Ken Bates Loses The Closest Thing He Ever Had To 'Honour'
By Mark, From http://twohundredpercent.net/?p=23862
It would be delicious if Kenneth William Bates' career in football were to
come crashing to an ignominious end because of a business deal double-cross.
The prospect of one final day in court awaits Bates, if he is true to his
word and sues Leeds United's owners, Dubai-based 'investment firm' Gulf
Finance House Capital (GFHC) - a subsidiary of the Bahrainian-based Gulf
Finance House (GFH) - for wrongful dismissal. And being a stubborn pain in
the arse is one of those rare contexts in which Bates usually is true to his
word. This is one reason why the temptation to write Bates' football
obituary right here is being resisted (in truth, its already half-written,
in anticipation of that magical day - a draft article to which I return for
cheer when necessary). After all, 200% asked whether had we entered the last
days of Ken Bates' empire ten months ago. It is also true that GFHC have
little more going for them, superficially, than not being Bates. And if
Bates wanted an institution to pay him millions for his Leeds shareholding,
only for them to have to return it because of failure to honour agreements
with him, then GFHC were ideal candidates.
However, immediately after his sacking as Leeds' honorary president (the
closest "Bates" will ever get to "honour"), Bates was so 'flustered' that he
spoke to Guardian and Observer journalist David Conn, who became persona non
grata at Leeds' Elland Road ground for daring to ask pertinent questions
about the club's ownership. And in the Observer and an 'emotional' interview
on TALKSPORT radio station, both last weekend, Bates let slip a few of the
truths which underpinned his entire tenures at Chelsea and Leeds. Four
months ago, Private Eye magazine, a frequent, cynical visitor to Bates'
business history, noted that on December 21 2011, Leeds "issued 32
preference shares to Lutonville Holdings, an offshore company linked to
Bates." These cost GBP3,092,894 but were "redeemable", according to club
accounts for 2011/12, "upon a change of control" of parent company, Leeds
City Holdings (LCH). They were "redeemed" when GFHC took control of LCH,
exactly a year later - after very protracted takeover negotiations (shares
experts can surely confirm that this timing was pure co-incidence). Their
GBP4m price "netted Bates GBP1m tax-free profit," noted the Eye, clearly
believing Bates' "link" to Lutonville to be direct.
Bates, as per usual, denied any such direct link when Conn presented further
details of its club-based revenue streams. The accounts noted that
Lutonville was "a related-party" to the club "by virtue of its connection to
Outro," the tax-haven vehicle Bates used to "finally" buy a 72.85% stake in
Leeds in May 2011. But Lutonville received a tidy six-figure sum while
awaiting their share redemption, including a bizarre-seeming GBP100,000
"set-up fee" for the share deal, and GBP40,000 quarterly "monitoring fees,"
the details of which were "not in front of" Bates when Conn asked about it -
though Bates should surely have known what Lutonville were "monitoring"
without having to look it up. Lutonville also loaned United GBP1m in March,
which Bates said he "arranged," even though, as Conn noted without missing a
beat, Lutonville is "not his company." Bates claimed this money should have
been, but wasn't, repaid in June. So, Bates "is planning to sue for
it".though Lutonville is not his company.
Conn's article told of a club with considerable financial 'challenges,'
which made the central issue to Bates' sacking more galling still. Bates'
explanation for his private jet extravagance "whenever he needed" was that
Leeds had always funded it. So that's alright, then. Other expenses Leeds
had 'always' funded, including GBP60,000 annual "office expenses in Monaco,"
which Bates could surely have covered either by working from home (I'm
guessing the rooms would be big enough) or from the taxes he avoided by
living in Monaco in the first place. Intriguingly, Conn also reported that
Leeds paid well-known solicitors to the damned, Carter Ruck, "GBP1.26m
between 2010 and 31 May 2012," adding that "it is unclear what they relate
to." It was surely money wiser spent than anything Carter Ruck received for
their contribution to a subsequent legal spat between Bates and Gary Cooper,
chairman of Leeds United's Supporters Trust (LUST).
In April, broadcasting watchdog Ofcom upheld Cooper's complaint of "unfair
and unjust treatment and unwarranted infringement of privacy" by Bates in
two interviews Bates gave to Yorkshire Radio (majority shareholder: K Bates)
in February 2012. The case added to Bates' gallery of thorough legal defeats
which revealed his unsavoury character. Bates broadcast details of Cooper's
personal ticket purchasing history, which purported to show Cooper as a rare
attendee at Leeds matches and therefore not authorised to speak for "the
ordinary Leeds United fan." The publication of Ofcom's findings - entirely
Cooper's favour - revealed that Carter Ruck joined proceedings part-way
through and made various representations on behalf of Yorkshire Radio, none
of which "materially affected the outcome of the complaint." You have to
wonder what proportion of the GBP1.26m was similarly spunked up the legal
wall.
If Bates released cats from bags in the Observer, he was more revealing
still in an interview with Talksport's Neil Ashton, which served up some
juicy quotes for Monday's local and national papers but was even more of a
car-crash in audio. There were flashes of trademark Bates; particularly his
considered analysis of GFHC's thinking behind his sacking ("somebody's got a
screw loose somewhere"). But otherwise it was tired, tiresome
self-justification. And when Ashton said "thanks, Ken", as Bates stumbled
over "one last thing", it was in the manner of ending an unsolicited
conversation with a stranger on a night bus. Aspects of his allegedly grubby
treatment by GFHC were dictionary definitions of "the biter bit"; "there's a
degree of viciousness in this quite clearly," he declared, with the
authority of personal experience.
