by Tom Bower
Graham Kelly preferred to ignore the events which followed the arrival on 15 March 1994 of Ronnie Fenton of Nottingham Forest at the Royal Lancaster Hotel in London to meet Rune Hauge, a Norwegian agent. Shortly after Terry Venables had been appointed as the England coach and occupied an office at the FA’s headquarters, Fenton and Hauge discussed a secret commission payment of £45,000 to the assistant manager of Nottingham Forest for transfers of players to the club. At the end of their meeting, Hauge directed Lisa Davey, his representative of a trust company in Guernsey, to ‘find the best practical way for [Fenton] to receive the funds and send him a letter with your proposal’. Eventually, during Fenton’s holiday in France, £30,000 would be transferred to a bank in St Tropez and the remainder was paid in other tranches.
That payment concluded a succession of agreements between Fenton, Hauge and Brian Clough concerning the transfer of Scandinavian players to Nottingham Forest. Their relationship had started in the early 1990s. Ambitious to break into the British market, Hauge offered his services to Clough. The manager confessed to hating agents because ‘they were making too much money out of it’ but he recognized that the Norwegian was particularly skilled in identifying potential excellence among young Scandinavian players. Clough arranged introductions for the Norwegian to several British football personalities including Alex Ferguson. Both sides were ignorant of the true costs. Scandinavian clubs were unaware how much British clubs were prepared to pay for players, while the English were unaware that Scandinavian footballers were cheap. Hauge profited from that collective ignorance and offered a share of those profits to managers. Hauge had perfected his methods. In 1992, he negotiated the sale of Torben Piechnik from FC Copenhagen to Liverpool for £550,000, but Copenhagen only received £250,000. Hauge received the remainder. Piechnik proved to be a disappointment. After seventeen appearances, he was released by Liverpool without any transfer fee.
In October 1992, Ronnie Fenton asked Hauge to investigate the signing of Alf-Inge Haaland, who played for Bryne of Norway. Like most uneducated British football managers, Fenton found negotiating with foreign clubs difficult, and Hauge was accommodating. Bryne agreed to Haaland’s sale for £150,000 and promised Hauge any money received over that amount. Hauge quoted Clough £250,000 as the transfer price, but Clough told Fred Reacher, Nottingham Forest’s chairman, that the price was £350,000. Bryne sold the player for £150,000. Hauge’s profit was £200,000 plus 20 per cent of any higher price if the player was resold by Nottingham Forest. Fenton clearly expected a share of those profits from Hauge. A few weeks later, after the transfer of Thorvaldur Orlygsson from an Icelandic club to Forest, Fenton collected £45,000 sent in cash by Hauge from a trawler visiting Hull.
Those payments remained unknown until George Graham, the Scottish manager of Arsenal for eight years, requested in August 1994 to speak to his club’s directors. ‘I’ve got a bit of a problem with taxes,’ the club’s 50-year-old, dark-haired idol told Peter Hill-Wood, the Etonian chairman of Arsenal, and David Dein, the club’s vice-chairman. ‘Could we keep it between the three of us?’ Arsenal’s directors nodded in agreement. Over the previous weeks, inspectors employed by the Inland Revenue had complained that some of Arsenal’s employees had not declared all their income. The club’s directors had been puzzled. Clearly, Graham’s request for a meeting identified him as one culprit. They imagined that the discrepancy concerned a few thousand pounds. At their next meeting, Graham arrived with his accountant and explained that he had deposited some money in a trust in Jersey for his children and he was now obliged to declare it. ‘How much?’ he was asked. ‘£425,000,’ replied Graham. Both directors were astounded. ‘That’s much more than we imagined,’ quavered Hill-Wood. ‘I wonder whether you can help me explain it to the Revenue?’ asked Graham. The directors remained uncommitted: ‘Give us more information and we’ll see what we can do,’ said Hill-Wood innocently. As the club’s star, Graham could expect the directors’ help. He had previously played as a stylish midfielder for the club and under his tutelage Arsenal had won the League, the FA Cup, the League Cup and the European Cup Winners’ Cup – no less than six trophies in eight years. Graham was capitalizing on that deep reservoir of gratitude and goodwill, but had slim hopes that the truth would not emerge.
