Sunday, 5 September 2010

Croydon Athletic

As a former Croydonian, the furore surrounding Mazhar Majeed and his association with Croydon Athletic, a club I have visited many times, is of particular interest.

A good run in the past couple of years, the result of a 'surprisingly talented squad', is perhaps now explained, and probably also at an end.

In the Financial Action Task Force's report from July 2009, the funding of a non professional football club as a means of money laundering was highlighted as an example (albeit from France), and there appear to be similarities with the situation at Croydon, where the club has gone from being £46,000 in the black in 2006, to £382,000 in the red a little over a year ago.

Investments in football clubs can be used to integrate money of illegal origin into the financial system, akin to investment of proceeds crime in real estate. Football clubs are indeed seen by criminals as the perfect vehicles for money laundering.

Following the receipt of a STR made by an accountant, a European FIU investigated a case regarding the funding of an amateur football club. It appeared that the accounts of the club were regularly in deficit and were balanced at the end of the season by exceptional payments from a businessman through a number of his companies. This businessman was the president of the club; however, his investments appeared suspicious for the following reasons:

(1) the funding was provided without any negotiated compensation, neither financial nor sportive,

(2) the funding was provided through the companies of the businessman to their prejudice: the
amounts invested in the football club were extremely disproportionate to the companies' financial possibilities.

Further investigation by the FIU revealed that the accounting information of some of the companies had not been correctly registered as required by the law. So it was not possible to verify the exact financial capacities of those companies. Finally the financial analysis revealed gaps between the accounting documents showing the breakout of the various payments for funding the club and financial flows observed on the bank accounts of the various companies of the businessman, the president of the club.

By excessive withdrawal of funds from the treasury of its companies without economic justification and in a way which compromises the financial balance of those companies, the businessman was misusing company assets, which is a criminal offence. The funds derived from this offence are illegal and their use to fund the football club constituted a ML [Money
Laundering] offence. The case was transmitted to the public prosecutor on the basis of a presumption of misuse of company assets and laundering of proceeds from the misuse of company assets.

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