Why it’s business as usual for Massimo Cellino at Leeds United
Guardian 7/10/14
Despite the owners and directors test, there has been a brittle lack of action since an Italian court found the Championship club’s owner had ‘elusive intent’ in evading €390,000 import duty
David Conn
Two weeks after the Guardian revealed that an Italian court found Massimo Cellino had “elusive intent” and had formed a “bogus corporate screen” to criminally evade €390,000 import duty, the Italian remains in charge at Leeds United.
His ownership of the club continues despite the owners and directors test, operated by both the Premier and Football Leagues, stating that people cannot own or run a football club if they have recently been convicted of a criminal offence “involving a dishonest act”.
The definition of “dishonest act” in the leagues’ rules is: “Any act which would reasonably be considered to be dishonest.”
Since the Guardian reported the adverse findings to Cellino of the judge in Cagliari, Dr Sandra Lapore, which were awaited since she found him guilty of the criminal offence in March, there has been a brittle lack of action. Cellino’s lawyer in Cagliari, Giovanni Cocco, confirmed he had seen the judgment, which was issued by the court to the parties on 28 July, and said he is appealing against it. Cellino, however, is understood to have said he did not even know about the findings against him until the Guardian asked him about it late last month.
The Football League has been advised by its Italian lawyers, the Milan office of DLA Piper, that it has no right to formally request the judgement from the court. The league has asked Cellino’s lawyer in England, Adam Morallee, of Mishcon de Reya, to supply it. He has not done so because, it is understood, he says he also has not seen the judgement. Morallee is believed to have asked Cocco to send him a copy but has not received it yet.
Amid all this stasis, though, it can quite confidently be predicted that Cellino will contest and appeal if the league decides his import duty evasion offence would reasonably be considered to have involved a dishonest act, and that he has failed its owners and directors test.
Cellino is likely to argue, as he did successfully when he was allowed to take over Leeds in the first place, that the offence of import duty evasion can be committed without dishonest intent, and also – an argument he failed with previously – that this judge’s decision should not be considered a conviction until all his appeals in Italy are exhausted. If those arguments are rejected, perhaps after high court actions, Cellino could be expected then to say he cannot be made by the league to simply or quickly sell an asset, Leeds United, that he bought legally.
Since his conviction in March and while the written judgment was being awaited, Cellino has bought Leeds, bought and sold a number of players, had club staff and two managers – Brian McDermott and Dave Hockaday – depart.
The club had been sinking into potential financial crisis under its previous owners, the Bahraini bank Gulf Finance House, although it said it would never allow Leeds to fall into administration and thereby lose the £20m it put in to soak up losses. Since then, Cellino is said to have dealt with the club’s creditors, and he is also negotiating to buy back Elland Road from its offshore owners, as well as planning to build a new training ground.
He unveiled the latest manager, the Slovenian Darko Milanic, on 23 September, just after the Guardian asked Cellino about the Cagliari judge’s adverse findings.
Cellino was allowed to take over, against the league’s decision to bar him due to his conviction, after his lawyers appealed to the league’s professional conduct committee. They argued that his offence could not be considered dishonest at that point, because Lapore had not yet issued her written judgment. The committee’s chair, Tim Kerr QC, accepted that that criminal offence of import duty evasion could conceivably be committed without a person having actual dishonest intent.
Kerr also rejected the league’s forceful plea that he should not allow Cellino to take over Leeds, with the risk that the judge’s written reasons, due 90 days later, could find Cellino had indeed acted dishonestly, meaning Cellino would have to be barred and extricated from Leeds. Kerr stated the league should have asked for an adjournment of the hearing if it wanted to make that case, but it had not. So the QC allowed Cellino, convicted of a criminal offence, to buy Leeds United and take control of the club because, temporarily, the facts of exactly how Cellino criminally evaded tax were not known.
“It follows from my reasoning,” Kerr concluded, “that if the reasoned ruling of the court in Cagliari discloses that the conduct of Mr Cellino was such that it would reasonably be considered to be dishonest, he would become subject to a disqualifying condition [meaning he would be barred from being an owner or director of Leeds United].”
Lapore found Cellino evaded the import duty on his yacht, Nelie, with “elusive intent”, the result of “a Machiavellian simulation”, using “a bogus corporate screen”. When the league finally does get a copy, as it surely must, it will then have to decide if his offence “involved a dishonest act”. If it concludes it did, the league must bar Cellino, according to the rules, from owning or being a director of Leeds United, which includes being a “shadow director” or being able to exercise “control”. If that happened, it would be the first time an owner has been disqualified when already in charge of a club, and constitute, if Cellino does mount legal actions, a major challenge to the rules.
Many who have studied this “test” have concluded it should be much stronger and broader, in an age when profiteers, here and overseas, may eye historic football clubs not as cherished institutions, but as cash cows. The barring of people convicted of criminal offences “involving a dishonest act” may be considered quite a basic standard but the case of Cellino is proving that it is not a straightforward one to apply.