Five months earlier, in March 1994, Henrik Madsen, a Danish television documentary reporter, had filmed an interview with George Graham on Arsenal’s training ground. ‘Didn’t you receive a secret payment on the Jensen transfer?’ asked Madsen unexpectedly, referring to Arsenal’s purchase in 1992 of John Jensen, a midfielder from Brondby, a Danish club. Graham was nonplussed: ‘Me, take money? Hey, you’d better be careful, that’s a serious accusation.’ Graham’s lie and his threat were a footballer’s normal reaction to the truth. By summer 1994, after a tip-off from Norwegian tax officials pursuing Hauge, the British Inland Revenue began investigating Graham. During eight years of management, George Graham had negotiated the trade of players worth £36 million, most apparently concluded without Arsenal’s business managers scrutinizing any details.
George Graham and Rune Hauge had negotiated together Arsenal’s purchase of John Jensen in July 1992. Acting on Graham’s directive, Arsenal had transferred £1.57 million to Brondby but the Danish club had only retained about £900,000. The remaining £739,433 had been re-transferred to Interclub, Hauge’s company registered in Guernsey. Soon after Hauge had secretly deposited £285,000 into Graham’s personal bank account in Guernsey. Inexplicably, Arsenal recorded the transfer fee in their handbook as £1.1 million.
During September 1994, Arsenal’s directors heard about the payment from Inland Revenue officials and from reports about Henrik Madsen’s journalism, but did nothing until October. Coincidentally, Arsenal were playing Brondby in Denmark and after the match David Dein asked Brondby’s directors how much they had received for Jensen. The reply, ‘£900,000’, would have been more astonishing if Arsenal’s directors had not been forewarned.
On the team’s return to England, Hill-Wood and Dein confronted Graham. The manager’s confession was prepared. ‘It was an unsolicited gift,’ Graham said in a reply contrived by his advisers. He offered to repay the full amount plus interest to the club. At an emergency board meeting the directors admitted their horror and considered their strategy. Unlike most other clubs the board of Arsenal was artfully balanced between David Dein and his friend Danny Fiszman who together owned 40 per cent of the shares, and the Carr family who owned 25 per cent. The Carrs owned hotels and had controlled the News of the World. Peter Hill-Wood, the chairman, owned about 1 per cent and the remainder of the shares were owned by outsiders represented on the board by non-executive directors. No single director could dictate the club’s policy. Their discussion concerning George Graham ended in unanimity and an unconventional decision. Instead of instantly dismissing the manager and summoning the police, the Arsenal directors initially appeared to be as anxious as their manager to preserve the secret. Graham was too successful and the directors too conservative to desire a confrontation. Their intention was to appear unvindictive. At a board meeting on 18 November 1994, they finalized an irresistible offer to Graham. Towards the end of the season in 1995, the club and manager would announce, with mutual pleasantries, that the manager had decided to retire and seek new challenges. In return for repaying the bribes and for the remaining two years of his contract, Graham would receive some compensation. The sum of £750,000 was mentioned but nothing was agreed. Graham accepted a verbal offer and, in the meantime, the lips of both sides were sealed.
David Dein would reject that critical interpretation. To avoid an action for wrongful dismissal, Dein explained recently, the directors summoned ‘a leading employment lawyer to assist them in a very delicate process of what to do based on such information as became available to them. The matter was handed over for investigation to the Premier League, who passed their report to the FA to deal with any disciplinary aspects. We acted on the best legal advice and took the appro
priate action.’ That considered explanation overlooked important sensitivities and the timetable.
Arsenal’s directors considered Graham’s dishonesty as a football matter and the football community sought to keep everything within the family. The etiquette of the business, properly and subtly, was not to wash the dirty linen in public. Initially, the club’s procedures for dealing with Graham remained unclear other than that they were intended to culminate in Graham’s unsensational resignation. Unexpected events destroyed that satisfactory scenario hastening Graham’s departure, and also exposing the dirty linen, compelling Arsenal to hand over responsibility for deciding Graham’s fate to the FA.
Dishonesty at Arsenal was not confined to George Graham. In 1989, two years before Steve Burtenshaw joined Arsenal as the club’s chief scout, he had signed an exclusive agreement with Hauge. Burtenshaw was to receive 25 per cent of all the business he introduced to Hauge and expenses, but that sum would be reduced ‘according to the number of “paybacks” which are involved’. The term ‘paybacks’, Burtenshaw knew, meant ‘palm greasers’. Over the next two years, Burtenshaw introduced at least twenty-four managers, coaches and chief scouts to Hauge, which the Norwegian agreed ‘was absolutely essential for us as an introduction to the market’.
