Watford face fine and points loss over forged HSBC bank letter
Published 25/10/2016 | 09:15
Watford are under investigation after supplying falsified financial information to the football authorities.
The Premier League club face a heavy fine, and possibly a points deduction, for submitting what was a forged banking letter when Gino Pozzo became their sole owner.
The faked filing, provided as proof that Pozzo had enough funds to bankroll Watford, allowed the Italian to take full control of the Hertfordshire club.
Fabricated to appear as though it was written by HSBC, one of the world’s largest banks, the letter was submitted to the Football League (now EFL) shortly before the club’s 2014-15 promotion-winning campaign.
An EFL spokesman said: “We can confirm, following receipt of information from The Daily Telegraph, that we immediately commenced a disciplinary investigation into serious allegations made against Watford Football Club.
“The club has been formally contacted by the EFL and is now required to provide a full and detailed response to the allegations. Once that response is received, it will be fully considered by the EFL and appropriate action will be taken under our rules and regulations.”
According to the EFL’s rules from 2014, under which Watford’s case will be judged, its sanctions range from warnings to expulsions from competitions.
There is no known precedent in professional English football for the offence, although Chesterfield were docked nine points in 2001 for financial irregularities, including falsifying gate receipts and giving a player two contracts.
Only two Premier League clubs have ever been docked points, with Middlesbrough losing three in 1996-97 for the unauthorised postponement of a fixture and Portsmouth nine in 2009-10 for going into administration. Both were subsequently relegated.
Watford, who have made their best-ever start to a Premier League season after taking 12 points from their opening nine games, have refused to deny filing the falsified letter, although it is understood club officials insist they would have done so unwittingly.
An internal inquiry is being conducted – and an independent legal firm has been recruited to examine documents – ahead of a deadline of next week for Watford to respond to the EFL. A club spokesman said: “There are two ongoing investigations. It would be inappropriate to comment further until those investigations reach completion.”
It is understood Watford’s probe has not uncovered any other financial irregularities, although the EFL is certain to check its own records to ensure nothing else was amiss with the club’s filings.
There is nothing to indicate Pozzo himself had any knowledge that a forged HSBC letter had been obtained or submitted on his behalf, despite it allowing him to succeed his father, Giampaolo, as the club’s ultimate beneficial owner in the summer of 2014.
The fabricated document states that the holding company which owns Watford, Hornets Investment Limited, had sufficient financial resources with the bank for it to issue “a cash-backed unsecured bank guarantee up to the amount of £7 million” during the 2014-15 season.
The letter is headed HSBC ‘Premier’, an arm of the bank that does not even deal with corporate customers, while a source says that Hornets Investment has never been a customer of HSBC.
The faked document, was secured by Watford’s executive chairman, Raffaele Riva, who is also a leading executive of Hornets Investment.
In a statement in which he made clear he in no way sought a falsified letter, Riva said: “In 2014, there was a restructuring of the shareholding of the ultimate parent company of Watford Football Club.
“The full ownership of the club was transferred to Gino Pozzo and, to comply with EFL restrictions, it was necessary to provide certain documentation to ratify this change in the shareholding.
“I compiled some of the documents required by the EFL which related to Hornets Investment Limited, which is the holding company, including a letter of support from a bank as a proof of funds for the EFL. To facilitate this I asked a third party, X, to assist. I trusted X to do so because, at that time, we worked together on other projects. I have not worked with X since the end of 2015.
“No other individual at Watford FC was in any way involved in obtaining the letter. The letter was submitted to the EFL via Watford FC along with the other documents.
“For two years, I had no reason to believe the letter was anything but genuine. Indeed, since the letter was submitted to the EFL, Hornets Investment Limited have put into the club over three times the amount specified in the proof of funds letter. It has come as a huge shock to be notified there are doubts over the veracity of the letter.”
Information indicates that the third party responsible for obtaining the letter admits to doing so but had no intention of it being used in any formal filing.
Watford would not comment on precisely who else at the club saw the document before it was submitted, and accepted by the Football League, amid serious questions about exactly what checks took place to validate it.
The Telegraph can also reveal that, before the fake HSBC letter was filed, the club submitted a two-year-old document from Credit Suisse – with which Hornets Investment did bank – that was rejected by the Football League as proof of funds because it was out of date.
Gino Pozzo was aware of the knockback, as was Watford chief executive Scott Duxbury – found in 2007 to have “misled” the Premier League during the Carlos Tevez affair while at West Ham United – although there is no indication either knew the matter was resolved with a forged document.
Pozzo could now be required to demonstrate he did have sufficient funds in 2014 to satisfy the League’s change of ownership criteria, something he is understood to be confident of doing.
Watford are also preparing to publish accounts showing the Italian subsequently invested £21 million in the club between 2014-16. However, this may not be enough to avoid some kind of sanction.