Wednesday, 29 April 2009
BG - The case against.
The following article has been submitted. The Blog Administrator wishes to make clear that the site does not validate anything in this article. In the interest of balance following the article in support of BG, this submission has been carried.
The negative responses to the recent article praising BG shows what most of us long suffering fans think of our Chairman. BG is lucky to have the persona of a gentleman billionaire that has merely been unfortunate in the credit crunch but, I found an article in 1st November 2002 Euromoney Magazine, under the heading “Questions Over Landsbanki's New Owner” that changed my mind about him. It says that BG has a criminal record and has been bankrupting companies by his mis-management since the mid-80s. His business life has been littered with numerous lost law suits and disasters of one kind or another simply because he is a bad businessman and should not be allowed near any company IMO. I have never met BG so it is not personal. I am merely a fan that wants the best for our club!
BG first came to international attention when he was found to have misled the shareholders and bankers of Hafskip, an Icelandic shipping line he was MD of in the mid-80s. Euromoney says that he twice issued false accounts to reassure shareholders and banks that Hafskip was operating profitably. Hafskip went bust a few months later in December 1985. The bankruptcy forced an Icelandic bank to be closed which sounds all too familiar today but this was in 1985! BG was arrested and remanded in custody for 28 days in 1986 so he is actually an ex-jailbird!
He was eventually found guilty of “embezzlement of company bank accounts,” to have “violated articles of the Companies Act” and also violated “The General Penal Code over several counts of embezzlement, two of which involved fraud.” He got a 12month prison sentence suspended for two years. This is a classic, early demonstration of BG's cavalier attitude to business matters.
After the disaster of Hafskip, BG and his son Thor, turned up in the new capitalist Russia, with it's reputation for corruption and largely unregulated commercial activity. They got involved in building up a bottling plant, which they sold to Pepsico. Euromoney say “They developed a flair for working their way around the viper's nest of customs, regulatory and tax authorities.” I wonder what that means? Then they invested in a brewery in St Petersburg and Moscow, Bravo International, which they built up with two partners, one English and the other an Icelander, eventually selling to Heineken for $400m in 1995! Of more relevance to us is the fact that their two partners claimed in law suits, that BG and Thor had forged their signatures on documents to cheat them out of their full share of the $400m sale. BG and Thor finally lost in an Icelandic court on 6 December 1999!
After the sale to Heineken, BG and Thor then invested in a long established Icelandic pharmaceuticals company, Pharmaco (now renamed Actavis); Straumur Burdaras, an investment bank run by Thor that eventually went under just last month, and Landsbanki which the Icelandic Government sold off in 2002. The business community were surprised and a lot of serious questions were raised about whether the Iceland government were right to sell their bank to a convicted criminal with a dubious past but Iceland is a small community of 320,000 people not the UK! Landsbanki went bust just 6 years later under BG! One of the most incredible disasters that I still don't fully understand, came when BG gave guaranties for our sponsors XL.com to help them secure a £163m loan from another bank just a couple of days before XL called in the receivers! That episode clearly helped finish off Landsbanki as they were re-nationalised days after that debacle!
Most of us first heard about BG when he bought West Ham using Eggert Magnusson as his front man presumably because of his own 'colourful' past. I was one of the many fans that thought our bubbles would at last, no longer fade and die! Terrence Brown was no longer in charge and we gained a billionaire that was going to invest big time in Eggy's much heralded business plan for a new 60,000 seat stadium and Champions League football within 5 years. It sounded unbelievable and that's exactly how it turned out - unbelievable!
The first disasters happened on the playing side and it soon became clear that the business plan was behind schedule. Eggy sacked Pardew and appointed Curbishley to complete indifference amongst fans. Curbs was not a bad manager, just that Champions League and Curbishley, don't quite go together somehow. A lot of non-Champions League players were bought for £40m and we all know that we got out of the relegation zone at Old Trafford, on the final day of the season with mainly the existing players. It seems that Eggy had been given no limits to his spending authority which is most unusual. BG should have imposed tighter controls but the kind of expertise he has, was honed in Iceland and Russia, not the UK.
Eggy then hit the exit door fairly soon afterwards and he has since issued a high court action against us. Zola replaced Curbs after he walked out over the Ljungberg settlement and Anton and McCartney transfers. Curbs claimed they were all done behind his back in spite of him having a contract giving him the final say on all transfers. He has sued us for constructive dismissal. BG showed incredible insensitivity and if he wanted Curbs out, he should have done the decent thing and paid him off but that isn't his way it seems. Zola has certainly been a saving grace for the club and his sparkle and drive always cheers me up but was he an inspired choice or just a cheaper alternative to Curbs? We'll never know but it is about the only thing that has worked out OK.