In July 1991, to Hauge’s disappointment, Burtenshaw cancelled the agreement to avoid a conflict of interest with his new employer, Arsenal. But Burtenshaw soon overcame his reticence. He was secretly paid £35,000 for aiding Jensen’s transfer, and Hauge deposited a further £32,242, as payment for Burtenshaw’s other assistance, in a Dublin bank account. The payments would be discovered during the Inland Revenue’s investigation of Arsenal. The exposure of Burtenshaw’s dishonesty had not encouraged Arsenal’s directors to launch their own investigation. Rather, the revelation of the circumstances behind Arsenal’s purchase of Pal Lyderson of IK Start, a Norwegian club, proved to be the final straw.
George Graham had flown on 10 September 1991 to Oslo where Hauge was waiting for him. Before departing the fee agreed for Pal Lyderson by Arsenal’s directors was £215,000. The following day, Graham telephoned Ken Friar, Arsenal’s chief executive in London, and said the fee had increased to £500,000. Friar trusted Graham and Arsenal’s directors approved the increase seemingly without question. The Norwegians were unaware of that conversation and were surprised when the contract appeared on 6 November 1991 showing the £500,000 transfer price. Hauge was asked by the Norwegians for clarification. The agent explained that the higher sum was necessary to obtain Lyderson’s work permit. Arsenal, claimed the agent, would be reimbursed with £285,000. Days later, Arsenal transferred £500,000 to Hauge’s account in Guernsey. After paying the Norwegian club and making other provisions, the remaining £285,000 was divided between Hauge, who kept £145,000, and George Graham. In December 1991, over a drink at the bar of the Park Lane Hotel in Piccadilly, ironically owned by the Carr family, Arsenal’s major shareholders, Hauge handed Graham a bag containing £140,000 in used £50 notes. Graham deposited the cash in a Dublin bank. ‘We all like a drink,’ commented a sage later, ‘but George wanted a whole brewery.’
During his discussions with Arsenal’s directors in October 1994, Graham suggested that his disclosure had been prompted by his accountant’s insistence that the offshore bank deposits would have to be declared to the Inland Revenue. In truth, Graham knew he had been endangered by Henrik Madsen’s book Men from Brondby. On page 257, Madsen had recorded Graham’s personal enrichment from the Jensen transfer. Graham’s further profit from the Lyderson deal emerged from the exposure of Burtenshaw’s dishonesty. The revelation of his corruption, George Graham realized, was as embarrassing to Arsenal and the FA as to himself. Everyone had hoped that ‘Cloughie’s bung’ was an isolated incident.
Three weeks after Graham and the club had agreed their settlement, their secret was exposed. On 11 December 1994, Simon Greenberg and Lawrence Lever reported Graham’s dishonesty in the Mail on Sunday. The immediate reaction by Arsenal’s spokesman was defiant: ‘We will not sack George Graham.’ Taking bungs was apparently acceptable to Arsenal’s directors if the manager was successful on the pitch.
Rick Parry and Robert Reid immediately extended their inquiry into the irrefutable circumstances that when Graham had negotiated Pal Lyderson’s transfer he had doubled the price and had received a ‘bung’ from Hauge. Despite these seemingly undeniable facts, Graham explained to the inquiry panel that no conspiracy had existed between himself and Hauge. The £140,000, said Graham, was an ‘unsolicited gift’. Deftly, he was supported by Hauge: ‘I gave George Graham the money but he didn’t ask for it,’ said the agent; adding without remorse, ‘So what’s wrong?’ On 17 February 1995, George Graham was shown the inquiry’s conclusions about his dishonesty but, on legal advice, refused ‘to answer any substantive questions’. Four days later, Graham returned from a jog to his Hampstead home and was summoned by Peter Hill-Wood to Highbury. ‘You’re fired,’ said Hill-Wood, who favoured short executions. ‘What about my compensation?’ stuttered Graham, obviously surprised. ‘Forget it,’ snapped Hill-Wood. The club’s public statement explained Graham’s dismissal for ‘not acting in the best interests of the club’. Graham was defiant. ‘The allegations,’ he pronounced, ‘are nonsense. I have made no money from transfers.’ His emphatic lies were normal for football’s mavericks. Ronnie Fenton, Brian Clough and Terry Venables also uniformly ridiculed any evidence and accusations. ‘The payments,’ Graham said, ‘were not expected and not asked for. I have never ever benefited from any transfer.’ Not one of Arsenal’s directors publicly denounced their former manager as a liar or asked the police to investigate whether a crime had been committed. On the contrary, the directors agreed to avoid wasting time and money pursuing Graham through the courts. ‘We wanted to do the best for Arsenal FC,’ explained Dein. ‘We acted on the best advice and that was to let it go no further.’
