The Panel, as of 12 Oct 2011.
Jean-Luc Dehaene, the man in charge of implementing UEFA’s financial fair play regulations, was due in London last week to speak at the Leaders in Football conference. Sadly, he had to cry off. The Franco-Belgian bank of which he is chairman was going skint. Again.
The Belgian arm of the total catastrophe that is Dexia, Dehaene’s bank, was nationalised on Monday. Prior to resigning — he will remain chairman of Dexia Group’s other interests — Dehaene announced a £3.45billion bailout by the Belgian government.
This is in addition to the £5.18bn Dexia needed to stay in business in 2008. Never forget, this is the man who could be banning your club from European competition if he thinks they are living beyond their means.
Imagine placing Sir Fred ‘the Shred’ Goodwin, former chief executive officer of the Royal Bank of Scotland, in charge of governance at the Football Association and you get the idea. That’s why you never get a good farce in the West End these days. Michel Platini and the boys at UEFA have nicked all the best plot lines.
Dexia was the result of a 1996 merger between Credit Local de France and Credit Communal de Belgique, the biggest municipal lenders in their respective countries.
‘Dexia accumulated the worst errors,’ says Francois Chaulet of Montsegur Finance in Paris. ‘They were the experts of municipal lending but by getting late into businesses they weren’t able to handle, like securitisation and bond insurance in the United States, they bought all that others didn’t want to buy.’
This isn’t the FT, I know, so I’ll keep it basic. In 2008, Dexia needed a gigantic bailout to remain in business, at which point Dehaene arrived.
Known as ‘the plumber’ during his time as Prime Minister of Belgium, due to his ability to resolve crises, this time he appears to have drilled through the main standpipe.
Dexia remains in danger of becoming the first European bank to fall victim to the Eurozone debt crisis and its stock is in freefall.
The man who will tell European football clubs how to run their businesses saw a share value drop of 42 per cent as concerns grew that his bank would be broken up in a final desperate attempt to keep it afloat. Since the 2008 bailout and Dehaene’s arrival, its stock has plunged more than 90 per cent.
The Belgian government picked up the tab second time around, paying £3.45bn for Dexia Banque Belgique’s consumer lending division. There remains all manner of speculation about who will pounce on other arms of the company, including a Qatari sovereign wealth fund, who bought Dexia Banque Internationale, a profitable retail and private banking unit based in Luxembourg.
How intriguing should Dehaene rule on Manchester City’s use of Arab wealth, which incurs no actual debt, while being happily party to investment from the region to help save Dexia’s skin.
The scale of this crisis cannot be overestimated. Bluntly, if Dexia goes down, so does Europe. Its balance sheet, with total assets of around £446.9bn in June, is roughly the size of the entire banking system in Greece, and larger than the combined assets of all financial institutions bailed out in Ireland.
Dexia has £2.9bn exposure to Greek government bonds and roughly four times that commitment in Italy. Dexia Credit Local’s portfolio includes £18.1bn in Greek, Italian, Portuguese, Spanish and Irish sovereign debt, which has understandably caused widespread panic and the collapse of short-term funding.
Still, nobody can doubt Dehaene’s expertise in how not to run a business. There is most certainly a lot that football could learn from him on that.
It could be argued, of course, that Dehaene took on an impossible job; that Dexia was a basket case enterprise before he arrived and he merely failed to resolve its enormous difficulties.
Certainly, it is no easy task taking charge of a bank that has needed bailing out in the billions. Yet even in Belgium, Dehaene is not without his critics.
Paul de Grauwe, a member of the economic advisory group to Jose Manuel Barroso, president of the European Commission, said: ‘Jean-Luc Dehaene and Pierre Mariani, the chief executive officer, are responsible for the fiasco at Dexia and it is only logical that they will resign. It is dangerous to speculate, to gamble with the money of ordinary citizens. The big problem is that Dexia abandoned traditional banking and started speculating to earn more. That ended miserably.’
Speculating? Gambling? Taking a punt with money you haven’t really got? Not the bold champion of financial fair play, surely? Or maybe in banking different rules apply.
Still, never mind. When Platini’s committee to assess financial fairness meets, Dehaene, as a refugee from an economy that has gone melons up, will fit right in. Perhaps he could discuss those nasty Greek government bonds with Petros Mavroidis, a lawyer from Thessaloniki, who will also assess financial fair play. Powerful, wealthy, well-connected — often to each other — UEFA have chosen their club overseers well.
Take Johan Lokhorst, from Holland. He is currently a director of various food groups, including Lotus Bakeries (£22.9m in debt, but don’t let that stop him telling everybody else how to do it). Lotus are a Belgian-Dutch company specialising in caramelised and pepparkakor biscuits, gingerbread, cake specialties and waffles.
What does he know of football? Who can say, but he certainly knows his fellow board member, Jean-Luc Dehaene. So that’s nice.
Then there is Yves Wehrli from France, a managing partner on the media and entertainment team of global law firm Clifford Chance.
He recently advised the French Football Federation on their successful bid to host the 2016 European Championship (UEFA president when the bid was won, Michel Platini), this after doing six years of legal work for the organising committee of the 1998 World Cup (held in France, joint head of committee, Michel Platini) and aiding the Lagardere group with the £745.8m acquisition of Sportfive (legal adviser at Lagardere, Laurent Platini, son of Michel Platini).
It goes on. There are two men who helped author the Independent European Sport Review in 2006, which is seen as the precursor to financial fair play (page 83, paragraph 5.27, Cost Controls, if you’re interested). One is Jacobo Beltran, a right-wing politician from Madrid — so no big clubs that might need looking after there, thankfully — the other is Egon Franck, a German professor of economics at the University of Zurich, so at least he won’t have far to travel for meetings.
It must be hard getting nine people from a continent with a population of 731m that are not connected to Platini personally or in charge of a bank that’s gone bust, so UEFA have our sympathy there.
English football is represented by Brian Lomax OBE, former chairman of Supporters Direct and the man who helped form the first supporters trust, to help save his club, Northampton Town — but obviously the board cannot be made up purely of dedicated souls like that. Not when there are so many hard-up bankers with mates who sell biscuits that need to be involved.
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Posted: Tue Jul 10, 2012 9:05 am