Cash riddle of China's star players

"YOU CANNOT uncover the transfer fee," said Liu Shijun, "because both sides signed a confidentiality clause. The fee is a secret."

Mr Liu was referring to the first transfer deal between English and Chinese clubs, the initial trickle of Chinese talent that he hopes will become a flood.

As managing director of London-based Greatgate Overseas Development - known in China as Gaode - the European representative of the Chinese Football Association, Mr Liu negotiated the arrival of Fan Zhiyi, the Chinese national captain, and Sun Jihai at Crystal Palace in August.

Thanks to him, the players, chosen by Terry Venables, the Crystal Palace manager, are now appearing in the First Division and attracting television audiences in China of more than 100 million viewers.

Sales of Crystal Palace shirts in China are booming - club officials recently joined Tony Blair in Peking during his efforts to boost sales of British goods in China - and the promise of huge television rights next year looms large. But in all the celebrations unanswered questions hang over the deal.

The Independent has uncovered a pounds 400,000 gap between the amount the English club has agreed to pay and the fees the Chinese authorities are expecting to receive.

When news of the Chinese arrivals broke in August, Mr Venables told journalists: "I brought them here because they are good players and I am trying to get the best I can."

Crystal Palace and Mr Venables, who has no involvement in the financial management of the club, said the players were costing "around half a million pounds each."

That was the figure most reported by the media at the time.

But this month the club secretary, Mike Hurst, told The Independent that the fees finally agreed amounted to pounds 1.35m - pounds 700,000 for Fan, from Shanghai Shenhua, and pounds 650,000 for Sun, from Dalian Wanda. However, the Chinese teams are to receive much less: in fact, at August's exchange rate, pounds 400,633 less.

Mr Liu's offices in Brondesbury Park, north-west London, are adorned with posters representing his triumphs at promoting Anglo-Chinese ties.

On one wall is a colourful picture of the England goal-keeper David Seaman, covered in bright Chinese characters and representing the England tour of China in 1996, while Mr Venables was the national coach.

On another wall is a picture of the Chinese national side, taken during a tour of England in 1997; on another side of the room is a picture of Premiership champions Arsenal taken during their tour of China in 1995.

Peking-born Mr Liu, 44, a law graduate from King's College, London, arranged them all.

He has been forging links between the Chinese FA and Western clubs since 1994, when football in China became professional. The Chinese Football Association wants more and more of its players to play in the West in the hope that exposure to higher standards of football with improve the national side.

It was against that background that Mr Liu helped to organise an England tour of China in 1996, when Terry Venables was the national team coach.

He said that Mr Venables "did much to promote Chinese football" with the tour, which was arranged through Tom Lawrence, an English agent.

He said that he also dealt with Mr Lawrence during the transfer of the Chinese players, and knows Ted Buxton, a Venables aide at Crystal Palace, who worked as coach to the Chinese national team in 1996 and 1997.

It is normal in international transfers for agents' fees to be taken into account. In most deals, each side will have an agent, usually paid about 10 per cent.

In this deal, however, that cannot explain the apparent gap between the fees to be paid and received.

Mark Goldberg, the chairman of Crystal Palace - who did not know of the discrepancy until it was disclosed to him by The Independent - said Mr Lawrence was paid pounds 25,000 plus VAT for the introduction to Mr Liu and for helping the players to gain work permits.

Curiously, Mr Lawrence said that he had not been involved in the deal at all and took no fees. He has not responded to repeated requests to explain this apparent contradiction.

So what of the Chinese end of the deal?

Yu Zhifei, the Shanghai Shenhua chairman, said that any sums paid to Mr Liu should come from the $1.5m (pounds 930,000) the Chinese clubs are expecting to receive (in four instalments over the next year), and not from the English club.

"According to international practice [Gaode's fee] comes from the $800,000 [for Fan]," he said. "As practice, since it is my agent, it can only get money from me."

He also said his club would have liked more money for Fan, but he agreed to the deal for two reasons: "One is that Fan is quite keen on going; another is out of consideration that this is the first time China's players go out.

"The historical step is very important and will influence the exchange between the two countries and the sports industry. Referring to the price, we are not satisfied with it, for sure."

Ma Kejian, Professional Department Director at the Chinese Football Association, confirmed the figures and added that any commissions to Gaode/Greatgate - usually at the rate of 10 per cent - should be paid from the Chinese end.

Which still leaves the pounds 400,000 apparently unaccounted for. Mr Goldberg, the flamboyant chairman of Crystal Palace, the club he bought for pounds 23m earlier this year, wishes to maintain a good relationship with the Chinese Football Association but he said yesterday that he also wants to get to the bottom of the Chinese deal.

It now seems that that relationship could be strained. The second of four instalments is almost due to be paid to the Chinese, but directors at the club may decide to put it on hold pending their inquiry.

Vincent Murphy, a director of seven years, said: "This has come as a complete shock. My colleagues and I will be calling for an explanation - with total transparency."