Sir John Quinton, a banker and the chairman of the Premier League, was anxious not to annoy his members. In at least ten recent transfers Hauge had acted for many of those attending the meeting of the Premier League chairmen and chief executives on 23 February 1995. Although the report by Robert Reid and Rick Parry established Graham’s dishonesty, the twenty men agreed not to embarrass Arsenal’s directors, nor to condemn Hauge. Graham’s portrayal of himself as a scapegoat matched their own interests. The twenty agreed to endorse Arsenal’s decision to dismiss Graham but ordered Quinton to announce that the manager had not been found ‘guilty of any offence’. Their rationale was flawless. The inquiry had been conducted to collect facts, not to pass judgement. Any disciplinary consequences were the FA’s responsibility. Nothing more would be done by the Premier League. Passing the buck avoided the danger of George Graham revealing embarrassing information and, to protect Arsenal’s directors from further humiliation, only an abbreviated version of the report was published.
Senior officials at the FA were sympathetic to George Graham’s plea that he had not requested the bribe. Graham, they persuaded themselves, was guilty of ‘receiving’ but innocent of ‘soliciting’ the money. Piously, David Davies, directing the FA’s publicity, announced, ‘The responsibility of the FA as always is to seek the highest standards of integrity in the national sport. We will meet that responsibility.’ Graham was fined £50,000 and banned for one year. The equivocation was sufficient for the manager to portray himself as ‘the sacrificial lamb offered up to ease football’s conscience’. In a corridor in the FA’s headquarters, Peter Leaver, the Premier League’s chief executive, encountered Graham Kelly. ‘You’ve been lenient,’ he commented. ‘Oh, this is difficult,’ replied Kelly. ‘Our lawyers have warned us to be careful about restraint of trade.’ Leaver, a QC, nodded. The Premier League’s representative was not in a position to criticize the FA. Both gave the appearance of preferring not to dig too deep.
In public, the famous sprang to George Graham’s defence and placed the blame on Hauge and agents. Gary Lineker pleaded that
the manager was ‘a very likeable and successful man’ who had been subjected to ‘grossly unfair’ treatment and was a ‘scapegoat for every manager who’s ever had a backhander’. In a revealing exposition of football’s morality, Lineker wrote, ‘The bung, it seems, has long been commonplace . . . It was almost considered to be an acceptable perk for men who are treated so shabbily by their employers . . . The majority of players are, I’m sure, not partial to the odd paper bag.’ This theme was reflected during the inquiry. In one exchange Rick Parry asked Graham Smith, the agent, about the Sheringham transfer: ‘Who were you representing in the deal?’ The question implied there was a choice between Nottingham Forest, Sheringham or Tottenham. Smith gazed nonplussed. ‘Well, me, of course,’ replied the agent. That brazenness helped them to heap the blame on the agents. ‘It is easy to see,’ they reported, ‘how the imposition of agents and intermediaries can create opportunities for financial irregularities, particularly where payment is made other than directly to the selling club.’ Hauge was punished by a life’s ban by FIFA but the sentence was reduced on appeal to two years. Rick Parry was exasperated. ‘Why,’ he asked Bobby Charlton, ‘do the managers take bungs?’ ‘Because,’ replied Charlton, ‘managers get abused; they’ll be unfairly dismissed; and so they’ll take while they have the chance.’
Those accusing Hauge of exercising a corrupting influence ignored the dilemma for some British football executives. Even honest managers were bound to deal with Hauge if he represented a desirable player. For those involved in football, there appeared to be no escape from sharp dealers. Surviving in the football business excluded any other possibility, as even Alan Sugar discovered.
During that same year, 1994, Ossie Ardiles, Tottenham’s new manager, asked Sugar to buy Ilie Dumitrescu, a Romanian player, from Steaua Bucharest. Representatives from Padua and Cologne football teams were in Bucharest already bidding. By then, Sugar had learnt that his sole concern ought to be only the final sum paid by his club for a player, not the amount any agent received. Trying to establish the ultimate destination of his purchase money for any player after its transfer to a bank account was pointless. Anxious to secure Dumitrescu and lacking any experience in Romania, Sugar asked Dennis Roach, Ardiles’s friend, to undertake the negotiations.