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Questions remain on EFL governance
6/29/2017

We noted at the beginning of May that we would detail in writing to the EFL, our concerns around whether and how the EFL had exercised its own rules in respect of Leyton Orient.

Those concerns were sent in detail later in May. The EFL has committed to respond once they have given full consideration to the various matters raised.

We have advised the EFL that we are publishing the text of our email to them, so that Leyton Orient fans can be assured that we will continue to press for answers on the governance of Leyton Orient.

Separately, the EFL has stated it will consult during 2017/18 around updating the much-maligned Owners and Directors Test. Although Leyton Orient is (for the time being) no longer an EFL club, LOFT’s board has offered to assist in this consultation, given the issues O's fans experienced first-hand under its former owner.

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Text of email to Shaun Harvey, EFL Chief Executive - 22 May 2017

Dear Shaun,

I write further to our meeting on 28 April, at which you agreed to consider our specific concerns around the application of the EFL’s regulations in respect of Leyton Orient FC.

Below is a list of questions relating to how those regulations are or were applied in relation to Leyton Orient.

For ease of reference, the areas of regulation are clearly headed, the relevant regulations referred to are included followed by a list of questions pertaining to the operation of those regulations.

We would welcome your response after you have had a chance to consider these questions, and we remain happy to discuss these issues with you in a follow-up meeting if that would be helpful.

Regulations relating to the submitting of financial records by league clubs

Regulation 16.1 states that: All clubs shall keep their financial records in accordance with the provisions of The Football Association Rules and The League may arrange for an inspection of all such books.

Regulation 16.2 states that Each Club shall submit a copy of its Annual Accounts (as defined in Regulation 16.3) to The League.

Further to this regulation 16.2.2 makes it clear that such a date (for submission of accounts) is no later than on which the Club is required to file its accounts at Companies House.

16.3    For the purposes of this Regulation 16, Annual Accounts means the annual accounts in respect of the Club’s most recent financial year (such accounts to be prepared and audited in accordance with applicable legal and regulatory requirements) together with a copy of the directors’ report for that year and a copy of the auditor’s report (if any) on those accounts.

16.4 if the Club considers it appropriate or The League so requests, the Annual Accounts required to be submitted in accordance with Regulation 16.2 shall relate to the Group of which the Club is a member.

16.5 Where a Club relies on any statutory and/or regulatory exemptions such that the Annual Accounts are either abbreviated in nature or unaudited the Club shall within 14 days of any request provide to The League such additional information as The League deems appropriate.  Any information request will ordinarily be limited to information that would be disclosed if the Club was required to prepare annual accounts under the provisions of Section 396 of the 2006 Act and The Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008 (as may be amended or replaced from time to time) other than the requirement to have an audit report prepared.

Regulation 16.6 states that The League has the powers set out in regulation 16.7 if:

16.6.1 the Club has failed to submit to The League the Annual Accounts as required by Regulation 16.2;

16.6.1 the Club has failed to submit to The League the Annual Accounts for the group where requested by The League in accordance with regulation 16.4: and/or

16.6.3 the Club has failed to submit to the League any additional information as required by Regulation 16.5 to the League’s satisfaction.

Regulation 16.7 spells out the consequences of a breach of regulation 16.6. These sanctions include:

16.7.1 to require the club to provide such further information as The League shall determine and for such a period as it shall determine; and

16.72 subject the club to a registration embargo such as that it shall not be permitted to register any Player with the Club without the written consent of The League until such time as the breach identified by Regulation 16.6 has been rectified in its entirety to The League’s satisfaction.

Questions relating to the operation of these regulations:

  1. On what grounds would the League consider it appropriate to arrange for an inspection of the “books” as indicated under regulation 16.1?
  2. How often in the last 3 years has the League exercised its right to arrange for an inspection of the books of any league club as entitled under regulation 16.1?
  3. Has the League ever arranged to inspect the books at Leyton Orient FC since Leyton Orient Holdings Ltd became owner of the club as allowed under regulation 16.1?
  4. Does the League check league clubs’ compliance with their commitment to submit accounts at Companies House?
  5. How does the League monitor compliance as outlined in 16.2.2 for clubs to submit Annual Accounts on time to the League?
  6. Did Leyton Orient FC (since being owned by Leyton Orient Holdings Ltd) ever fail to submit its accounts to the League on time, in accordance with 16.2.2? If so:
  7. Could you please outline how (and to what extent) the financial information referred to in regulations 16.1, 16.2 and 16.5 is used by the League to ensure financial oversight of clubs?
  8. Does the League make any assessment of the quality and completeness of the financial information provided by Clubs?
  9. Does the League undertake any cross checking or verification of the financial information it receives from Clubs with other available sources?
  10. Apart from financial information referred to in regulations 16.1, 16.2 and 16.5 what other financial information does the League require clubs to supply?
  11. Could you please confirm that regulations 16.8 to 16.20 only apply to Championship Clubs?
  12. Could you please explain the reasoning why Championship Clubs have to supply a greater amount of financial information to the League than Clubs in League 1 and 2?

