”. If so, the League could decide to ban the 58-year-old from ownership of Leeds under its owners’ and directors’ test.
The key moment in this unlikely saga came in April, on an afternoon whenLeeds lost 1-0 at Wigan Athletic last season. Tim Kerr, an independent QC, overturned the League’s decision to block Cellino from buying Leeds, citing insufficient evidence to prove dishonesty until the full judgment from Sardinia had been released.
It sparked celebration among the majority of supporters and opened the door for Cellino to purchase a 75% share in Leeds through his company Eleonora Sport, with the previous owners Gulf Finance House – a Bahrain-based investment bank – remaining as minority shareholders.
Since then he has been heavily involved in all matters at Leeds from thehiring and firing of his unlikely first head coach, David Hockaday, to the signing of 15 players in the summer transfer window and appointment this week of the Slovenian Darko Milanic.
He has become embedded in a club that without his intervention was sailing into oblivion. Under GFH Leeds were haemorrhaging around £1m a month but since his £35m takeover Cellino has brought financial stability, galvanised support and also promised to buy Elland Road back from private hands, although a significant number of staff have lost their jobs at United.
A key figure pulling the strings at United then, David Haigh, has been in a Dubai jail since May accused of serious financial wrongdoing by GFH. He denies the allegations, and reiterated his innocence on Wednesday.
However, while it may seem perplexing that an investment bank with no history in football was allowed to take over an English club while Cellino – an experienced football man who has brought relative stability – was not, the Football League rules are black and white. The League argues that such issues cannot be subjective. Its regulations state that owners and directors can be disqualified if “they have unspent convictions for offences of dishonesty”, rendering Cellino’s current position under renewed threat.
His previous conviction for false accounting at Cagliari in 2001, for which he received a suspended 15-month prison sentence, is considered spent in the British legal system but the case of the Nélie – and two other pending charges on a Land Rover and a separate yacht – could have a key influence over his continued ownership of Leeds.
The League’s fit and proper persons rules, in place to protect clubs, prohibit individuals with unspent convictions for dishonesty offences from being directors, 30% owners or from exercising control.
However, sources close to Cellino have indicated that even if the League should rule against him regarding the Nélie, his position at Leeds will not be relinquished without a fight. It could become another protracted and messy affair similar to the one which dragged on earlier in the year when Cellino first attempted to buy the West Yorkshire club, thinking he had completed the deal on a bizarre night in the club’s history as fans descended on Elland Road to voice their protest, only to be told later the transaction had not been not ratified.
A possible battle in the high court could ensue and potentially another saga that is likely to do no good whatsoever for the club, who this season are rebuilding on the road to a potential first return to the Premier League since 2004.
Judge Sandra Lepore’s written findings in the yacht case – revealed by the Guardian – certainly do not do Cellino any favours, even if his lawyer in Italy, Giovanni Cocco, has dismissed them as “full to the brim of errors”.
Cocco added: “It does not take into account what emerged in the trial: that is to say, that nothing implicates Cellino. I have already … lodged an appeal and have also completely demolished the [judge’s] reasoning.”
The standard check on the Nélie by finance officers on patrol in 2012 turned out to be anything but routine, as Lepore ruled that not only was the yacht registered to a Miami-based company and yet “in the exclusive use … of an Italian citizen, resident in Cagliari”, but that citizen, Cellino, the then owner of Cagliari football club, was “discovered onboard during the check, acting in the capacity of captain”.
Subsequent research revealed that import duty on the yacht had not been paid. The total fine was fixed by the police at €388,500 – a figure Lepore says was calculated according to the estimated worth of the vessel.
Following the first-grade conviction in March, Cellino was ordered to pay a €600,000 fine. He is appealing that decision and a final judgment is some way off, although prosecutors in the case are also appealing on the grounds that the fine was too lenient. The complexities of the Italian legal system ensure that case may not reach a resolution for a significant time.
It is a strange quirk of modern football that unpaid import tax on a yacht in Sardinia two years ago could have such a bearing on the future of a major English club. Yet this is merely another twist in the frenetic recent history of Leeds United.
Since his arrival in England Cellino has undoubtedly lived up to his reputation as a maverick individual. From colourful language to bizarre superstitions and unexpected decisions, the anecdotes are myriad. But, although he has gone a long way to sorting out a grand mess at Leeds, Cellino has yet to emerge from another mess in Italy. The future, once again for Leeds, remains fraught with uncertainty.
Cellino’s Leeds reign under renewed threat after tax ruling
Football League earlier called tax case a ‘cloud’ over Leeds
James Riach
According to an Italian court document, in June 2012 Massimo Cellino sailed into Cagliari harbour, the captain of an elegant white yacht adorned with the stars and stripes of an American flag. Sardinian revenue officers on sea patrol for the Guardia di Finanza were curious and undertook a routine check of the vessel, a check which has, remarkably, become entwined with the future of Leeds United.
