Who's The Real Owner of Leeds United? - David Conn

And more extensive David Conn/The Guardian

Riddle of Leeds' ownership remains shrouded in mysteryWho exactly owns the Elland Road club is still wrapped in secrecy after four years of Ken Bates' chairmanship

The ownership of Leeds United has been routed via a network of offshore companies ever since Ken Bates arrived at Elland Road as the club's new chairman in 2005, and now mystery surrounds it again.

Bates told the Royal Court of Jersey in January this year that he himself jointly owned the club's holding company, the Cayman Islands-registered Forward Sports Fund, with his long-term financial advisor, the Guernsey accountant Patrick Murrin. It has since emerged that in May Bates swore an affidavit in the same court, stating that it had been "not correct" and "an error on my part" to say he was the joint owner of his club.

Contrary to what he and his solicitor Mark Taylor, also a Leeds director, had told the court in January, there are in fact 10,000 shares in Forward, and Bates does not own any of them. Forward's administrators, based in Geneva, have refused to say who the owners of those shares are.

The ownership of Leeds, then – the Yorkshire club finally on the rise in League One after years of financial horror – is unknown. That begs a serious question over whether the club's current owners have ever been passed as "fit and proper" people according to Football League regulations, and therefore whether the takeover of the club by Bates has actually been ratified.

Bates first became the chairman of Leeds, which was in grim financial meltdown, in January 2005. He emerged as the chairman again in 2007, after he and his fellow directors, Taylor and the chief executive, Shaun Harvey, had slashed the club's debts by placing it in administration owing creditors £35m. Forward Sports Fund, which originally bought the club in 2005, also bought it from the administrators, ultimately paying 17p in the pound to those owed the millions.

The ownership of Leeds has been illuminated gradually in the Jersey court, where Leeds are suing a company, Admatch, which Bates claims owes Leeds money. Admatch is counter-suing, arguing that it was owed considerably more when another Leeds United company was put into liquidation. Admatch's owner, Robert Weston, who is personally representing his company against Bates' lawyers, has made it an issue in court to seek the identity of the club's ultimate owners, and he has won a series of judicial orders forcing Bates to declare who they are.

In January, Leeds' Jersey lawyers told the court that Bates and Murrin, who has worked closely with Bates for 30 years, owned one "management share" each in Forward. Taylor subsequently told the Guardian that there were no other shares in Forward and that meant Bates and Murrin were the fund's, and therefore the club's, joint owners.

Neither Leeds nor the League would divulge this week the names which the club has submitted as the club's owners to be passed as "fit and proper", according to the League's requirements. It would, though, be logical to assume that Bates and Murrin were presented as the joint owners.

It has since emerged that on 6 May, Bates swore an affidavit following another Jersey court order for him to disclose Forward Sports Fund's "ultimate beneficial ownership". In that sworn statement, Bates said he had approached Murrin in January 2005 "to enquire whether investors, represented by him, would consider backing me by making an investment in Leeds United".

Bates suggested to Murrin that an investment vehicle be formed and: "Patrick Murrin arranged for the incorporation of FSF, a fund incorporated in the Cayman Islands."

Bates, in his statement, said he left the financing of Forward to Taylor, who negotiated with Murrin for Forward to lend Leeds £4.4m.

"As far as I was aware there were two management shares issued in Forward," Bates swore in his affidavit. "One was issued to Patrick Murrin, and the other to a Mr Peter Boatman, a representative of a Geneva based fiduciaire [trust administrators], representing the interests of the investor group. This information has only just come to light and the information contained in our advocate's [lawyers'] letter, dated 5 December 2008, which stated that I had the other of the management shares in Forward, was not correct and was an error on my part."

Bates went on to say that although he manages "the direction of Forward on a day-to-day basis … the ultimate decisions rest with the participating shareholders".

His affidavit concluded: "Neither I, Mark Taylor or Shaun Harvey are able to confirm who the ultimate beneficial owners of Forward are."

Attached to the affidavit was a letter from Taylor, dated 27 April, to Château Fiduciaire, Forward's Geneva-based administrators, in which Taylor said the Leeds directors believed Forward had two management shares, owned by Bates and Murrin, and there were no other shares in the company.

Château Fiduciaire replied nine days later, saying there were two management shares, issued to Murrin and Boatman, and neither carried voting or ownership rights. "Ten thousand participating shares are also in issue," the letter said. "Understandably, it is not the policy of this company, a fully regulated Swiss fiduciaire, to release information on ultimate ownership without an appropriate court order, valid in Switzerland."

The revelation by Bates that he made "an error" when he said he jointly owned Forward, and the Château Fiduciaire letter, means the ownership of Leeds, still one of English football's potential giants, is undeclared. The Yorkshire club apparently belongs to the holders of 10,000 shares in a company registered in the Cayman Islands, administered in Geneva by trustees who refuse to reveal the owners' identity.

That represents grounds for the Football League to investigate, according to the Liberal Democrat MP, Phil Willis, who has consistently campaigned for greater transparency in the ownership of Leeds and clarity in the way the 2007 administration was handled.

"Leeds United is a fantastic football club whose loyal and dedicated supporters have stuck by it through thick and thin," Willis said yesterday. "They have a right to know who owns their club and that those people are fit and proper. The Football League must revisit this case to ensure that its rules, that owners must be passed as fit and proper, have been met."

Neither Bates nor Taylor responded to questions from the Guardian about how the error was made over the Leeds ownership, and who the club has submitted to the league as its owners.

In another court action this summer, the former Leeds director Melvyn Levi's libel claim against Bates in London, Bates confirmed that he has never put any of his own money into Leeds United. Levi won that case, which Bates is now seeking leave to appeal.

The Premier League asks its clubs to publish all owners of 10% or more of their shares, but the Football League does not make ownership details public, claiming it is unable to do so due to the Data Protection Act. The revelation that Leeds United's owners are unknown, and offshore, comes as the League board prepares to decide whether to pass as fit and proper Notts County's takeover – by a group of investors, not yet fully identified, in a fund administered from Switzerland.

ASTOR QUESTION

The mystery over Leeds United's owners raises a question, too, over the most controversial aspect of the club's 2007 insolvency. Bates, as the chairman, and Forward Sports Fund were supported in buying the club back from the administrators by another offshore company, Astor Investment Holdings. Astor was prepared to write off £18m it was owed, as long as Bates and Forward remained in charge, an offer not made to any other bidders, and so crucial to Bates retaining control.

The administrators said then they were satisfied there was no connection between Astor and Forward, or Bates, which would have required a separate vote, without Astor, to be taken. Mark Taylor clarified then that there had previously been an ownership connection, but it had been severed when Astor sold Forward to Bates and Patrick Murrin.

Now it has been revealed that Forward never was sold to Bates nor Murrin. Asked how, in fact, the connection between Astor and Forward was severed, Taylor did not respond.

www.guardian.co.uk/sport/david-conn-inside-sport-blog/2009/sep/30/leeds-united-ken-bates-jersey