If today’s news about tax investigations and arrests for fraud seem a little familiar, it’s because the owners of West Ham United have been through this sort of thing before. In 2009, while Sullivan and Gold were owners at Birmingham City, HMRC and the City of London police arrested both Karren Brady and David Gold as part of an investigation into corruption that was known as Operation Apprentice.
Other prominent names that were involved in the 2009 investigation were ex-West Ham manager Harry Redknapp, ex-Portsmouth and Leicester City owner Milan Mandaric, agent Willie McKay, and player Amdy Faye. The focus into Birmingham City apparently centered around two players signed by the club, Aliou Cisse and Ferdinand Coly, whose deals were brokered by McKay, and the payments that were received surrounding the transfer.
It is important to note that no charges were filed in the previous case against Brady and Sullivan, and that Operation Apprentice basically ended up being a lot of smoke without a lot of fire. Barely any charges actually stuck, and HMRC ended up taking over the investigation from the police. Redknapp was acquitted in 2012 of tax evasion, and the police investigation seemed to be overzealous prosecution looking to make a name for itself by going after high-profile men (and in Brady’s case, women) in football.
I'm told around 50 HMRC officers raided West Ham's offices at the London Olympic stadium at 8am today. Club has had to hand over documents— Dan Roan (@danroan) April 26, 2017
The early morning raids at West Ham and Newcastle seem to be related to the falling revenue at HMRC from “high-net worth” individuals since 2009, despite the number of overall tax revenues growing. The issue of using “image rights” as a tax dodge was specifically highlighted by MPs in January of this year, and it is believed that the current investigation is related to the use of image rights as a way to avoid taxes by footballers, agents, and clubs.
West Ham is no stranger to financial shenanigans. The infamous Carlos Tevez and Javier Mascherano transfer dealings are perhaps the most famous of them, but a more recent example is the loan of Jonathan Calleri from Third-Party ownership front Deportivo Maldonaldo, a club in Uruguay who is connected to the agent at the center of the Tevez and Mascherano debacle, Kia Joorabchian.
Newcastle's managing director Lee Charnley arrested, club offices raided on suspicion of tax fraud but no statement or word from the club.— Richard Conway (@richard_conway) April 26, 2017
All of this smoke may end up without a fire, and while Newcastle’s sporting director, Lee Charnley was arrested, it appears no one from West Ham was arrested at this time. The club has stated that they are cooperating fully with the HMRC investigation. It is, however, concerning that the ownership at West Ham is yet again in the crosshairs of HMRC and the police, even if nothing comes of this investigation. The links to questionable transfers have dogged the club for years, and the club was still paying off Sheffield United from the judgement against them in 2012, a full 3 years after they settled with the Yorkshire club in 2009. Any judgement or penalty, while not necessarily hurting the club points wise, would be a blow to the finances and reputation of the club.