Regulations relating to the prompt payment of PAYE and NIC

17.1 Current HMRC Debt. Any club which has not within 28 (twenty eight) days of the relevant Due Date paid to HMRC the amounts due to be paid to HMRC to discharge:

17.1.1 the Club’s full liability for PAYE and NIC due in respect of any and all employees or former employees of the club for the immediate proceeding payment period: and/or

17.1.2 the Club’s full liability for PAYE and NIC which becomes due as a result of an assessment issued by HMRC, subject to clause 17.8 below, (clause 17.8 deals with disputed amounts)

Shall report the Default Event to the League within 2 working days of the Default Event.

Questions relating to the operation of these regulations:

  1. Has Leyton Orient FC ever notified the League of any Default Event as outlined under regulation 17.1 since being owned by Leyton Orient Holdings Ltd? If so, on what date(s) was the League notified?
  2. If the League was not notified about any Default Event, on what date did the League become aware that Leyton Orient FC had PAYE and NIC payments outstanding to HMRC?

Regulations relating to the reporting of Default Events

17.2 When a club reports a Default Event to the League it shall at the same time provide to the League details of any and all amounts due to HMRC from the Club in respect of PAYE and NIC, together with the periods to which they relate.

Questions relating to the operation of this regulation:

  1. If Leyton Orient FC has notified the League of any Default Event (since being owned by Leyton Orient Holdings Ltd) did the club provide full details as required under regulation 17.2?
  2. If it did not, what action did the League take? Did the League approach the club for the information? 

Regulations relating to the consequences of a Default Event

17.3 Without prejudice to the general position (pursuant to Regulation 41. 1) that all registrations must be approved by The League, a Club which is subject to a Default Event shall be subject to a registration embargo such that it shall not be permitted to register any Player with the Club without the prior written consent of the League for the period that the Club is subject to a Default Event.

Questions relating to the operation of this regulation:

  1. Was Leyton Orient FC, since being owned by Leyton Orient Holdings Ltd, ever subject to a registration embargo brought under regulation 17.3? 

Regulations relating to the consequences of failing to report a Default Event

17.4 A club which fails to report a Default Event shall be guilty of misconduct and shall be referred to a Disciplinary Commission in accordance with Section 7 of these regulations.

Questions relating to the operation of this regulation:

  1. Has Leyton Orient FC ever been referred to a Disciplinary Commission on grounds outlined in regulation 17.4 since being owned by Leyton Orient Holdings Ltd?
  2. If it has, what was the outcome of the Disciplinary Commission?

Regulations relating to the provision of authority to approach HMRC

17.5 Each Club shall provide to The League, not later than 31st  May prior to the commencement of a Season, (and in any event within 7 days of any request for a further authority from The League), an original, irrevocable authority (which shall not be time constrained) in the form prescribed by The League and signed by a director and the company secretary of the Club, addressed to HMRC authorising HMRC to provide to The League information relating to amounts of PAYE & NIC payable, paid and overdue from the Club to HMRC from time to time including, by way of example and without limitation, the amount of Arrears (if any), the existence of and current position in respect of any Time to Pay Agreement and if a Club suffers a Default Event (‘Authority’).  The League shall be entitled to forward the Authority to HMRC without having to seek the consent of the Club.

17.9 Information provided by a Club and/or HMRC in relation to any Arrears shall only be made available to senior members of The League’s staff and the independent Chairman (as described in Article 17.1.1) and shall not be disclosed to the Board generally, provided always that The League shall be entitled to report the happening of a Default Event to the Board for the purposes of enforcing Regulation 17.3 (Consequences of a Default Event).