Cellino was found guilty of evading almost €390,000 (£305,000) of import tax duty on the boat earlier this year, a first-grade conviction in Italy that he is appealing. Now, however, an Italian judge has ruled that this was a “Machiavellian simulation” which could have serious ramifications for the Championship club, who have recently been heading into calmer waters themselves despite a wretchedly turbulent year.
The Football League, which initially blocked Cellino’s takeover earlier this year, must decide whether judge Sandra Lepore’s written reasons for the guilty verdict are sufficient to deem that the maverick Italian acted “dishonestly”. If so, the League could decide to ban the 58-year-old from ownership of Leeds under its owners’ and directors’ test.
The key moment in this unlikely saga came in April, on an afternoon whenLeeds lost 1-0 at Wigan Athletic last season. Tim Kerr, an independent QC, overturned the League’s decision to block Cellino from buying Leeds, citing insufficient evidence to prove dishonesty until the full judgment from Sardinia had been released.
It sparked celebration among the majority of supporters and opened the door for Cellino to purchase a 75% share in Leeds through his company Eleonora Sport, with the previous owners Gulf Finance House – a Bahrain-based investment bank – remaining as minority shareholders.
Since then he has been heavily involved in all matters at Leeds from thehiring and firing of his unlikely first head coach, David Hockaday, to the signing of 15 players in the summer transfer window and appointment this week of the Slovenian Darko Milanic.
He has become embedded in a club that without his intervention was sailing into oblivion. Under GFH Leeds were haemorrhaging around £1m a month but since his £35m takeover Cellino has brought financial stability, galvanised support and also promised to buy Elland Road back from private hands, although a significant number of staff have lost their jobs at United.
A key figure pulling the strings at United then, David Haigh, has been in a Dubai jail since May accused of serious financial wrongdoing by GFH. He denies the allegations, and reiterated his innocence on Wednesday.
However, while it may seem perplexing that an investment bank with no history in football was allowed to take over an English club while Cellino – an experienced football man who has brought relative stability – was not, the Football League rules are black and white. The League argues that such issues cannot be subjective. Its regulations state that owners and directors can be disqualified if “they have unspent convictions for offences of dishonesty”, rendering Cellino’s current position under renewed threat.
His previous conviction for false accounting at Cagliari in 2001, for which he received a suspended 15-month prison sentence, is considered spent in the British legal system but the case of the Nélie – and two other pending charges on a Land Rover and a separate yacht – could have a key influence over his continued ownership of Leeds.
The League’s fit and proper persons rules, in place to protect clubs, prohibit individuals with unspent convictions for dishonesty offences from being directors, 30% owners or from exercising control.
However, sources close to Cellino have indicated that even if the League should rule against him regarding the Nélie, his position at Leeds will not be relinquished without a fight. It could become another protracted and messy affair similar to the one which dragged on earlier in the year when Cellino first attempted to buy the West Yorkshire club, thinking he had completed the deal on a bizarre night in the club’s history as fans descended on Elland Road to voice their protest, only to be told later the transaction had not been not ratified.
A possible battle in the high court could ensue and potentially another saga that is likely to do no good whatsoever for the club, who this season are rebuilding on the road to a potential first return to the Premier League since 2004.
Judge Sandra Lepore’s written findings in the yacht case – revealed by the Guardian – certainly do not do Cellino any favours, even if his lawyer in Italy, Giovanni Cocco, has dismissed them as “full to the brim of errors”.
Cocco added: “It does not take into account what emerged in the trial: that is to say, that nothing implicates Cellino. I have already … lodged an appeal and have also completely demolished the [judge’s] reasoning.”
The standard check on the Nélie by finance officers on patrol in 2012 turned out to be anything but routine, as Lepore ruled that not only was the yacht registered to a Miami-based company and yet “in the exclusive use … of an Italian citizen, resident in Cagliari”, but that citizen, Cellino, the then owner of Cagliari football club, was “discovered onboard during the check, acting in the capacity of captain”.
Subsequent research revealed that import duty on the yacht had not been paid. The total fine was fixed by the police at €388,500 – a figure Lepore says was calculated according to the estimated worth of the vessel.
Following the first-grade conviction in March, Cellino was ordered to pay a €600,000 fine. He is appealing that decision and a final judgment is some way off, although prosecutors in the case are also appealing on the grounds that the fine was too lenient. The complexities of the Italian legal system ensure that case may not reach a resolution for a significant time.
It is a strange quirk of modern football that unpaid import tax on a yacht in Sardinia two years ago could have such a bearing on the future of a major English club. Yet this is merely another twist in the frenetic recent history of Leeds United.
Since his arrival in England Cellino has undoubtedly lived up to his reputation as a maverick individual. From colourful language to bizarre superstitions and unexpected decisions, the anecdotes are myriad. But, although he has gone a long way to sorting out a grand mess at Leeds, Cellino has yet to emerge from another mess in Italy. The future, once again for Leeds, remains fraught with uncertainty.