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http://www.guardian.co.uk/football/david-conn-inside-sport-blog/2009/nov/18/chester-city-fit-proper-person-test
Chester City owner told by FA to surrender his majority shares
Chester City's Stephen Vaughan has become the first major scalp of the fit
and proper person test
Chester City, losing £600,000 per year, are facing expulsion from the
Conference over unpaid debts. Chester City supporters are hoping that a
torrid period for their club can be brought to an end and a new beginning
embarked upon by the requirement that Stephen Vaughan, the owner since 2001,
must reduce his majority stake after admitting a £500,000 "carousel" VAT
fraud and being disqualified as a company director for 11 years.
Vaughan, a Liverpool businessman whose in charge of City, and the
Conference club Barrow before them, was marked by early success then
insolvency and controversy, will become the first majority owner of any
professional football club declared not "a fit and proper" person while
still in charge.
The FA's "fit and proper person test", which applies to Conference clubs,
states that anybody who has been disqualified as a company director cannot
hold 30% or more of a club's shares, and Vaughan will be required to reduce
his shareholding within 21 days of the disqualification order taking effect
on 25 November.
In a statement, the FA said: "We are aware of the Insolvency Service
decision and will be taking necessary steps under the requirements of the
fit and proper person test."
On the face of it, this will bring to an end Vaughan's eight turbulent years
at City, although he is likely to transfer the shares to one of his sons,
according to the club's managing director, Bob Gray. If that happens, the FA
will have to be satisfied that Vaughan senior no longer exercises "direct or
indirect control" over the club's affairs as stipulated by the rules.
Ever since he first bought Barrow, then in the UniBond League, in February
1995 and began to put money in, Vaughan has been one of lower-league
football's more controversial figures. While at Barrow, Vaughan declared
publicly that he had been arrested by HM Revenue and Customs as part of an
investigation into Curtis Warren, the Liverpool drug dealer who had been
sentenced to 12 years' imprisonment in the Netherlands for trafficking
hashish, heroin, cocaine and ecstasy.
Vaughan, then a boxing promoter, wrote to the magazine Boxing News saying:
"The allegations centre on the laundering of millions of pounds of supposed
drug money."
The investigation is understood to have turned to Barrow partly because of
an incident related in Warren's biography, Cocky (Milo Books, £14.99), in
which Warren, before his arrest, was said to have been flown round the
north-west in a helicopter, pointed down to Barrow FC, and said to the
pilot: "I own that."
Vaughan always said that was untrue, "categorically and strenuously" denied
any involvement in money laundering and was never prosecuted for any offence
arising out of the Warren investigation. However, he always remained loyal
to Warren, who was a childhood friend, and publicly acknowledged that he
knew him.
As at Chester, Vaughan put significant money into Barrow in the early years,
and in May 1998 the club won promotion to the Conference. But he then pulled
out financially and in January 1999 Barrow were plunged into a traumatic
liquidation, before they were rescued by a consortium of local businessmen.
Vaughan took over at Chester in October 2001, when City, owned by an
American, Terry Smith, had been relegated out of the Football League for the
first time since their election to the Third Division (North) 70 years
earlier.
Vaughan's investment, which Gray puts in the millions, saw City promoted
back to the Football League in 2004 under the management of Mark Wright, and
comparative good times trickling back, although intrigue was never a
stranger at the Deva Stadium. In November 2007, the fans were asked to
honour a minute's silence for a man, Colin Smith, described as a friend of
Vaughan's and a benefactor to the club. Supporters bewildered about Smith's
identity would soon read he was a major Liverpool cocaine dealer - although
he was never actually convicted of any drug-related offences - who had been
killed the previous month in a shooting widely described and reported as a
gang execution.
Gray, asked about this yesterday, said Smith had been well-known at City and
his son played in the junior section, but he had "never put a penny" into
the club.
"We knew him as a lovely and very friendly man," Gray explained. "We didn't
know what he did outside the football club; that didn't come into it. The
minute's silence was to sympathise with and honour his family."
Vaughan, Gray said, has been: "A very generous owner, probably too
generous," but last season City ran into financial problems, were relegated
and in May collapsed into administration with declared debts of £8m. Of
that, £1.8m was stated by the administrator to be owed to Vaughan
personally, and £2.2m to Vaughan's company, Cestrian Group.
