Monday, 25 June 2007

Building Your Club On Third World Corruption

The summer break is filled with football stories that run and run and run... The summer break is also the time to hide away the media items that might imply that something is wrong with the game. The former creates highly manipulated betting markets where inside information rules and yet public disinformation driven by the media counterbalances such insider behaviour thus creating an equilibrium of positions in the marketplace. It also sells newspapers. The latter is a standard distraction tactic utilised by power abusers globally to limit public attention of things that they wish for you not to see. For example, the rise and fall of Quest's results covered barely a week in the press and Bob Woolmer's murder (sorry, death) lasted only a day while Thierry Henry's transfer to Barcelona and the takeover and management issues at Manchester City have been running since the dawn of time (or so it seems). In this post, we intend to focus on the former - the soap operas of the close season. We will be using the uproar at Man City as a structure that may be replicated in any spectacular society media ruse.
As we have posted previously, Thaksin Shinawatra is not a fit and proper person to be involved in the Premiership (see: The freezing of his Thai-based assets would have ended his alleged interest in buying Man City if the man hadn't been making full use of offshore financial centres (OSFs). Aside from his looting of the country on a business level when he was Premier, we firmly believe that Thaksin and his cronies were linked far too closely to the underground Far East betting markets in Thailand. The dirty profits resulting were, no doubt, successfully secreted away in one of Asia's prime OSFs locations - Macau, Shanghai, Hong Kong or Singapore. Due to his close corruptive links with the latter of these, it would be our estimation that this is where the money is based that may be used to purchase Man City. The Thai Finance Minister, Chalongphob Sussangkarn, states that Thaksin had declared no overseas assets when he was in power and, consequently, he is certain the Thai Assets Examination Committee will seek out the source of his funds with respect to potential (probable) illegality. Even the normally compliant Minister for Gambling, Richard Caborn, is urgently seeking talks with Scudamore of the Premier League specifically regarding Thaksin's attempted takeover. 'Nuff said...
It appears that the main momentum towards the takeover in Manchester has been former Man City player and supremo, sometime horserace trainer and businessman, Francis Lee. No surprise there then. Lee dived in the penalty area, ducked and dived in his bogroll business and now he is utilising his betting industry contacts to allow Manchester City to hit the illegal Asian betting markets big style. City sacked Pearce who not only had the common sense to get rid of Calamity James but also may well have led the England U-21's to Euro glory had it not been for the withdrawals of half his team due to Premiership club pressures. The media and the bookies then had a field day with markets and speculation regarding Ranieri becoming new manager when he had already signed on the dotted line in Turin and are continuing in the same manner with an avalanche of press leaks about Mr. Eriksson and Michael Owen.
The Dietrological Trading Team are unanimous in our assessment of the way that this theatre will play out. Thaksin will not be allowed to take over the club as he will not be able to prove the legality of his money and, although laundered money is as omnipresent in the Premiership as in the arms industry, Thaksin is neither American nor Israeli and we believe that the authorities are going to have to create a threshold of how deep into the gutter the money sloshing around the game is sourced. Inevitably, there is also a mature market monopolistic angle to this and, additionally, there is a racist angle to this nonsense too. The European and Israeli market operators are involved in an ongoing battle with the Asian market makers for absolute control of the global betting industry and inviting your enemy into your battle formations is not something that would have been suggested by Clausewitz, Howard or Sun Tzu! Furthermore, we do not believe that Sven will be welcome back into the English game. It was his wheeling and dealing in the fake sheikh episode that initiated the whole bungs inquiry - whistleblowers at any level are not welcome in the corrupt corridors of English football - and he also implied Redknapp's criminality which is only a wise course of action if invisibility is an option! As for Michael Owen? Whatever... If City wish to play with ten players, that is their choice. Of course, Thaksin and Sven might avoid these major obstacles but, in our guesstimation, the probability is low.
None of the characters recently involved in buying the Premiership clubs are what one might term ethical businessmen. The drivers of modern shareholder capitalism wish to hide away their profits from the tax authorities and there is a global network of OSFs that were established for this very reason. The global financial system is made less robust by the fact that some 15% of trading and investment exists around such dark pools of liquidity. Aside from denying governments their taxes and enhancing the bank balances of some particularly unsavoury characters, this process significantly increases systemic risk in the marketplace which prevents financial regulators and overseers from correctly estimating where the next financial crisis might begin. For example, the use of complex derivatives and the growth of hedge funds are generally secreted away in territories with minimal supervision. Each capitalist hotspot has a variety of OSFs hotspots. Britain relies on Guernsey, the Isle of Man, the Cayman Islands and Jersey; The US on Bermuda, the Caribbean, Delaware and Nevada (the latter two onshore rather than offshore); Germany on Switzerland, Liechtenstein and Luxembourg; France on Monaco and a variety a pinprick islands. OSFs are utilised both to launder money and to avoid taxes but, revealingly, the authorities are only interested in eliminating aspects of the former while regarding the latter, perversely, as somehow demonstrating how well the "market" in support of tax evasion works! By allowing companies and the wealthy to avoid taxation, OSFs sap tax revenues from real economies limiting the ability to pay for public services and resulting in increased taxation for those not fortunate enough to be provided with a tax-free loophole. When Bush produced a one-off tax amnesty in 2004, American companies repatriated $350 billion with psychopathic pharmaceutical company, Pfizer, leading the way with $38 billion! One might have thought that such creative accounting might preclude their targeting of Third World generic drug producers. Not so! The activities of the corrupt tend to spread throughout their business operations as all major company decisions are founded on the company culture. If the culture is to race to the bottom of the barrel then the bottom of the barrel becomes synonymous with the corporation.
And, yet, tax evasion is not the most worrying aspect of OSFs. That prize is reserved for the money launderers which rather neatly brings us back to Mr Shinawatra, Manchester City and the bookmaking industry. Organisations and individuals involved in the betting industry whether allegedly legal as in Nevada or downright illegal as in the Far East football betting markets or the South Asian cricket markets have a major problem with their ill-begotten financial gains. It is relatively easy to fix a Premiership football match, to place many millions of dollars on the underground markets and to collect your corrupt winnings. Then what? The only route to securing one's profits are the OSFs and the bookmakers are able to effectively disguise their financial gains through the use of shell companies or even legitimate above board bookmaking operations in the region. Most major European bookmakers either trade directly in Asia (Ladbrokes, for example) or have close links with financial institutions in the Far East (eg William Hill and Japanese investment house, Nomura). With an infrastructure that may be easily moulded to the specifics of a particular company, it is a facile process to rinse your money in an OSFs.
The OSFs are a blight on the whole financial system and not just the football industry. Although Dietrological primarily focus on the links between finance and football, we should be even more concerned about the impact of OSFs on the international financial markets (IFMs). There is a very high probability that the next financial depression will erupt when a number of OSFs hedge funds go belly up leading to feedback loops that create contagion throughout the financial system.
Do the fans who used to stand on the Kippax still want Shinawatra to take over? Probably, they are not the brightest bunch of fans on the planet...

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