Mr Venables said: 'If he had gone to the football authorities in 1991, it would have been the best thing for everybody.'
It is now clear that Mr Sugar knew within months of taking control of the club about the improper payments to players that last week resulted in the club being severely punished by the Football Association.
Last week, Mr Sugar emphasised that he had volunteered information to the football authorities investigating the club's improper payments - mainly made to induce new players to join the club.
Tottenham documents show that he was in a position to bring these matters to the attention of the sport's regulators at a much earlier stage.
Mr Venables added: 'Sugar only went to the authorities last year, after I left the company. I knew nothing about the payments made between 1985 and 1989.'
This fresh evidence casts Mr Sugar's conduct at the FA hearing in a completely new light.
In October 1991 Mr Sugar was advised by an eminent barrister, Anthony Grabiner, that he should arrange a meeting with the Football League - the relevant authority at that time - to explain the mess he had inherited on assuming joint management control of Tottenham Hotspur with Mr Venables in June of that year.
At a meeting attended by Jonathan Crystal, a Tottenham director responsible for the company's legal affairs, Colin Sandy, the company's finance director, Eddie Ashby, an executive, and Bryan Fugler, the club's then solicitor, Mr Grabiner confirmed that Tottenham should go to the Football League 'to make a full disclosure as quickly as possible'.
Mr Fugler wrote to both Mr Sugar and Mr Venables on 11 October 1991 about the barrister's advice. He said: 'I thought it might be helpful if I were to let you each have a note of the discussion that took place at the consultation yesterday afternoon with Anthony Grabiner and of the advice that was given. I accordingly enclose a copy of my note and recommend that you each attend to this matter with the utmost priority.'
Last week after the FA fined Tottenham pounds 600,000, banned the club from competing next season in the FA Cup, football's main knock-out competition, and deducted 12 points from next year's league tally,Mr Sugar was quoted as saying: 'I was always brought up to believe honesty is the best policy and have followed that throughout my career.'
News of the fine knocked the share price in Tottenham Hotspur, one of England's three football clubs to have its shares publicly quoted, to a 67p low for the year before it recovered to finish the week at 84p.
Tottenham's shareholders were also not told in the 1993 report and accounts about a potential pounds 400,000 liability for the improper payments or the existence of an Inland Revenue investigation.
Yesterday a spokesman for Tottenham and Alan Sugar said that the club, which is appealing against the FA's decision, did not want to comment on the manner or timing of its disclosure to the football authorities, 'save to say that it is satisfied that it acted on the considered advice of its legal representative who sought and followed a number of legal opinions'.
The Spurs spokesman added: 'This will be one of the issues dealt with at the appeal.'
Asked to comment on why there was no explicit mention of either the Inland Revenue investigation or the improper payments in last year's annual report - in spite of the fact that both matters were mentioned in a presentation by Touche Ross, the company's auditors, in a report to the board in July 1993 - the spokesman said: 'There was no obligation to refer specifically to the loans, since they were moved from a capital asset to a salary cost.' He added that Touche Ross had signed off the accounts without adverse comment.
Touche Ross declined to comment, saying that the presentation in question was a confidential matter between the firm and Tottenham Hotspur.
The financial affairs of Tottenham are currently the subject of a Department of Trade and Industry investigation.
Comment, page 2
Foul play at Tottenham, page 3