Carson Yeung And The Fit And Proper Persons Test

Carson Yeung And The Fit And Proper Persons Test

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In June Birmingham City’s president and largest shareholder Carson Yeung was charged with money laundering. At the time the club’s chairman Peter Pannu commented, “Understandably the fans are worried about this. But this has got nothing to do with the club and there is no impact on the operations over here. I’ve spoken on a couple of occasions to Carson and his lawyers and they’ve assured me there is no link whatsoever.” Even when Yeung was recently refused entry back into the UK the club still remained adamant that it would not effect their goings on.

Such a stance from Peter Pannu is simply naive and untrue. Birmingham have arguably gone into free-fall since the allegations were made. Shares for Birmingham’s parent club Birmingham International have been suspended and the club is reportedly riddled with debt, at least £29 million. Having been relegated Birmingham have already missed out on the £40 million per year Premier League clubs receive in TV revenue which is only compensated by £12 million a year in parachute payments. 

In the summer transfer window Birmingham off-loaded all of their best players, centre-back pairing Scott Dann and Roger Johnson moved to Blackburn and Wolves respectively, Cameron Jerome left for Stoke, goalkeeper Ben Foster moved to West Bromwich Albion, Barry Ferguson to Blackpool, Craig Gardner and Sebastian Larsson moved to Sunderland, all of whom were first team players for Birmingham last season. All of the players Birmingham brought in were on frees except for minimal fees paid for Pablo Ibanez and Wade Elliot.

The ownership of Yeung despite the intial promise, as he claimed he’d invest £40 million in new players back in 2009, has brought about serious problems for the club who could face going the same way as Portsmouth have if Yeung doesn’t shake off the allegations. Yeung has also apparently used the . What this effectively means is that if Yeung defaults on these loans, which he may well do after his arrest, that HSBC could repossess Birmingham City’s property including their stadium.

What this does do is raise serious questions about the ‘Fit and Proper Person Test’ that the Premier League use to deem who should be able to purchase clubs. Such rules that have allowed a man wanted on money laundering and who has put the club in such serious amounts of debt must surely be questioned.

 What Is The Fit And Proper Persons Test?

The ‘fit and proper persons’ test is as stated a way of deeming whether a potential chairman or owner of a club is suitable. The scheme was started in 2004 to safeguard clubs from suspect characters (note this was after Roman Abramovich acquired Chelsea) and in essence to try and protect the long term future of clubs.

The rules stated that , and anyone who owns more than 10% of a club must be declared. The rules are about preventing anyone  ‘with unspent criminal convictions relating to acts of dishonesty’ or someone who has taken a football club in to administration twice from taking charge of a club.

In 2009 in the context of rising club debt and a clear lack of transparency in the Premier League the league looked to review the rules. The new rules meant that clubs would have to sell players or assets if they failed an on going audit by the Premier League. However again placing transfer embargoes on clubs such as Portsmouth failed to adaquetely solve anything. The 2009 review was again ineffective and failed to prevent Yeung taking over despite question marks over the long term viability of his plans.

The Impact Of The Rules So Far

Its fair to say that the rules have been wholly ineffective so far. The rules which has put the club into reportedly £750 million of debt something that has led to widespread outcry from United fans 

A look at United’s local neighbours Manchester City makes this even more clear. InShinawatra was able to purchase the club with basically no opposition from the Premier League despite being under investigation for corruption in Thailand.  Later charged with the offence he sold the club in 2008. This is a man who was described by Human Rights Watch as ‘a human-rights abuser of the worst kind.’ Human Rights Watch actually attempted to challenge the Premier League over their allowing Shinawatra to take over as a result of such human rights abuses as  The Premier League requested information from the Foreign Office but reportedly did not follow this up and thus let Shinawatra take over.

The Future For Birmingham City

With regards to Birmingham City things don’t look so good. Carson Yeung as stated was banned from entering the UK. The parent company that owns Birmingham City and is subsequently owned by Yeung is in a bad financial state and is , with their share prices dropping 99.5%. The loans that Yeung is seeking would effectively reduce his share stake significantly as he will no doubt now be looking to leave the club amid calls from the Hong Kong attorney general to freeze Yeung’s assets. 

With the mass exodus from Birmingham that took place during the summer window the signs are definitely not good for Birmingham City on the pitch either. They are currently struggling for form in the Championship sitting in 12th ahead of their game against Southampton tomorrow. Promotion is by no means a write-off at this early stage in the season but with the exodus in mind as well as pressures off the pitch it will certainly be difficult. For Birmingham the faster the situation with Yeung is resolved the better.

The nature of Yeung’s arrest and financial dealings with the club as stated raise serious questions about who the Premier League is letting take over clubs. After the debacle at Portsmouth with Alexandre Gaydemak who himself was a dubious character, reportedly involved in Eastern European arms dealing, the Premier League clearly have not learnt their lesson. Despite being reviewed in 2009 the rules are still nowhere near acceptable to prevent clubs such as Birmingham City being bought by men with questionable motives and questionable finances.  The Premier League have made some positive steps however as they have now hired an international law firm to preside over the tests. It still remains to be seen whether this will make any difference but the idea behind it is that international lawyers are better placed to judge who can take charge of clubs.