Questions relating to the operation of these regulations:

  1. How many times in the last three seasons has the League approached HMRC using the authority given to it under regulation 17.5 to ascertain the position of any club in respect of its PAYE and NIC payable, paid and overdue?
  2. Can you confirm that Leyton Orient FC for the 2016/17 season provided you with such an authority as outlined in regulation 17.5?
  3. Has the League ever approached HMRC using the authority given to it under regulation 17.5 to ascertain the position of Leyton Orient FC since being owned by Leyton Orient Holdings Ltd in respect of its PAYE and NIC payable, paid and overdue?
  4. Can you confirm if the League has ever reported the happening of a Default Event by Leyton Orient FC to the Board in the last three years?

Regulations relating to Customer Charters

20.1 All Clubs must publish a Customer Charter, and provide financial reporting and accountability as requested by The League. 

20.2 A copy of the customer charter and any amendments made thereto shall be furnished to The League by each Club and shall be made available to the public through all usual Club publications, the ticket office and their web site.

20.3 Each Club shall:

20.3.1 submit a charter report by 30 June annually each year to The League. The report shall detail how each of the policies outlined in the charter have been implemented and the extent to which each has been achieved; and

20.3.2 comply promptly with any request for information made by The League.

Questions relating to the operation of these regulations:

  1. Can the League confirm that Leyton Orient FC has provided the League with a Customer Charter as set out in regulation 20.2?
  2. Can the League confirm that Leyton Orient FC has provided the League with a Customer Charter report as set out in regulation 20.3.1 and that whether this report is publicly available?
  3. Is the financial reporting referred to under regulation 20.1 different from that required under League regulations?
  4. What assessment if any of the quality and completeness of Customer Charters and Customer Charter reports does the League undertake? 

Regulations relating to offences, inquiries, commissions, disputes

79.1 The League shall have the power to initiate and prosecute proceedings against any person subject to the Regulations for breach of these Regulations or other conduct amounting to Misconduct.

79.2 The League shall have the power to investigate any of the following:

79.2.1 suspected or alleged breach of any of these regulations: and/or

79.2.2 any complaint, allegation or suspicion of financial or other irregularity and/or

79.2.3 misconduct

By any Club, Official or Player.

Questions relating to the operation of these regulations:

  1. How many times in the last three years has the League initiated proceedings against any club under regulation 79.1?
  2. Is the initiation of proceedings under 79.1 made public in every case? Is the outcome of such proceedings also made public?
  3. How many times in the last three years has the League initiated proceedings against any club under regulation 79.2.2?
  4. Is the initiation of proceedings under 79.2.2 made public in every case? Is the outcome of such proceedings also made public?
  5. What does the League specifically consider constitutes “allegations or suspicions” sufficient to warrant the initiating of proceedings under regulation 79.2.2?
  6. What does the League specifically consider constitutes “financial or other irregularity” sufficient to warrant the initiating of proceedings under regulation 79.2.2?
  7. Does the League have a “whistle blowing” policy relating to the reporting of any breach of its Regulations or other conduct amounting to misconduct under its regulations as outlined in regulation 79.1?
  8. Does the League consider non-payment of PAYE and NICs to be sufficient grounds to initiate proceedings under regulation 79.2.2 or any other of its regulations?
  9. Has the League ever initiated proceedings against Leyton Orient FC since it has been owned by Leyton Orient Holdings Ltd under i) any of the circumstances outlined under regulation 79.1 and ii) more specifically the circumstances outlined in regulation 79.2.2? If so:

Other questions relating to the events of 29 April 2017

Whilst writing to you, we would also appreciate a response to these questions relating to the announced ‘cancellation’ of the Leyton Orient vs Colchester United match on Saturday 29 April following a pitch invasion protest late in the game, and its subsequent ‘un-cancellation’ once the ground had been emptied of supporters:

  1. Who specifically made the decision to announce the game as ‘cancelled’ when it became clear that a number of Leyton Orient supporters were not going to leave the pitch?
  2. Was that course of action first considered as an option ahead of the game if such a protest took place?
  3. Does the EFL recognise that taking such action will undoubtedly have a negative effect on the outcome of any future pitch invasion protests at other clubs, in that supporters will not believe any announcements made as to a game’s ‘cancellation’ or abandonment?
  4. Does the EFL recognise that taking such action will also possibly have a negative effect on the reaction of supporters to any safety announcements at all, around matches being ‘cancelled’ or abandoned in the future?
  5. How does deliberately telling lies to supporters at EFL matches sit with the EFL’s position around maintaining the integrity of EFL competitions?
  6. How do the farcical scenes that have emerged around how the last minutes of the match were played out in a non-competitive manner sit with the EFL’s position around maintaining the integrity of EFL competitions?

We look forward to a response from you in due course.




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