Cellino and Leeds United in Troubled Waters

The Football League finally got their man. But is it too late? Will Massimo Cellino and Leeds United yet sail off into the clear blue sea?

On 1 December 2014 in a reasoned decision, the Football League Board announced that Massimo Cellino, Leeds United Chairman, is disqualified from being a director of Leeds United and from exercising control over the Club (http://www.football-league.co.uk/documents/oadt-decision-cellino549-2116187.pdf).

This is the second time that the Football League has made such a decision. On the first occasion, in late March this year, the League had been seeking to block Cellino’s attempted takeover of Leeds. But Cellino successfully appealed.

In the light of the contents of yesterday’s decision, Cellino will consider himself fortunate to have succeeded the first time around, having got off on what most people would regard as a technicality.

The League probably feels rather sore about it but will have learnt the lessons in terms of the need to ensure it has a completely robust legal case form the outset. The impressive reasoned decision made on Monday suggests that such lessons have been digested.

The saga is a good-old yacht scandal.

In March an Italian court in Cagliari, Italy, declared Mr Cellino to be guilty beyond reasonable doubt of the crime of evasion of tax in importing one of his luxury yachts. Under the League Rules:

“Any person who is at any time subject to a Disqualifying Condition shall be disqualified from holding office or acting as a Relevant Person at a Club for such a period as they shall remain subject to a Disqualifying Condition.” (App 3 para 2.1)

In the case of convictions resulting in imprisonment for 12 months or more, the fact of the foreign conviction is sufficient in itself to be a disqualifying condition. But this did not apply to Mr Cellino who was only fined. Instead, the League relied on the rule that states that Disqualifying Condition includes committing an offence involving a “dishonest act”.

Where the League came a cropper first time around was in relying entirely on the unreasoned judgment of the Italian court. This is perhaps understandable given that the offence was of tax evasion. It is difficult to see how that offence could be committed other than dishonestly. But on appeal, Tim Kerr QC did not consider that there was sufficient evidence on this point and overturned the League’s decision.

The League then sought and was provided with reasons from the Italian judge. The reasons made manifest that which was previously implicit. Indeed, once these reasons had been obtained, Mr Cellino did not even seek to contest before the League that the offence was one of dishonesty, thus reinforcing the view that he benefitted form a technicality first time around.

Instead, Mr Cellino, no doubt playing for time, focused almost all of his arguments at points that had been already decided against him, such as that as a matter of Italian law he remained only “accused” whilst the decision was under appeal and that he should benefit from the presumption of innocence. The Football League rightly pointed out that not only were these points decided against Mr Cellino but that the League rules do not import foreign law and clearly apply to an adverse decision by a criminal court even if it is under appeal. He also advanced the ambitious argument that no crime giving rise only to a fine can be considered to be a crime of dishonesty within the meaning of the rules. Again, this argument was given short shrift.

On the face of it, however, the League’s victory will be short-lived. Under the rules, the disqualifying conviction continues only until the date the conviction would be deemed spent under the Rehabilitation of Offenders Act 1974, section 5, which the League calculated to be 12 months after the date of the conviction, namely, 18 March 2015.

Leeds United are also entitled to appeal and could escape the consequences of Mr Cellino being subject to a Disqualified Condition if they can show there are “compelling reasons” why he should not be disqualified. No doubt the administrative and potentially legal implications of Mr Cellino resigining as director for such a short period would figure prominently in any such argument.

Even so, Mr Cellino and Leeds United might be in deeper waters than first appears. The Board stated that an independent disciplinary commission will be appointed to look into whether Mr Cellino and/or Leeds United had committed misconduct by failing to disclose the disqualifying condition. Questions will be asked, for example, about the failure to disclose the condition on the Owners’ and Directors Declaration form which must be completed by each relevant person at a Club.

In addition, media reports indicate that Mr Cellino is the subject of at least one further prosecution for tax evasion relating to another yacht. The trial was adjourned in October.

With these matters on the horizon Cellino and Leeds United remain in very hostile seas.