Police called in to investigate disappearance of £2.55m from Blues’ parent

THE soap opera that is Birmingham City FC has taken a further twist with the club’s Hong Kong parent calling in police to investigate the disappearance of £2.55m.

Birmingham International Holdings believes the money have been misappropriated by an unnamed former employee and the disappearance missed by auditors.

It has warned the disappearance could have a “material impact” on the business.

In a statement to the Hong Kong Stock Exchange yesterday, BIH said: “The board has recently discovered that as of the date of this announcement a former employee of the company may have misappropriated a sum of at least HK$30m (£2.55m) belonging to the group since December 2013.

“The company has reported the suspected misappropriation of funds to the Hong Kong Police Force and they are currently investigating the matter.”

It adds: “On a preliminary review, the board considers that the suspected misappropriation may have a material impact on the operation and financial situation of the group.”

The board said it would continue to assess the impact as the investigation progressed and review operations accordingly.

It said it also remained concerned that the disappearance of the money had not been spotted during the group’s audit for the year ended June 2014.

“The board will consider setting up an investigation committee to look into the suspected misappropriation and see how to improve the internal control system of the company,” adds the statement.

Shares in the company remain suspended – as they have been since the beginning of December when news of a possible takeover of the club leaked – and the board said it would update shareholders when it had more information.

Any further financial impropriety will be an unwelcome visitor to the Championship club.

The cloud hanging over the St Andrew’s club grew ever more dark last year when former owner Carson Yeung was convicted in Hong Kong of money laundering. He is currently serving a six-year jail sentence although he has lodged an appeal against the conviction.

Despite a complicated pay-off arrangement which saw Yeung surrender his ownership of the club he continues to be the club’s largest shareholder and is believed to be trying to influence developments behind the scenes.

He is thought to be behind a bid to get three senior directors ousted from their positions and replaced with his own nominations.

The BIH board, fearful of his intentions, has asked the Hong Kong Stock Exchange to intervene in the matter.

Here, the Football League is also looking into the club’s affairs and is trying to determine the extent of Yeung’s influence.