The identity of the so-called "mystery backer" that loaned £15m to take Derby County from the Co-Op Bank's receivers a fortnight ago can now be revealed; and what could possibly reassure Derby fans more than to know their club is in debt and has mortgaged its celebrated new stadium to a faceless company registered in Panama?
Quite why the newly appointed board at Derby, led by the new chairman, John Sleightholme, a barrister and the deputy coroner of South Yorkshire, felt compelled to withhold this news when he took over at the end of last month, is unclear. Mortgages have to be registered at Companies House, and so, a few days later, a document duly appeared on the public record which succinctly stated that: "All that freehold property known as Derby County Stadium Pride Park", is mortgaged to ABC Corporation, of Calle Aquilino de la Guardia no 8, Panama City, the Republic of Panama.
This, of course, only gets anyone so far, which is one of the whole points of registering companies in Panama. The Panamanian Consulate in London proudly advertises on its website that a principal advantage for people registering "offshore corporations" in the country is that the Republic operates "the most secure confidentiality laws to be found anywhere." Companies must name officers, but these are usually lawyers working for the owners, whose identity does not have to be disclosed, and the companies do not have to file accounts or regular financial information.
The other main advantage is that a company registered in Panama which does not actually operate in the country - like ABC Corporation and most of the 350,000 other companies registered there - pay no tax except a token annual administration fee. The consulate particularly stresses the advantages for banking: "The income derived is exempt from Panamanian taxes, which is a very attractive feature."
The limited information available from the public registry in Panama City states that ABC Corporation was formed in October 1984. The address at Calle Aquilino de la Guardia is that of a law firm. Its first officers, a president, secretary and treasurer, were three Swiss lawyers, Peter Lenz, Marcel Muff and Hans Hinderling, who is a registered footballers' agent. Then in 1992 following a meeting at Hinderling's offices in Basle, the officers of the company were changed to lawyers in another offshore tax haven, the Bahamas: Richard Lightbourne, Hartis Pinder and Lourey Smith, of the firm McKinney Bancroft and Hughes in Nassau. But that's it. The identity of the owner, or the source of the money, is hidden.
Derby themselves refused to elaborate this week, consistent with Sleightholme's statement when he took over with his fellow new directors, Steven Harding and Jeremy Keith - the prime mover of the takeover - that they would keep the source of the £15m loan confidential. A club spokesman said the loan had been "passed" by the Football Association and League, but this does not mean that the source has been disclosed or vetted in any way. The FA has no system yet for vetting football club directors - the long-promised "fit and proper person test" - let alone to examine the ever more far-flung sources of finance to which many clubs are turning as ordinary banks pull out of the game with their fingers singed.
The League did pass ABC Corporation's loan, but under a different rule, the one which prohibits one person or company having an interest in two clubs - as it turns out, the Panamanian nameplate is also on a sizeable loan outstanding at another club, Queen's Park Rangers, and ABC have a mortgage on their cosy old ground at Loftus Road.
At QPR, a few details have seeped out since ABC Corporation of Panama City loaned £10m last year, with which the club paid off outstanding debts, mainly to the majority shareholder, Chris Wright, and came out of administration. The interest rate was confirmed by QPR's chairman, Ross Jones, a banker, early this year, as 10 per cent annually; £1m for the near-bust West London club to find, and a nice, tax-free earner for whoever is behind ABC. The club deals with a representative of the lender in London, Philip Englefield, who under his full name of Philip Anthony Devereux Englefield is currently registered as a director of several property companies which are based in Knightsbridge.
In May 2002, as ABC's representative, Englefield was made a director of QPR, but then QPR 1st, the supporters' trust whose members have grown desperately concerned about the club's plight, discovered that in 1991 Englefield had been struck off the roll of solicitors by the Law Society. He had, the Law Society found, while a partner in a firm of solicitors in London W1, between July 1988 and June 1990, taken nearly £900,000 from the firm's clients' bank account, in 91 separate withdrawals, for payments "of a personal nature".
At his hearing, Englefield admitted the offences, but argued in mitigation that he had been "foolish and desperate, and had not formed any intention to commit fraud." The Law Society described the hole in the firm's bank account as "of a very great magnitude", said the payments "were not made in error" and that "extraordinarily large sums of money were involved." They struck him off as a solicitor and ordered him to pay the costs of the hearing and the inquiry.
Shortly after the Trust presented the club with their discovery, on 12 July 2002, Englefield resigned from the QPR board. He is, however, still the man, registered as a legal advisor to various companies, with whom QPR deal to make their regular monthly payments of £83,333. David Davies, QPR's chief executive, confirmed that the club deals with Englefield, and said the relationship with him and ABC was similar to "any other mortgage company", and that their dealings so far had been cordial:
"We made the difficult decision to borrow the £10m or die last year because there was no other solution offering itself to enable us to come out of administration. ABC have been fair with us and they have not been predatory."
As at Derby, QPR have never disclosed who is behind ABC; Davies has said it is a Swiss trust. There were some rumours earlier this year that the ultimate lender of the money was Michael Hunt, the former managing director of Nissan UK, who in June 1993 was jailed for eight years for his part - allegedly with Octav Botnar, the company's chairman - in siphoning off £149.2m from Nissan UK and cheating the Inland Revenue out of £56.3m, Britain's largest-ever tax fraud. Witnesses to the fraud were called from Panama and Bermuda, and the money, according to the prosecution, was laundered through Swiss bank accounts.
In March this year Justin Pieris, QPR 1st chairman, wrote to Davies asking him to clarify whether the rumours that Hunt was the lender were true. Davies had previously officially denied rumours that Fulham's owner, Mohamed Al Fayed, was the lender, however this time he did not confirm or deny it, but replied that he was bound by confidentiality. Davies pointed out that in order to exit administration the club and its administrator, Ray Hocking of BDO Stoy Hayward, had had to satisfy the court that the loan came from "legitimate sources, not illegal activities, and that they had done so".
"The most important element," Davies wrote, "is ensuring the loan repayments are met, not what the background of an individual may be. The speculation over who may or may not have been involved in the affairs of Nissan(UK) contribute little to meeting those obligations."
That, indeed, is a crucial point. At both QPR and Derby, the loans have merely replaced one hefty creditor with one from Panama, leaving the clubs in the same debt and not increasing their earnings. It is believed to be costing QPR significantly more in interest, and the club is desperate for cash - Davies has budgeted for a loss around £2.5m this season and said QPR will not make it to the end of the season if no new investor comes in. If the worst happens - and Davies said all QPR's directors have to contemplate the club might go bust - the Loftus Road ground, a nice potential development site in Shepherd's Bush, will be repossessed by a Panamanian Corporation, represented here by a struck-off solicitor involved in property investment.
At Pride Park, a symbol of the game's new dawn in 1997 when football was coming home and QPR were floating on the Stock Market, Derby would not confirm the interest the stricken club will be paying on its new £15m loan to Panama, or any other details. No doubt, as at QPR, a few odd specks will come out in the wash.Reuse content