Football chairman banned in £4.6m bridging scandal

Football chairman banned in £4.6m bridging scandal




The former Chairman of Watford FC has been banned from holding a position of authority within a football club for three years, after.

The former Chairman of Watford FC has been banned from holding a position of authority within a football club for three years, after a series of allegations relating to loan acquisitions.

Laurence Bassini, who left the club in 2011, was found to have breached Football League regulations which governed the use of parachute payments as a form of loan security.

Watford FC has also been ruled to have breached key Football League regulations, as a result of Bassini’s actions, and has been instated with a transfer embargo from the Football Disciplinary Committee (FDC).

The businessman is also facing a lawsuit with the former chairman and vice-chairman for failing to meet the obligations of a bridging loan he acquired in order to buy his 30 per cent share in the club.

Last week, a Judge ruled that Bassini is to pay back approximately £1 million of the £4.6 million he borrowed from Vince and Jimmy Russo, to buy their share of the club.

The Russo brothers, who own Valley Grown Salads, sold their 29.96 per cent stake in Watford FC after falling out with majority shareholder, Lord Michael Ashcroft.

Bassini, a keen property developer, created a parent holding company - Watford FC Limited, in order to purchase the stake in the club; he subsequently took out a series of bridging loans from the brothers in return for their shares in the club.

When the payments were made to Bassini, the three loans of £1 million (February 2011), £135,000 (May 2011) and £959,500 (February 2012), were paid directly into the account of Watford FC Limited.

When Bassini took over the company, he was immediately faced with adverse cash flow and a problematic financial future for the club.

As a result, in 2011 Bassini and his associate, Angelo Barrea, approached a sports financing consultancy company, ‘Good for Sport’, which advised him to use a financing scheme called ‘forward funding’ to restore prosperity to the Championship side.

Forward funding, which was permitted at the time, is a term used to describe loans that are secured against other loans and player sales or secured from future Football League pool payments.

Bassini, who has been bankrupted before, proceeded with the scheme and entered into a contract with a financing company, LNOC Limited, using parachute payments from the league and future player sales as loan security.

In 2011/12 the Football League introduced regulations on clubs using pool payments as loan security and subsequently deemed Bassini’s actions to be misconduct, as it was never contacted for approval of the contract, nor was LNOC a recognised financial institution.

The regulation states that entering into loan agreements for payments from the League’s Pool Account should result in a transfer embargo until the money is repaid.

Bassini, in his defence, has claimed only 50 per cent of the blame as he maintains that the Russo brothers own the other half of his shares and have acted in a secret arrangement to covertly own the club. 

The former owner confirmed the Russos did send three separate letters demanding immediate repayment of the loans and interest they claimed was owed on May 15, 2012 but stated the money had not been paid because he insisted it was not a loan.

After last Thursday’s trial, at which Bassini was ruled to have broken the obligations of a financial contract, the Judge ruled that just over £1 million of the loans must be paid back to Valley Grown Salads, with the other £3.5 million to be disputed at a later court date.
 

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