Following the revelations uncovered by The Telegraph newspaper relating to the apparent wide-spread corruption in the player transfer market in English football, The Football Association, the Premier League and the English Football League have issued a joint statement vowing that, should they find any "evidence of criminality" they will "inform and seek the support of the appropriate statutory authorities."
In this article, Thomas Webb and Chris Davies from our fraud and white collar crime team, explore the potential criminal offences committed by managers, agents and connected parties.
Alleged illicit payments
The allegations reported in The Telegraph are that eight current and former Premier League managers have received bribes from agents in exchange for player transfers. According to the newspaper, the alleged illicit payments are a mere sample of “widespread evidence of corruption” in football.
The illicit payments made to managers appear to fall into two main categories. The first category relates to player transfers. The second category relates to player salary increases. These categories are discussed below in relation to the potential criminal offences that may have been committed.
In the first category, the agents caught on camera by The Telegraph allege that eight current and recent Premier League managers and two Championship managers accepted illicit payments in connection with securing the transfer of players away from the club at which the manager was employed. This category of allegations can itself be split into two scenarios.
- Scenario 1: In the first scenario, the Manager would agree with the Agent that a fee would be paid into an offshore bank account which was in the name of the Manager as an incentive to secure the transfer of the player. The use of offshore accounts is presumably in order to keep the ultimate beneficiary of the payment anonymous.
- Scenario 2: The second scenario involves the use of an ostensibly independent individual or entity who would be a third party "consultant". In fact, the consultant would be a trusted acquaintance of the Manager. The Manager would refer the Agent representing the player to the consultant who would raise a fraudulent invoice for the fee relating to the transfer of the player. This fee would include the illicit payment that, through the consultant, would find its way to the Manager. In both scenarios, the illicit payment is paid by the agent to the Manager as the ultimate beneficiary.
Player salary increase
The second category of illicit payments relates to a “you scratch my back and I‘ll scratch yours” understanding between the Manager and the Player. The Manager would promise to the player a pay rise in exchange for the player paying a ‘kick-back’ to him. The Manager would then use his influential position with the Club and its owners to secure an increase in the player’s pay and, in return, the Player would pay an illicit payment to him in the form of a percentage 'kick-back'.
There are various criminal offences that could be committed by those involved in paying or receiving the illicit payments referred to above. The main offences are summarised below:
Bribery Act 2010
Section 1 – Offering or providing bribes
Section 1 of the Bribery Act makes it an offence to offer or provide bribes to another person. It defines the “act of bribery” as that of offering or providing an advantage to another person, where the advantage is intended to induce a person to perform a function or activity “improperly” or reward them for that improper performance. It is also an offence to offer an advantage where the offeror knows that its acceptance would itself constitute improper performance.
“Functions” and “activities” include any public function, and any business or employment activity, whether within or outside the UK. “Impropriety" does not mean mere incompetence or negligence but means acting in breach of obligations of impartiality, good faith or trust. The improper performance of a function is evaluated according to the view of a “reasonable person in the United Kingdom”. If the function is performed abroad, the local customs and practices of bribery are to be disregarded, unless enshrined in the law of that country.
Section 2 – Receiving bribes
Section 2 of the Bribery Act also makes it an offence to request or accept an advantage with the intention that a function or activity will be performed improperly as a consequence, or to accept the advantage as a reward for improper performance. An offence will also be committed where the request or acceptance itself constitutes improper performance.
In relation to this offence, there is no requirement that the recipient of the bribe knows that the connected performance is improper.
Section 7 – Failure of a commercial organisation to prevent bribery
A “commercial organisation” can also be found liable where it fails to prevent bribery in situations where a person “associated” with it provides bribes with the intention of obtaining or retaining business, or an advantage in the conduct of business, for the organisation. “Commercial organisation” is broadly defined and includes any corporate or partnership carrying on all or part of its business in the UK.
It will be a defence for the organisation to prove that it had “adequate procedures” in place to prevent the bribery. The Ministry of Justice has produced guidance which sets out six key principles to be considered when establishing “adequate procedures”. These are: Proportionality, Top Level Commitment, Risk Assessment, Due Diligence, Communication and Training and Monitoring and Review.
Fraud Act 2006
Section 1 provides that a person can be guilty of fraud in three ways. If he dishonestly:
- makes a false representation (section 2)
- fails to disclose information which he or she is under a duty to disclose (section 3)
- abuses a position of financial trust or responsibility (section 4)
and intends on making a gain for himself or anyone else, or inflicting a loss (or a risk of loss) on another.
The penalties applicable to the offences under the Bribery Act and Fraud Act are potentially severe: being a maximum of 10 years imprisonment and unlimited fines.
Application of the offences to illicit payments in football
Under both categories of illicit payments, the Manager would be receiving a bribe and would be guilty under Section 2 of the Bribery Act. The acceptance of the financial advantage, in the form of illicit payments, would itself constitute the improper performance of his managerial duties. Note that, impropriety is judged on the basis of the reasonable person's expectations and not that of the Manager’s. Therefore, it is irrelevant if the Manager believes that the way he performed his functions was appropriate or consistent with the way the transfer market operates. Also, the fact that the acceptance of the advantage can be made directly or via a third party, means that the use of the third party "consultant" as an intermediary in Scenario 2, does not alleviate the Manager's liability.
In addition to the bribery offences, the Manager may be guilty of a fraud offence under section 4 of the Fraud Act. As an employee of the Club, he would be expected not to act against its financial interests. He would dishonestly abuse that position of responsibility by receiving an illicit payment (from the Agent in the ‘player transfers’ scenario and the Club in the 'player pay-rise' scenario), intending to make a gain for himself.
Agent and the “associated” commercial organisation
The Agent would be paying a bribe to the Manager. He would therefore be liable under Section 1 of the Bribery Act for providing a financial advantage to the Manager, inducing or rewarding the Manager for the improper performance of his functions.
If the Agent is “associated” with a “commercial organisation” i.e. a corporate or partnership with operations in the UK then, under Section 7 of the Bribery Act, this entity is at risk of being held strictly liable for bribery committed by the Agent (its "associated person). It would be for the commercial organisation to demonstrate that it had in place “adequate procedures” designed to prevent agents from providing bribes. Query how many commercial organisations in the structure referred to above could satisfy this test.
Third party consultant
The third party consultant would be at risk of committing fraud offences under Sections 2 and 4 of the Fraud Act. Under Section 4, he would dishonestly abuse his position as a supposedly "independent" third party consultant with the intention that he makes a gain for the Manager. Under Section 2 he would be making a false representation i.e. that he is independent and is not acquainted or related to the Manager for the purposes of receiving the fee from the Agent and then passing it on to the Manager.
Bribery and criminal activities should have nothing to do with the “beautiful game”. Regulators, Associations, Leagues, football clubs and participants should be doing, and should be seen to be doing, everything within their power to safeguard the integrity of the sport. Whilst most clubs, particularly in the Premier League, may already have some form of anti-bribery procedures in place, it would be sensible to review and revise them now, especially in light of the recent bribery allegations concerning football managers. It remains to be seen whether the Serious Fraud Office will take an active interest in these latest allegations as the head of the SFO, David Green, indicated in relation to the FIFA scandal last year. Certainly, the successful prosecution of a Premier League manager would appear to be a high profile "scalp" for the anti-bribery lobby.
Should clubs have suspicions of impropriety having taken place, they should seek advice and undertake internal investigations bearing in mind legal privilege and employment law issues.