Off the pitch and off the books: professional football’s money laundering problem

Carson Yeung: convicted of money laundering. David Jones/PA Wire

You may or may not have heard of Carson Yeung. He is Asia’s answer to Vidal Sassoon – a businessman who made his name and riches presiding over a hairdressing empire in Hong Kong. He is also owner of Birmingham City FC and currently appealing a six-year jail sentence for money laundering.

It may be that behind the glossy consumer-friendly sheen of the football fan zone and the armchair ride of end-to-end action there exists the sporting equivalent of the dark web: an underbelly of nefarious characters using the beautiful game to advance their ugly interests. This alongside a global game that has seen its share of organised crime using football clubs to launder profits garnered from criminal or corrupt activities.

From Colombia …

The collusion between professional football and organised crime is hardly a startling revelation. The outer reaches of the global game have long been tainted by match fixing, aided and abetted by crime organised betting syndicates – operation VETO between 2011 and 2013 revealed global match fixing on an industrial scale across 15 countries and partly orchestrated by crime syndicates. Perhaps most famous is the rise of narco-soccer in Colombia, predating the tragic assassination of Andrés Escobar, a defender with the national team, in 1994.

The own goal that precipitated Andrés Escobar’s murder in 1994.

Of course, being a business activity where the money revenues come in various forms, football has become a ready-made laundry service for Colombia’s narco gangs. Take the ruthless office of the Envigado cartel known as La Oficina. It conducted something of a corporate takeover of Pablo Escobar’s trafficking operation and has used Colombia’s top-flight football division, Primera A, to aid its cash flow and cash cleansing activities.

Last year the US Treasury Department revealed Envigado FC as one of 14 institutions used by La Oficina to launder profits from its crime operations – mainly narcotics but also the outsourcing of crime-related services such as extortion, debt collection and bespoke assassinations.

… to Europe

But the alliance between professional football and organised crime is not exclusive to cartel country. Player transfer systems and cross-border financing makes football a global sport and European leagues and clubs have also come under scrutiny for their links to money laundering.

Most prominent in this respect was a mainly European-focused investigation in 2009 conducted by the Financial Action Task Force (FATF), the inter-governmental organisation that polices global finance for money laundering and terrorist financing. European football clubs, according to the FATF report, are vulnerable to criminal penetration.

The football journalist David Conn, author of the excellent investigation into English football Richer than God, welcomed the report at the time but also saw it as a lost opportunity. While citing actual cases raised by the authorities in 22 countries – including the English FA – no names were named, no interventions made.

It was a smoking gun, with no bullets or targets. The two English cases both involved tax evasion rather than any major laundering-style infiltration by organised crime. Does that mean English football, its television paymasters, vested interests and various hangers on can sleep easy?

Fit and proper

Recent news reports would by inference suggest otherwise. There is no evidence or suggestion, whatsoever, that top-flight Premier League clubs are acting as washing machines. However, two recent cases – one in the courts and the other a public inquiry – have mentioned the term laundering in conjunction with the names of some notable figures at the business end of things in the English game.

First there is the case of Hong Kong businessman Carson Yeung. Yeung purchased a controlling stake in Birmingham City in 2007. Back then, he was deemed to have passed the football league’s “fit and proper persons” test for club ownership. The test is meant to prohibit people from becoming directors or owners of a substantial stake in clubs if they have “unspent convictions for offences of dishonesty”.

But when Yeung was convicted, the Hong Kong judge deemed that he had used £2.8m of laundered money to purchase Birmingham City shares in 2007.

Litvinenko’s investigation

There is also the inquiry into the assassination of Alexander Litvinenko, the fugitive Russian special agent and organised crime expert who at the time of his death was investigating the alleged laundering activities of high-profile Russians in Spain, Britain’s high court recently heard. Specifically, he was investigating claims in relation to the oligarch and owner of Chelsea FC Roman Abramovich.

Roman Abramovich has been investigated for money laundering. Rebecca Naden/PA Archive

Of course there is no suggestion that his purchase of Chelsea FC was tied to laundering – that was likely driven by image laundering for Abramovich more than anything else. But it raises all sorts of interesting counter-factual questions about what Litvinenko may have found about the alleged oligarch laundering trail, had he lived. In fact, Abramovich was under investigation by French officials back in 2005 for laundering activities, but was never charged.

Down the rabbit hole

Who knows how far money laundering reaches down into the rabbit hole that is the opaque finances of professional football, especially in the most lucrative European leagues? This is a matter of conjecture punctuated by occasional news stories highlighting the problem. The latest report involves Giampietro Manenti, president of the top flight Italian club Parma and recently arrested for embezzlement and money laundering.

Under arrest: Parma FC’s president, Giampietro Manenti. EPA/Elisabetta Baracchi

If Manenti is convicted it may suggest that the problem involves more than just a few bad apples. A closer look at the finances and business structure of the sport suggests otherwise; that the barrel or even the orchard may be rotten. The commercial success and corporatisation of the game means there are vast cash flows that make professional football a useful destination for hiding criminal money.

Broken business model

But it is not only the vast riches that football has generated in recent decades, making the sport vulnerable to nefarious practices. The business models and competitive environment of modern football mean that clubs are eager to attract investment. The sport operates in a zero-sum style market where the winner does not just take home trophies but vast sums of money.

As a result, according to the 2009 Financial Action Task Force report, “many football clubs are financially in bad shape and their financial trouble could urge football clubs to accept funds from dubious parties”. In this respect, the English Premier League’s finances look like a petri dish for attracting laundered funds: in 2012-2013 Premier League clubs made losses of £291m, despite a record £2.7 billion income, with £1.8 billion on wages. It could be that a new season of Breaking Bad is unnecessary – all we have to do is watch Match of the Day.