Roman Abramovich's move to pass control of Chelsea to the club's charitable foundation has been put on hold, with the trustees taking legal advice on whether it is even possible. At least one trustee fears they may have to resign because of a potential conflict of interest.
One trustee who would have a potential conflict of interest is Emma Hayes, the manager of the Chelsea women's team.
The board of trustees held talks with legal advisers on Sunday and will wait for their guidance. As someone who as served as a trustee and chair of two charities, I know that charity law is very complex and quite demanding. At one medium-sized charity, we had to retain a specialist solicitor.
The regulatory body, the Charity Commission, has contacted the Chelsea Foundation with a request for more information. While I was chair of one charity, we were subject to a routine investigation by the Commission. They gave us a clean bill of
The trustees have yet to agree to an arrangement that would pass the stewardship of the club to them.
It has been alleged that the trustees were not given sufficient warning of the announcement on Saturday night, with The Times reporting that one trustee saying the situation had been 'appallingly handled'.
The charity would be permitted to run the club under charity law, but it would require an appropriate structure.
The bigger picture
Abramovich, Chelsea and his lawyers have always denied he is
close to the Kremlin or there is any reason why he would be sanctioned. He is,
as they regularly point out, sometimes on headed notepaper, just a successful
businessman who happens to be Russian.
There are some — who may or may not have just spoken to the
club — who believe that if the unthinkable happens and Abramovich is
sanctioned, Chelsea will be completely fine.
That is because a) they are a UK-registered company that has
nothing to do with Russia b) they are a business that earned more than £400
million last season, with cash in the bank and more coming in every month from
broadcasters, commercial partners and the turnstiles and c) they are now run by
a charity. So what on earth could go wrong?
But then there are others — who may or may not
have studied the UK’s sanctions laws — who wonder how a company
wholly owned by a sanctioned individual could possibly function. They point
out, for example, that the company’s British bank accounts would be frozen,
which means no money in or out, and no British firm would be able to do
business with the club. How does a football club without access to a bank
account pay its staff or bills?
That then begs the question: would the British government
really let one of this country’s most successful and popular football clubs go
bankrupt? It almost certainly would not want to let that happen. One cannot envisage it being temporarily
nationalised and run by Nadine Dorries, the culture secretary.
The sports lawyer Stuart Hatcher, who is a Corporate Partner
at Forsters LLP, has told The Athletic that the word
“stewardship” does not have a legal meaning.
To pass over “stewardship and care” to the trustees is,
therefore, extremely different to the situation that would have occurred if
Abramovich had given “ownership” to the trustees.
Chelsea have suggested that decisions Abramovich would
usually make will now be deferred to the trustees of the charitable foundation.
When asked by The Athletic to explain the legal basis of this
transfer of decision making or whether there has been a contractual transfer of
control, however, Chelsea were unable to clarify or comment.
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