Business View: Chelsea shenanigans? The whistle should have been blown long ago

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The Independent Online

Talk about shutting the stable door after the horse has bolted. The Financial Services Authority's investigation into the share register of Chelsea Village is later than a Chopper Harris tackle - a point that was seized on by the company's controversial chairman, Ken Bates, who argued that no one had complained before now.

Ken isn't quite right. There have been complaints about the shareholder shenanigans ever since Chelsea floated in 1996. Then its dominant investor was an outfit called Rysaffe, a trust whose name was an anagram of Saffery, as in Saffery Champness, the accountants which not only audit Chelsea but had as a partner Patrick Murrin, a friend of Mr Bates and a director of Chelsea.

Mr Murrin left Saffery to form Harbour Trustees in Guernsey. At the same time, the stake was transferred from Rysaffe to Swan Management, which was administered by Harbour.

Last year two things happened. First, a complaint was made to the Guernsey Financial Services Authority accusing Harbour of being a sham trust essentially controlled by Mr Bates. The evidence centred on Swan making a payment to Mark Taylor, a solicitor working for Chelsea who rented offices from Chelsea and had been promised the payment by Mr Bates. If Mr Bates controlled Swan through Harbour then it would have had to be declared as a director's shareholding.

Around this time Swan sold its 26 per cent stake, partly to Mr Bates and partly to five offshore trusts, each of which held just under the 3 per cent threshold that would have required them to make a declaration to the market. If these trusts were in any way linked, this would have had to be declared, and if Mr Bates had any control over any of these trusts then that also would have needed to be declared.

The FSA probably acted because all these trusts agreed to sell out to Russian bidder Roman Abramovich on the same day, at the same time, as Mr Bates. It may also have been alerted by the US Department of Justice, which, as we pointed out last November, is investigating whether Rysaffe, Swan et al were really fronts for South African businessman Stanley Tollman, who is wanted on fraud charges in the US.

But in truth the whistle should have been blown long before. And you have to ask what gave Saffery, as auditors of Chelsea, the comfort that all was clean and above board. If the FSA does uncover something fishy, Chelsea will have already been sold and Mr Bates will be enjoying his retirement, so the only people left to throw the book at will be the professional advisers.

Rod, sweat and tears

Late last week the Australian press started getting excited about the prospect of Rod Eddington parachuting out of British Airways and going off to run the Australian Football League (that's Australian Rules Football, by the way, the one with hundreds of players and about six different ways to score). Given Rod's troubles at home, you wouldn't blame him.

Having just steered BA through post-9/11 and Sars, he gets hit by a wildcat strike at Heathrow over working practices just as the summer rush started. You could argue that strikes and airlines are becoming synonymous as the traditional carriers try to streamline themselves to compete with the likes of Ryanair and easyJet. Yet this dispute appears to have caught BA by surprise.

But Rod's no quitter. The AFL stories aren't true. He'd like the job, but only after he's finished the one he's doing at BA. And that will take a few more years, and a lot more sweat and tears.

No blame, no gain

It's funny how companies are happy to use dramatic world events such as El Nino, 9/11, the Gulf War and Sars as excuses for poor performance. But they are rather slow to own up when an ill wind blows them good fortune. London Clubs International, the casinos group, needs all the luck it can get after nearly impaling itself on a disastrous venture in Las Vegas. Its struggle back to life was helped by some good figures, released last week.

But my man on the gaming floor tells me that LCI has George Bush and Tony Blair to thank for some of the uplift. The spectre of war in Iraq made many Middle Eastern high rollers, who tend to summer in the UK because it is too hot at home, fly over early to avoid a different type of heat. This gave them more time to kill (and lose money) at the gambling tables.