HMRC, owed £983,000 in unpaid tax and VAT, challenged the agreed Company
Voluntary Arrangement (CVA), which had seen Vaughan take charge again. The
tax authority severely disapproves of football's insolvency rules, which
insist that "football creditors" - other clubs and players - must be paid in
full, but other debts can remain unpaid. In July, His Honour Judge Pelling
QC ruled in the high court that the CVA should indeed be cancelled because
of a "material irregularity" in Cestrian Group's £2.2m claim, which he
ordered be reduced to £590,089.
After that, Vaughan bought the club from the administrator again, this time
without a CVA being agreed or its debts paid in full as required by
Conference rules. The Conference imposed a 25-point deduction, 10 for the
club being insolvent, 15 for the failure to agree a CVA, but the FA still
fined the league itself £5,000 for accepting City, a breach of the league's
own rules.
On the field, City have accumulated 21 points which, without the deduction,
would place them in the relatively safe place of 17th in the table, but they
remain rooted to the bottom on -4.
Budgeting to lose more than £600,000 this year with a wage bill including
several players on about £1,000 a week, City have fallen behind with their
payments again, and have been threatened with expulsion from the Conference
if they do not pay money owed to the Professional Footballers' Association,
Wrexham and Vauxhall Motors, by 30 November.
The club is seeking parachute payments from the Football League, which were
withheld because of the administration, but the league board is taking
advice about whether the money should be paid and if it is, whether to the
old club company, which remains in administration, or Vaughan's new company.
"We hope the Football League will pay us," Gray said, "but if they don't,
we'll have to find it."
Mike Poole, 39, a senior civil servant and chair of the campaigning group
City Fans , lamented the club's plight: "Chester City were formed in
1885, it is in our blood and part of the city's fabric like the Roman walls
and cathedral. It is heartbreaking, as if 125 years of effort have come to
this."
Poole said he hoped the current management can pull the club round, but the
fans are raising money in case they have to take it over themselves.
"We want to help preserve professional football in Chester," he insisted.
"The club is too important to lose."
Chester City owner told by FA to surrender his majority shares
Chester City's Stephen Vaughan has become the first major scalp of the fit
and proper person test
Chester City, losing £600,000 per year, are facing expulsion from the
Conference over unpaid debts. Chester City supporters are hoping that a
torrid period for their club can be brought to an end and a new beginning
embarked upon by the requirement that Stephen Vaughan, the owner since 2001,
must reduce his majority stake after admitting a £500,000 "carousel" VAT
fraud and being disqualified as a company director for 11 years.
Vaughan, a Liverpool businessman whose in charge of City, and the
Conference club Barrow before them, was marked by early success then
insolvency and controversy, will become the first majority owner of any
professional football club declared not "a fit and proper" person while
still in charge.
The FA's "fit and proper person test", which applies to Conference clubs,
states that anybody who has been disqualified as a company director cannot
hold 30% or more of a club's shares, and Vaughan will be required to reduce
his shareholding within 21 days of the disqualification order taking effect
on 25 November.
In a statement, the FA said: "We are aware of the Insolvency Service
decision and will be taking necessary steps under the requirements of the
fit and proper person test."
On the face of it, this will bring to an end Vaughan's eight turbulent years
at City, although he is likely to transfer the shares to one of his sons,
according to the club's managing director, Bob Gray. If that happens, the FA
will have to be satisfied that Vaughan senior no longer exercises "direct or
indirect control" over the club's affairs as stipulated by the rules.
Ever since he first bought Barrow, then in the UniBond League, in February
1995 and began to put money in, Vaughan has been one of lower-league
football's more controversial figures. While at Barrow, Vaughan declared
publicly that he had been arrested by HM Revenue and Customs as part of an
investigation into Curtis Warren, the Liverpool drug dealer who had been
sentenced to 12 years' imprisonment in the Netherlands for trafficking
hashish, heroin, cocaine and ecstasy.
Vaughan, then a boxing promoter, wrote to the magazine Boxing News saying:
"The allegations centre on the laundering of millions of pounds of supposed
drug money."
