Inside Newcastle's agent scam

The same VAT and Duties tribunal that took English Newcastle United to task for its transfer dealings also found that some top agents made false statements to the FA when registering transfers.

The Guardian named the agents, listed as First Artist, run by brothers Jon and Paul Smith; Paul Stretford's Proactive agency; SFX, which represents Alan Shearer; Jonathan Barnett's agency Stellar, which acts for Kieron Dyer and Titus Bramble, and Key Sports, which represents Shola Ameobi.

On the official G2 and H1 forms, clubs are required to lodge with the FA to register new signings or new contracts, Newcastle and the agents stated that the agents had acted solely for the club when in fact they were the players' agents.

The club did this to avoid being seen by the FA to have flouted one of football's main rules governing agents' conduct – that agents are allowed to act for only one party in a deal.

The rules were established by FIFA to avoid conflicts of interest.

The tribunal stated that agents were, "…in breach of [FIFA] regulations, having failed to adhere to [the agents'] Code of Professional Conduct, by behaving untruthfully."

It ruled that 21 of 24 player deals were carried out in the same way. The club approached the player's agent and asked him to have the player to sign for a given financial deal. The agent was paid based on how close he came to the club's target figure.

The player, signed up to be represented exclusively by his agent, did not know that the agent had come to such an arrangement privately with the club.

Newcastle felt the agents were acting for both the club and the player, even though this was a rules violation. The FA, made aware of what was happening, felt Newcastle and the agents made false declarations on the official forms to the FA, in claiming that the agents had acted solely for the club, and not for the player.

The tribunal used one 2001 example, concealing the players' identities in a certain transaction. The agents were named.

In that transfer, Newcastle paid GBP 35,250 to First Artist, for "acting for and on behalf of" the club.

The G2 form, to register the transfer with the FA, signed by the club and the agent, stated that Jon Smith, of First Artist, had acted for Newcastle in the deal, there was no mention of acting on the player's behalf.

Newcastle made a "Declaration" stating that First Artist had acted as the club's agent and was being paid under a written agreement, another FIFA requirement.

Following new contract negotiations for the same player, Newcastle paid First Artist an additional GBP 32,250. Another Form G2 was lodged with the FA, stating that Phil Smith had acted this time, again solely for Newcastle.

A declaration was made to the FA, identifying First Artist as the club's agent under a written agreement, which again the tribunal, like the first time, found to be "non-existent."

In trying to reclaim VAT on fees to the agents, Newcastle undid itself. The club argued that the agents were acting directly for both the club and the players, and wanted to reclaim the VAT on the fees paid to the agents.

Russell Cushing, Newcastle's chief operating officer, argued that the rules are usually ignored and "do not reflect the global business we are now operating in."

The tax authorities undertook an investigation into how the deals were done, as they have at several other clubs.

They wrote to First Artist asking about the player transfer, in which all the official forms had stated that the agents acted for the club.

On April 18 2006, First Artist replied to the authorities: "Please note First Artist Corporation were acting on behalf of the player."

There were many other deals done in the same manner that the tribunal found to have been riddled with falsified statements on FA documentation. Included are six deals by Stellar, the negotiation of a new player's contract by Key Sports and the signing of two players represented by Proactive, for which the agency was paid GBP 200,000 and GBP 300,000.

SFX, one of the game's most high-profile agencies, acted in three transfers. In two, the tribunal found the forms were falsely completed to state that SFX acted for the club alone, not the players, who were the agency's clients.

In the third the declaration lodged with the FA said Newcastle had agreed to pay Tony Stephens, a senior SFX agent, GBP 160,000 "in accordance with the written agreement" between him and the club.

The tribunal found there was no such written agreement.

No agencies contacted would comment to the Guardian except Jon Smith of First Artist.

Smith would not talk directly about this case, but said that generally First Artist tries to abide by football's rules.

"However, the rules do not always work," Smith said. "Very often we do act for the player and the club quite legitimately, yet the rules say we can't and they are unworkable."

Cushing admitted in his evidence that the forms lodged with the FA were "technically incorrect", and that the club did this to avoid the FA seeing that its rules were being broken.

Newcastle's argument is that the regulations against agents acting for both sides, and the official paperwork, do not reflect the reality that agents do act for player and club simultaneously in this way.

The club insisted that in all these deals they had "engaged the services of the agents" and the forms to the FA were filled in "accordingly."

The club said it intends to appeal the tribunal's decision. Newcastle's £550,000 VAT payments cannot be reclaimed.

The FA is responsible for upholding football's regulations, yet the governing body is still reluctant to comment because of Newcastle's pending appeal.

"We will wait until the matter is concluded before looking into any possible breach of the rules," an FA spokesman said.

Source: euFootball.BIZ © Copyright 2006 - All rights reserved.