Hampshire police confirmed last night that it was examining allegations of "bad business practice" relating to several matters, including the purchase of the players last year.
The Independent has learnt that officers based at Southampton have asked Interpol to make inquiries in Australia. On July 16, the agency was asked by detectives in England to gather information about a football-orientated company.
News of the investigation comes just days after another club, Crystal Palace, called in the Football Association to examine the transfers of two players from China. Interviews with club and football association officials in China by The Independent revealed that the amount Crystal Palace had agreed to pay, pounds 1.35m, for Fan Zhiyi and Sun Jihai was pounds 400,000 more than the Chinese authorities were expecting to receive. Mr Venables, the club manager, said he played no part in the transfers.
The intended destination of the difference remains a mystery. Last night Mike Hurst, the club secretary, said the Chinese had confirmed they were "happy" with the deal. Mark Goldberg, the club chairman, said lawyers and auditors had been asked to examine transfers for any irregularities in the light of newspaper claims surrounding the purchase of the Israeli captain David Amsalem for pounds 800,000. The police inquiry into business practices at Portsmouth FC under Mr Venables' ownership - he bought the club for pounds 1 in August 1996 when it was in crisis - began this summer. It is understood that the new board of directors, under the chairmanship of Martin Gregory, was unhappy about a number of matters and asked the police to investigate.
However, it is understood those matters did not involve transfers. That inquiry was initiated separately by the police.
The transfers under investigation are believed to involve Robert Enes, bought from Sydney Utd in October 1997 for pounds 195,000; Hamilton Thorpe, from Western Adelaide in summer 1997 for pounds 75,000; and Craig Foster, from Fairfield Marconi in September 1997 for pounds 300,000.
After Mr Venables left the club in December 1997, Enes and Thorpe were released by Portsmouth and are believed to have returned home. Foster is now playing at Crystal Palace with Mr Venables.
A fourth Australian, John Aloisi, joined from Cremonese in Italy for pounds 300,000 and is still at Portsmouth. It is not known whether that transfer is being examined.
In October 1997, the Australian football authorities said they were concerned about the number of players going to Portsmouth, although Mr Venables can counter that he was impressed by them during a spell as Australian national team coach.
Asked for his views on the Amsalem transfer, a spokesman for the former England coach said: "Mr Venables is only the coach. He has no involvement in transfers whatsoever."
On the Portsmouth inquiry, he said: "Mr Venables has no comment to make in connection with investigations that he knows nothing about. He is not aware of any situation requiring any investigation in any event."
Crystal Palace said yesterday it was "committed to the highest standards of corporate gorvernance". Portsmouth Football Club declined to comment on the police inquiry.Reuse content