Despite the owners and directors test, there has been a brittle lack of action since an Italian court found the Championship club’s owner had ‘elusive intent’ in evading €390,000 import duty
David Conn
Two weeks after the Guardian revealed that an Italian court found Massimo Cellino had “elusive intent” and had formed a “bogus corporate screen” to criminally evade €390,000 import duty, the Italian remains in charge at Leeds United.
His ownership of the club continues despite the owners and directors test, operated by both the Premier and Football Leagues, stating that people cannot own or run a football club if they have recently been convicted of a criminal offence “involving a dishonest act”.
The definition of “dishonest act” in the leagues’ rules is: “Any act which would reasonably be considered to be dishonest.”
Since the Guardian reported the adverse findings to Cellino of the judge in Cagliari, Dr Sandra Lapore, which were awaited since she found him guilty of the criminal offence in March, there has been a brittle lack of action. Cellino’s lawyer in Cagliari, Giovanni Cocco, confirmed he had seen the judgment, which was issued by the court to the parties on 28 July, and said he is appealing against it. Cellino, however, is understood to have said he did not even know about the findings against him until the Guardian asked him about it late last month.
The Football League has been advised by its Italian lawyers, the Milan office of DLA Piper, that it has no right to formally request the judgement from the court. The league has asked Cellino’s lawyer in England, Adam Morallee, of Mishcon de Reya, to supply it. He has not done so because, it is understood, he says he also has not seen the judgement. Morallee is believed to have asked Cocco to send him a copy but has not received it yet.
Amid all this stasis, though, it can quite confidently be predicted that Cellino will contest and appeal if the league decides his import duty evasion offence would reasonably be considered to have involved a dishonest act, and that he has failed its owners and directors test.
Cellino is likely to argue, as he did successfully when he was allowed to take over Leeds in the first place, that the offence of import duty evasion can be committed without dishonest intent, and also – an argument he failed with previously – that this judge’s decision should not be considered a conviction until all his appeals in Italy are exhausted. If those arguments are rejected, perhaps after high court actions, Cellino could be expected then to say he cannot be made by the league to simply or quickly sell an asset, Leeds United, that he bought legally.
Since his conviction in March and while the written judgment was being awaited, Cellino has bought Leeds, bought and sold a number of players, had club staff and two managers – Brian McDermott and Dave Hockaday – depart.
The club had been sinking into potential financial crisis under its previous owners, the Bahraini bank Gulf Finance House, although it said it would never allow Leeds to fall into administration and thereby lose the £20m it put in to soak up losses. Since then, Cellino is said to have dealt with the club’s creditors, and he is also negotiating to buy back Elland Road from its offshore owners, as well as planning to build a new training ground.
He unveiled the latest manager, the Slovenian Darko Milanic, on 23 September, just after the Guardian asked Cellino about the Cagliari judge’s adverse findings.
Cellino was allowed to take over, against the league’s decision to bar him due to his conviction, after his lawyers appealed to the league’s professional conduct committee. They argued that his offence could not be considered dishonest at that point, because Lapore had not yet issued her written judgment. The committee’s chair, Tim Kerr QC, accepted that that criminal offence of import duty evasion could conceivably be committed without a person having actual dishonest intent.
Kerr also rejected the league’s forceful plea that he should not allow Cellino to take over Leeds, with the risk that the judge’s written reasons, due 90 days later, could find Cellino had indeed acted dishonestly, meaning Cellino would have to be barred and extricated from Leeds. Kerr stated the league should have asked for an adjournment of the hearing if it wanted to make that case, but it had not. So the QC allowed Cellino, convicted of a criminal offence, to buy Leeds United and take control of the club because, temporarily, the facts of exactly how Cellino criminally evaded tax were not known.
“It follows from my reasoning,” Kerr concluded, “that if the reasoned ruling of the court in Cagliari discloses that the conduct of Mr Cellino was such that it would reasonably be considered to be dishonest, he would become subject to a disqualifying condition [meaning he would be barred from being an owner or director of Leeds United].”
Lapore found Cellino evaded the import duty on his yacht, Nelie, with “elusive intent”, the result of “a Machiavellian simulation”, using “a bogus corporate screen”. When the league finally does get a copy, as it surely must, it will then have to decide if his offence “involved a dishonest act”. If it concludes it did, the league must bar Cellino, according to the rules, from owning or being a director of Leeds United, which includes being a “shadow director” or being able to exercise “control”. If that happened, it would be the first time an owner has been disqualified when already in charge of a club, and constitute, if Cellino does mount legal actions, a major challenge to the rules.
Many who have studied this “test” have concluded it should be much stronger and broader, in an age when profiteers, here and overseas, may eye historic football clubs not as cherished institutions, but as cash cows. The barring of people convicted of criminal offences “involving a dishonest act” may be considered quite a basic standard but the case of Cellino is proving that it is not a straightforward one to apply.