Millwall football club is facing the prospect of leaving their long term home in London’s docklands. Another victim of London’s land war.
The deal stinks, and as usual the stench emanates from opaque offshore finance. The fight for the Den should be a warning to all fans of all clubs, as to why tax haven financial secrecy must be eliminated.
The Dockers from the Den
Millwall football club lies on the border between Deptford and Bermondsey. Years ago this was the centre of London’s global maritime economy. Today the docks are no longer the thriving hive of activity they once were. London’s role in the global economy is increasingly, it seems, to build luxury housing to sell to anonymous international elites.
In former maritime heartlands on the banks of the Thames, the South Bank, the Isle of Dogs and Wapping, new neighbourhoods of high cost, shiny towers of glass and steel sprout out of the ground. The term used by local government when promoting such schemes is ‘regeneration’, a term loaded with the promise that local communities will stand to benefit. In reality these communities often find themselves excluded: priced out and forced out. And there is no greater symbol of this than what is happening to Millwall.
Lewisham council has put forward plans for a comprehensive redevelopment of a large piece of land they call New Bermondsey. Part of the project includes land owned by Millwall Football Club, including their youth club and carpark.
To ensure the redevelopment proceeds, Lewisham is seeking to use their powers of compulsory purchase. That is where the council can force landowners to sell their land to them. Compulsory purchase is a long and complicated process often taking several years to complete.
Although Lewisham claim that they want to make the area into a sports hub, and have recruited some high profile sportspeople to a charity they have founded to promote the scheme, Millwall say that if the compulsory purchase goes ahead they may be forced to move.
Millwall deny opposing regeneration. In fact, they say that they have volunteered to take forward the part of the scheme that is on their land, in a way which will allow them to stay. But Lewisham insist that the only way this scheme can be delivered is if all the land is in the hands of just a single owner - and they are seeking to use their powers of compulsory purchase to make that happen.
The council has also selected that single owner: a ‘development partner’ called Renewal, to whom they will transfer the land after compulsory purchase. In order to assist Renewal in delivering this vital service of getting Lewisham council to force landowners to sell their land to them, the Greater London Authority is providing the company with a £20m loan.
Who are Renewal?
Given the power being given to Renewal, and the apparently favourable treatment, it was inevitable that questions would be asked. What special expertise do they bring, that makes them worthy, and indeed crucial?
The first thing to note is that Renewal are not a property developer. They have no track record in taking on a major redevelopment project such as New Bermondsey and are indeed not even planning on building anything at New Bermondsey themselves.
Instead, as is set out in Lewisham council’s Compulsory Purchase Order documentation, once Renewal gets control of the land, they will be selling parcels of it onto other housebuilders, who will then go on and build. The sales will be in phases as the development progresses.
Renewal may keep a stake in the development. Or they may not; the CPO documents are openly non-committal on this point.
The conclusions to be drawn from the Lewisham CPO documents are mind bending. The only real value which Renewal is contributing to the project is the potential to act as a single land owner, which the council says is crucial to take the project forward. However, although Renewal have been buying up land in the area for ten years, it is the council which is creating that single land owner through compulsory purchase - and then handing the profit to Renewal.
This would be a questionable transaction, regardless of the parties involved. But the background and financial structure of Renewal raise some very serious questions for Lewisham.
The founding directors of Renewal are individuals with long associations with Lewisham Council. One, Mushtaq Malik is a former Chief Executive of Lewisham Council, the other, David Sullivan, is the former Mayor of Lewisham council. Clearly both are likely to have long standing relationships with people who still work at the council.
The potential conflicts of interest that exist around this deal are so blindingly obvious that any reasonable public authority would have to insist on full transparency over all aspects the deal if there is to be any trust that they are acting in the public interest.
But that is not what is happening here. Instead no one, not even Lewisham council themselves can really know for sure who they are dealing with, and who is benefiting from the deal, because Renewal are owned by a series of offshore entities, including a trust in the British Virgin Islands.
In 2013 Lewisham commissioned auditors PwC to conduct financial due diligence on the Renewal Group. They found that:
“Renewal Group Limited (registered in the Isle of Man) is a 100% subsidiary of Renewal Holdings Limited (also registered in the Isle of Man) which in turn is owned on a 50/50 basis by Incorporated Holdings Ltd (IHL) (registered in the Isle of Man) and Independent Advisors Incorporated (IAI) (registered in the British Virgin Isles).”
Renewal confirmed to PwC that IAI is ultimately controlled by a family trust and that IHL is ultimately controlled by a charitable trust. But all the information was unaudited, which mean it had not been independently verified. Lewisham and PwC simply had to take Renewal’s word for it.
The threat posed by financial secrecy
People often assume that offshore is just about tax. It isn’t. Offshore holdings provide not only low tax rates, but high levels of financial secrecy. Many offshore companies (including the UK’s own limited liability partnerships) allow their owners to hide their identity, and to hide any payments they are making to third parties. As the Panama Papers laid bare, that secrecy, and the resulting potential for corruption and criminality, can be as powerful a motive as tax for many people setting up offshore holdings.
This is not just about hiding from public scrutiny either. Financial secrecy is a nightmare for professional financial investigators and the police who also find it difficult to find out what is really going on with an anonymous company. Anti-corruption campaigners and the Tax Justice Network have campaigned for years to end anonymous companies, calling for all companies to be subject to rules which compel them to disclose publicly who owns them.
Let’s be blunt. If Lewisham was a developing world government, outside observers would not hesitate to highlight the conflicts of interest and the potential for corruption. The same people would be calling for a thorough investigation of Renewal and Lewisham.
We have no reason to suspect that Renewal are engaged in any unlawful behaviour, and nothing in this article should be taken as a suggestion they are. But regardless of the actual motivation and ownership in Renewal’s deal with Lewisham council, that deal is fundamentally flawed, and should be rejected.
Fighting fraud and corruption is not just about catching villains in the act. It is also about ending the opportunities for secrecy that allow financial crime to flourish. Just as the football authorities should ban anonymous ownership of clubs and their debts, all companies should be required to provide rigorous transparency to the public.
As Millwall fans like to sing, ‘no one likes us, we don’t care’. Fans of other clubs may feel that this is none of their concern - but given how many old clubs have their grounds in now-valuable real estate, the risks go much wider than Millwall.
And as we have pointed out many times before, opaque financial structures pose a threat to the ongoing survival of many to football clubs themselves. Just ask fans of Bolton and Rangers. Football fans should join campaigners and tax justice advocates to demand an end to the secret, offshore economy.
Photo: The Den, by Matt Churchill from Flickr under the Creative Commons License