During BG's two year ownership we have been found guilty of lying to the Premiership about the existence of an illegal side agreement with Kia Joorabchian. The lies got WHUFC fined £3m and breaking the rule itself, just £2.5m! Had we told the truth and pleaded mitigating circumstances – eg previous owner's fault just the way Alan Sugar did when he took over Tottenham, it would have cost £2.5m. We would have sorted out the Tevez contract properly and there would not have been a Tevezgate scandal that has cost us incredible amounts of money and ruined the club's reputation. We have now had 3 managers when in the previous 107 years we got by with only 9! The five year £1m pa contract Terry Brown negotiated for himself as part of the sale to BG, was canceled, presumably in an attempt to make him the scapegoat for the Tevez affair. We now know that the club lied though, because a copy of the side agreement was printed in the News of the World exposé a few months ago. BG must have approved Duxbury's lies to the Premiership or he would surely have gone through the exit door as well. Brown added himself to the list of people suing us and BG settled out of court because he was wrong and knew Brown was not going to let it go. I have little sympathy for Brown who made millions out of our club but it was just another example of BG's shady dealings that litter his entire business history.
Even Kia Joorabchian sued us for non payment of a £7m contract secretively arranged to keep Tevez playing apparently! Kia's settlement is that he is now our transfer consultant for as long and as much as it costs for BG to keep him quiet. It's a shame BG never thought to employ Kia's lawyer as well so that he could not give his damning evidence to the FA hearing! Verbal cuddles Duxbury called it and the fact that he hasn't been sacked or shafted like Brown, Eggy, Kia and Curbs, suggests Duxbury has been operating under BG's direction since he took over. Tevez has now reputedly cost us around £26m spread across the next 5 years plus millions in legal fees and it could have been even worse! It could have put us into administration.
The May 2008 accounts have been delayed from being filed for 6 months beyond the deadline allowed for PLCs! Normally you cannot do that but BG used a little known rule to twice change our year end date by a few days each time so that we were given the extra time to sort out the accounts. We have the weird situation that our financial year will now end on the 24th May! The reason? Our auditors would not sign off our accounts or in layman's terms, they would not confirm that BG's version of our accounts were an accurate reflection of the year's trading!
I believe that the auditors insisted on putting in a large provisional sum for Sheffield United's compensation. Our auditors have a world-wide reputation to protect and clearly the size of provisional sum they demanded for the compensation payment would have pushed us into filing insolvent accounts and that would put us into administration. Those 6 months of delay gave BG time to settle with Sheffield United and even better, spread it over 5 years to minimize the impact in any one year. We can now belatedly file the 2008 accounts with an accurate provisional sum that should allow the accounts to remain solvent. For that reason, I have a feeling that our club actually may not have done anything wrong to deserve having to pay the compensation but, the auditors demands forced us to settle with Sheffield United or go bust! That's unfortunate but a direct result of BG having no credibility left with auditors and bankers. We will only find out if I am right, if the final hearing decides we did nothing wrong and it gets publicly announced.
All BG's companies, except Actavis, are now busted. Even Actavis has troubles and in 2008 lost an American law suit for patent infringements and have been forced to withdraw a particular brand of tablet from all outlets across the USA due to contravening the Food and Drug Administration's regulations! Sound familiar? As I said law suits seem to follow them around. They put Actavis up for sale this year for €8 billion but the highest bids did not clear the €4+billion in bank loans they owe! Imagine the interest and capital payments on €4+billion in loans every year? Then add in the costs of a product recall and losing a big legal battle in America. A cost of close to €750m I imagine. Ouch!
The banks that lent BG money for buying West Ham, have already threatened to take our club over once the Icelandic version of chapter 11 protection on Hansa's bankruptcy ends in June. I cannot see the banks going through the trouble to take us over for any other reason than they want to protect their interests by keeping the loans on their books as assets rather than being in default as they are currently. I hope I am wrong but if the banks do take us over, then expect them to try to load the £100m they are owed, directly onto our club instead of BG's bankrupt holding company. According to the Mail on Sunday a week ago, our club's borrowings have increased to £50m under BG so that means we would carry a total debt for around £150m! Thanks BG.
Whatever kind of spin anyone puts on it, BG has not been good for our club. His ownership of many companies shows a history of broken contracts, failed litigations, bad decisions, dodgy settlements and bankrupted companies. I don't think anything has really changed since Terence Brown's days as our Chairman, except we are now actually worse off financially; our good name has been dragged through the mud; we get sued all the time; have up to £10m a year to pay out in fines and settlements for the next few years and we could still end up getting lumbered with debts of up to £150m. We are still a selling club with survival as our main ambition despite Duxbury's Project and there is only one man that can take the wrap for all this – the man at the top.
Let's all cross our fingers that we find a new owner very soon. I don't believe any real West Ham fan wants an Abramovich or a wealthy Arabian trillionaire throwing money around like they do at Chelsea and Man City. We just want someone that gives us some stability and Zola and Nani a fighting chance in the transfer market. Maybe some future investment into developing the East Stand and the new training ground? Not much really is it?
Is there anyone out there with £200m to invest in a very good cause?
Posted by Hammersfan at 22:52