Blues’ owner BIH move to curb consultancy payouts to Pannu
THE owners of Birmingham City FC have interceded to stop the payment of consulting fees to former acting chairman Peter Pannu placing a further strain on the club’s already stretched finances.
Directors at Hong Kong-based Birmingham International Holdings said they had become aware of the effect the fees were having on the business during a review into its annual results.
Under an agreement entered into between then-chairman Carson Yeung and Pannu’s Asia Rays consultancy in 2009, the Asia Rays business was entitled to housing allowance and tax reimbursements.
However, BIH said due to increases in the level of housing allowance and tax reimbursement payable, the total fees paid out to Asia Rays for the year ended June 30, 2014 had exceeded the annual cap for the original agreement.
The total amount paid by the company to the consultancy for the years ended June 2012, June 2013 and June 2014 were HK$8.063m (annual cap HK$7.3m), HK$5.92m (HK$4.8m) and HK$6.124m (HK$4.8m) respectively, equal to about £1.65m.
Mindful of the parlous state of the struggling Championship club’s finances, BIH said they had been forced to revise the agreement.
In a statement to the Hong Kong Stock Exchange, BIH said: “The directors expected that the annual cap for the year ending June 30, 2015 will likely be exceeding if the same is not revised. The company proposes to revise the annual cap for the year ending June 30, 2015 from HK$1.20m to HK$2.80m (£0.23m).”
It added: “In determining the revised 2015 annual cap, the directors have considered the following factors (i) the historical amount of consultancy fee paid by the company; and (ii) the historical amount of tax reimbursement and the housing allowance paid by the company.”
As the highest applicable percentage ratio under the HKSE’s rules for the consultancy fees is less than 5%, the board does not need the approval of shareholders to implement the changes.
Annual caps are ceilings imposed on the increase in a charge during a specified period. They are designed to protect firms against a sudden and excessive increase in their payouts.
Pannu’s contract with the Championship football club was terminated last month.