Bates said GFHC "revealed some of the details of my contract," which "I
suppose gives me freedom to do likewise." But his claim that "the Guardian
revealed .all the confidential information they've been receiving came from
GFH" didn't correspond with the Observer's description (it being a Sunday)
of "sources who have seen the club accounts" - which were no more
confidential than the information Bates broadcast when "unwarrantedly
infringing" Gary Cooper's privacy. Bates whinged about GFHC's communication
("not one person from GFH rang me," he half-cried, like a jilted teenage
schoolgirl). He dismissed their concerns over Leeds' finances ("they knew
exactly what they were taking on, it took them seven months to do due
diligence"). He laid into GFHC's own finances ("they claimed to have lots of
money but when the chips are down, 'have they'?" he asked, suggesting his
own due diligence had taken closer to seven minutes).
His self-justification occasionally bordered incomprehensible. The club
spending half-a-million quid over three years so that he could be in Leeds
without paying UK taxes, "is cheaper than the existing deal. and is in
sterling, which protects against currency fluctuations because all gas is
bought in dollars." And if Leeds' current finances are wobbly, as Conn's
Observer piece suggested, then that is because GFH have apparently been
running the show since last summer. "All major decisions," Bates claimed,
"were approved by a man called Saleem Patel," who has been a public face of
the takeover as GFH's "chief investment officer." Yet Bates has supposedly
controlled clubs for anonymous, off-shore owners for years. So for him to
allow Patel to make "every major decision" a year after 'finally' becoming
majority owner seems unlikely.
But with the Observer suggesting Leeds needed "a cash injection since the
takeover of between GBP13m and GBP15m," Bates was probably keen to let
someone else appear in control, especially true if it took focus from the
expensive construction work on Elland Road's East Stand. This has been
funded by borrowing against future ticket and catering income. And financial
alarm bells rang even louder when it was revealed that Bates mortgaged
future season-ticket income through 'Ticketus' - the agency involved in
Rangers' financial collapse. So it was trademark hypocrisy for Bates to call
his sacking "a diversionary tactic" because GFHC "haven't been doing very
well recently, running the club." Bates apparently raised concerns with a
senior GFH executive in February. But while the executive said "we must
discuss them urgently", he didn't respond further. "I rang him five times
over three days," added Bates, back in jilted-teenager mode.
Asked about his Leeds "legacy" Bates waxed lyrical about Elland Road's
transformation from "crumbling ruin" to "ready for the Premiership" (sic)
via "GBP20m over eight years," then admitted that "all fans really care
about is what happens on the pitch," as Bates' fiercest critics have
consistently insisted. Then this: Leeds being "twenty-four hours from
liquidation" when he became chairman "wasn't the fault of the people I
bought it from," - the long-awaited admission that he himself bought Leeds
in 2005, not some off-shore investors who sought anonymity and riches in
football's high-profile financial loony bin. The weekend's interviews
revealed that Bates' football future won't be as short as hoped when news
broke of his sacking, and that much of it will be within the confines of due
legal process. But that's the beauty of it all, as Leeds' tangled financial
web is open to all sorts of legal interpretation. Bates could be right to
sue.but lose on a loophole.
Bates' recent legal track record is as bad as Arsenal's trophy-winning one.
Yet it has been relatively straightforward for legal people to expose Bates'
inadequacies in most of these cases. And GFH's early months at Leeds suggest
they are quite capable of having loused up Bates' departure. If Bates
doubted Gary Cooper's credentials as a fans' representative, he could have
had hours of fun with those of lawyer David Haigh. A former Conservative
Party activist whose sole foray into council elections resulted in a
personal vote little higher than "him and his mates," Haigh emerged as
GFHC's Deputy CEO and the takeover's public face alongside Patel. Both
strenuously deny that GFHC's takeover initially involved a wealthy
individual who withdrew financial support early this year, despite Bates,
without challenge, publicly referencing "a very rich individual, very close
to the government of Bahrain" as among GFHC's backers, before the takeover.
And GFHC's 'investment strategy' earned those, and more, inverted commas in
March when GFH's 2012 accounts stated that they were "holding the club for
sale, which they envisage completing within six months to a year." 'Within'
one day, GFH 'clarified' that "GFHC is looking for investment in part of.the
club, not its entirety," without clarifying how the club was divided for
such purposes.
But Bates too must know that he's on uncertain ground. He "checked, very
interestingly, with the solicitor who wrote me the letter" (presumably his
'dismissal' letter) that he had authority to "commit" Leeds to his private
jets, despite telling Neil Ashton that GFHC "drew up the contract, I only
signed it." Meanwhile, GFH's accounts said the "bargain purchase" of Leeds,
for $33m (c. GBP22m), "was due to pressure on the sellers to exit their
holdings due to changes in their business plans." So Bates, 72.85% owner of
this "bargain purchase," stood to gain GBP16m (and reportedly more if Leeds
reach the Premier League's TV-money-based riches). This would be tax-free
(Bates is a capital gains tax-exile in too) and reminiscent of his pay-off
from Roman Abramovich after the oligarch bought Chelsea in 2003. Bates also
hung around after that takeover, not relinquishing the almost-redundant
chairman's role until March 2004. Then, though, Bates left willingly to
spend more time with his money. Now, he seems ready for court, with "a
fully-chronicled dossier" of agreements with GFHC, "which, of course, will
be produced in good time." Last week, I tweeted that "Bates claims his
sacking is "unfair & ridiculous" treatment? Good. A strong taste of his own
medicine. Hope he's a victim of the.treatment he's gloried in dishing out to
others down the years. Hope he sues and loses." Nothing in a weekend of
wearied, emotive bluster from Kenneth William Bates has changed that view.
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