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Last updated: March 24, 2014 3:07 pm
The ability of the football authorities to prevent a club takeover is being tested to the limit as the owners of Leeds United pursue a sale to an Italian investor’s company despite the Football League blocking his appointment as an owner or director because of a fraud conviction.
The league ruled that Massimo Cellino failed its “owners and directors” test after being convicted in a Sardinian court of tax evasion.
However, the championship club said it would “continue discussions” with Eleonora Sports, Mr Cellino’s company, in the biggest test yet of football authorities’ willingness to enforce ownership rules.
It is the first time the League has disqualified a prospective owner since the test was established in 2003 to prevent clubs being mismanaged. The legal soundness of the test will be challenged if Mr Cellino pursues the league through the courts. He has 14 days to appeal to the League first.
Mr Cellino had agreed to buy a 75 per cent stake in the championship club from GFH Capital, a private equity fund based in Bahrain, for £25m through Eleonora, in which other members of his family have a stake.
The Miami-based agricultural entrepreneur was found guilty of failing to pay import duty on the purchase of a yacht and fined €600,000.
Mr Cellino, who owns Serie A club Cagliari, also has previous convictions from 1996 and 2001. His lawyers maintained that the former was overturned on appeal and the latter was “spent”, meaning that under the league’s ownership rules it was too long ago to disqualify him.
His lawyers argued that because he was appealing against the latest judgment it was not a conviction, but the League’s lawyers disagreed.
Mr Cellino has lent GFH money to run the club, believed to be about £6m, and the latest uncertainty could raise the possibility of the club entering administration.
However, Leeds said: “Our shareholders continue to support the club directly or through additional investments as has always been the case. We would like to reassure the fans of the continuity of our great club.”
GFH has accused rival bidders of undermining the sales process.
A domestic consortium is waiting in the wings, although GFH has broken off talks with them. It includes Andrew Flowers, managing director of Enterprise Insurance, the club’s shirt sponsor; Adam Pearson, former Hull City chairman; and Mike Farnan, ex-Sunderland marketing director. People familiar with the bid said they had amassed £50m.
The League published a four-page document setting out its reasons for disqualifying Mr Cellino.
The document said: “Mr Cellino was recently found guilty beyond reasonable doubt by a court in Sardinia of an offence under Italian tax legislation relating to the non-payment of import duties on a boat. This resulted in a fine of €600,000, an order for the payment of trial costs and the confiscation of the boat in question.
“Having fully considered the matter, the board agreed unanimously that the decision of the Italian court does constitute a disqualifying condition under its owners’ and directors’ test.
“The relevant disqualifying condition being that Massimo Cellino has been convicted of an offence involving acts that would reasonably be considered to be dishonest.”
Additional reporting by Roger Blitz
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