David Conn: From ABC to QPR, the tangled tale of how football gambled its future

Thursday 02 April 2009 23:36

Michael Hunt, the former managing director of Nissan UK, who was sentenced to eight years for his role in the largest tax fraud ever perpetrated in Britain, is, according to sources, the man behind the ABC Corporation, a Panama-registered company which has lent £10m and £15m to Queen's Park Rangers and Derby County respectively, and has mortgages on both Loftus Road and Pride Park.

Michael Hunt, the former managing director of Nissan UK, who was sentenced to eight years for his role in the largest tax fraud ever perpetrated in Britain, is, according to sources, the man behind the ABC Corporation, a Panama-registered company which has lent £10m and £15m to Queen's Park Rangers and Derby County respectively, and has mortgages on both Loftus Road and Pride Park.

Hunt was convicted in 1993 of conspiring to cheat the Inland Revenue, after Southwark Crown Court heard that for nine years Hunt, along with the company's chairman Octav Botnar and another director, had orchestrated a "truly massive" tax fraud, by using bogus invoices and a sham shipping agent to siphon £149.2m from the company and launder it through offshore companies, depriving the Inland Revenue of £56.3m tax and £36m interest.

Botnar stayed in Switzerland and refused to come back to face trial, although he later agreed a settlement with the Inland Revenue. Hunt, however, who was said by the prosecution to have made £30m personally from the frauds, and another former Nissan UK director, Frank Shannon, were convicted for their parts in the scam. Hunt appealed, but his conviction and sentence were upheld in May 1994.

QPR, who had long been in administration following their financial collapse under Chris Wright's ownership, borrowed £10m from the ABC Corporation in May 2002, at an interest rate of 10 per cent, £1m a year, a huge amount for the once-chirpy club to pay. Companies registered in Panama, a tax haven, do not have to disclose their shareholders or directors, but in March 2003 rumours began to circulate on QPR fans' messageboards that Hunt was behind ABC.

After ABC provided the money, a "consultant legal adviser," Philip Englefield, became a director of QPR to represent ABC's interests on the club's board. The club's supporters' trust, QPR 1st , then discovered that in 1991 Englefield had been struck off the roll of solicitors by the Law Society for improperly taking nearly £900,000 from his firm's clients' bank account.

QPR asked him to stand down, which he did, although he continued to act as ABC's contact, a role the club said he discharged professionally. Englefield, it turns out, had also been convicted of theft and fraud offences for taking £4.7m from his firm's client account, and been sentenced in March 1993 to seven years in prison, reduced to six on appeal. A year later, he wrote to The Sunday Times, praising the fish and chip supper, "the gastronomic highlight of the week" - served up on Fridays in his prison.

In October 2003, Derby County, relegated after six seasons in the Premier League and, under their former owner Lionel Pickering, sagging beneath £31m debts, were suddenly put into receivership. The club and their ground were sold to a newly formed company, Sharmine Limited, and new directors were unveiled: Jeremy Keith, a "business doctor" specialising in financially failing businesses, who had briefly been involved at Portsmouth FC before they went into administration in 1998; Steven Harding, an advertising executive, and a perhaps unlikely figure as the new chairman of Derby: John Sleightholme, a barrister and the deputy coroner for North Yorkshire.

At the time the directors said they would not reveal who owned the club, a stance they have maintained ever since. A month later, it emerged that the £15m finance for their takeover had come from the same ABC Corporation, registered in Panama City.

Sleightholme had been previously involved in a venture with a former Scottish players' agent, Murdo MacKay, who, a few months later, joined Derby as the club's director of football. MacKay's own business career is somewhat chequered; he was a Fifa-registered players' agent for what he described as 11 "unblemished" years, but one of his companies, Inside Soccer Recruitment, which had a high-profile launch in 2001 and was backed by the former Rangers and England centre-back Terry Butcher among others, went bust just 18 months later, owing a large tax bill and leaving creditors, including a furious Butcher, unpaid.

From 1993 to 1996, MacKay was made personally bankrupt after the failure of another recruitment agency, MMK Associates, when 19 creditors, ranging from the Inland Revenue to a furniture loan company, were left owed £157,659. MacKay has, however, said he has put that behind him and is applying his knowledge of football to reviving Derby's fortunes.

Last month, Sharmine Limited, which owns Derby, finally revealed who its owners are, but that only opened into a new layer of opaque anonymity in yet more tax havens: two of its shareholders are registered as companies in Belize, the other in the British Virgin Islands.

Sources close to the deals, however, confirmed to me this week that Michael Hunt is the ultimate source of the ABC cash. He is understood to operate a family trust registered in Switzerland, whose size, the sources said, runs into "nine figures". A lawyer in Basle, Dr Hans Georg Hinderling, has represented ABC Corporation in their dealings with QPR.

QPR's current board, chaired by lifelong Rangers fan Bill Power, who took the club over last year, has since been scathing about the ABC loan it inherited: "It is scandalous," Power told me, "that we've been saddled with this debt, from a Panama corporation of all places, at such an outrageous interest rate."

David Davies, the chief executive at the time the deal was done, who is now working for London Wasps Rugby Club, maintained however that QPR had no alternatives at the time: "Looking back, yes I am uncomfortable about the loan we had to take out, but no banks would lend to us. It was a matter of keeping the club in business."

At Derby, ABC replaced one load of debt, owed to Lombard and the Co-op Bank, with the money now owed to them. The club's directors have told the Supporters' Trust, Ramstrust, that the debts have increased another £4m since they took over, to £35m. Ted McMinn, the former Rams' winger who now commentates for BBC Radio Derby, has been a sceptic from the start: "We know very little about these people, or why they took over," he told me. "They appear to have put no money in themselves, and the debt isn't getting smaller."

In a meeting with Ramstrust last December, Jeremy Keith said of Michael Hunt's rumoured involvement with ABC: "We can't categorically say who is involved," although Michael Hunt's name was not on any documentation and was not an officer of the organisation. This week John Sleightholme said they had had no dealings with Hunt.

Nick Sellors, of Ramstrust, called for transparency: "We want to know who owns our club, and why they have to maintain this level of secrecy."

On the field, however, Derby, led by their over-performing manager, George Burley, will be in the play-offs if they can maintain their current sixth place in the Championship. If they manage to pull off an unexpected promotion, they will sail into £25m of Premier League riches, and the club's owners, whoever they are, will presumably be quids in. ABC may even be repaid. That is the football gamble: there is money to be made at the top.

Nothing in the secretive, offshore financing and mortgages which prop up and weigh down Derby and QPR appears to be illegal. David Davies told me that in order to exit administration, QPR had had to satisfy the court that the loan came from "legitimate sources, not illegal activities", and they had done so.

This is instead, to its tangled roots, a tale of how football blew the greatest financial boom in its history, and where some of its grand old clubs have had to go to find the cash to stagger on.


Additional research by Matt Denver

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