The investigation is understood to have turned to Barrow partly because of
an incident related in Warren's biography, Cocky (Milo Books, £14.99), in
which Warren, before his arrest, was said to have been flown round the
north-west in a helicopter, pointed down to Barrow FC, and said to the
pilot: "I own that."
Vaughan always said that was untrue, "categorically and strenuously" denied
any involvement in money laundering and was never prosecuted for any offence
arising out of the Warren investigation. However, he always remained loyal
to Warren, who was a childhood friend, and publicly acknowledged that he
knew him.
As at Chester, Vaughan put significant money into Barrow in the early years,
and in May 1998 the club won promotion to the Conference. But he then pulled
out financially and in January 1999 Barrow were plunged into a traumatic
liquidation, before they were rescued by a consortium of local businessmen.
Vaughan took over at Chester in October 2001, when City, owned by an
American, Terry Smith, had been relegated out of the Football League for the
first time since their election to the Third Division (North) 70 years
earlier.
Vaughan's investment, which Gray puts in the millions, saw City promoted
back to the Football League in 2004 under the management of Mark Wright, and
comparative good times trickling back, although intrigue was never a
stranger at the Deva Stadium. In November 2007, the fans were asked to
honour a minute's silence for a man, Colin Smith, described as a friend of
Vaughan's and a benefactor to the club. Supporters bewildered about Smith's
identity would soon read he was a major Liverpool cocaine dealer - although
he was never actually convicted of any drug-related offences - who had been
killed the previous month in a shooting widely described and reported as a
gang execution.
Gray, asked about this yesterday, said Smith had been well-known at City and
his son played in the junior section, but he had "never put a penny" into
the club.
"We knew him as a lovely and very friendly man," Gray explained. "We didn't
know what he did outside the football club; that didn't come into it. The
minute's silence was to sympathise with and honour his family."
Vaughan, Gray said, has been: "A very generous owner, probably too
generous," but last season City ran into financial problems, were relegated
and in May collapsed into administration with declared debts of £8m. Of
that, £1.8m was stated by the administrator to be owed to Vaughan
personally, and £2.2m to Vaughan's company, Cestrian Group.
HMRC, owed £983,000 in unpaid tax and VAT, challenged the agreed Company
Voluntary Arrangement (CVA), which had seen Vaughan take charge again. The
tax authority severely disapproves of football's insolvency rules, which
insist that "football creditors" - other clubs and players - must be paid in
full, but other debts can remain unpaid. In July, His Honour Judge Pelling
QC ruled in the high court that the CVA should indeed be cancelled because
of a "material irregularity" in Cestrian Group's £2.2m claim, which he
ordered be reduced to £590,089.
After that, Vaughan bought the club from the administrator again, this time
without a CVA being agreed or its debts paid in full as required by
Conference rules. The Conference imposed a 25-point deduction, 10 for the
club being insolvent, 15 for the failure to agree a CVA, but the FA still
fined the league itself £5,000 for accepting City, a breach of the league's
own rules.
On the field, City have accumulated 21 points which, without the deduction,
would place them in the relatively safe place of 17th in the table, but they
remain rooted to the bottom on -4.
Budgeting to lose more than £600,000 this year with a wage bill including
several players on about £1,000 a week, City have fallen behind with their
payments again, and have been threatened with expulsion from the Conference
if they do not pay money owed to the Professional Footballers' Association,
Wrexham and Vauxhall Motors, by 30 November.
The club is seeking parachute payments from the Football League, which were
withheld because of the administration, but the league board is taking
advice about whether the money should be paid and if it is, whether to the
old club company, which remains in administration, or Vaughan's new company.
"We hope the Football League will pay us," Gray said, "but if they don't,
we'll have to find it."
Mike Poole, 39, a senior civil servant and chair of the campaigning group
City Fans , lamented the club's plight: "Chester City were formed in
1885, it is in our blood and part of the city's fabric like the Roman walls
and cathedral. It is heartbreaking, as if 125 years of effort have come to
this."
Poole said he hoped the current management can pull the club round, but the
fans are raising money in case they have to take it over themselves.
"We want to help preserve professional football in Chester," he insisted.
"The club is too important to lose."
Last edited by Rickd on Sat Dec 05, 2009 5:25 am; edited 2 times in total (Reason for editing : change to the title following Leeds decision)
