Manchester City have been accused of presiding over an Enron-style financial scandal by La Liga’s president who has called in the European Commission to investigate.
In incendiary claims vehemently denied by the Premier League champions, Javier Tebas alleges the club artificially kept their costs down through their Abu Dhabi state connections.
He claims City, currently awaiting the outcome of their alleged 130 financial breaches battle with the Premier League, are being separately investigated in Europe over a complaint he filed in 2023.
“You remember the case in the USA, the Enron case,” Tebas then added in a question and answer session with reporters via a translator. “They put losses into different companies. These are similar cases.”
The astonishing comparison of City’s finances with the multi-billion pound Enron scandal – the FBI’s most complex white-collar crime investigation in the early 2000s – was immediately dismissed by sources close to the Etihad.
Tebas had revealed La Liga filed its own complaint about City to the European Commission in 2023, having been left dismayed by City’s successful appeal against a two-year Champions League ban.
Referring to City appealing the previous Uefa sanction at the Court of Arbitration for Sport, Tebas said: “We call it a ‘court’ but it’s not really a court of justice. Manchester City were not condemned. Uefa was clear in the sanctions.”
City strongly denied all claims from Tebas, an outspoken figure in European football with a long history of attacking the club. The club refused to comment, but pointed to their accounts as proof of no wrongdoing which are a matter of public record.
During the most legally fraught years in the history of England’s top tier, City have also launched two legal challenges against so-called Associated Party Transaction regulations, which effectively govern sponsorship deals.
Tebas disputes values of players City loaned to Girona
Tebas cited those cases in his attack on the club, criticising City’s player dealings with other teams in the club’s ownership group, including Girona who play in La Liga. “When City Football Group bought Girona they sent five players on loan,” he said. “We checked the valuations. We calculated they were 40 times higher than Manchester City claimed.”
However, he said “what worries me about Manchester City is something else” as he then accused the club of writing off losses on companies that are not officially part of CFG [City Football Group].
“They have a group of companies outside of City Football Group,” he said. “They saddle all their expenses to these companies. For example, they have scouting or marketing companies who accrue high expenses. They invoice Manchester City for low amounts. It allows Manchester City to have a structure that circumvents the rules. We have reported Manchester City to the EU. Even though they are an English team, and not part of the EU, they still have commercial activities in Europe. We first made the complaint in July 2023 and there are now regulations in place allowing the EU to look at companies like City Football Group.”
La Liga complaint centres on ‘financing mechanisms’
It had previously only been known that La Liga had called in the commission over financial dealings by Qatari-owned PSG. That complaint followed the implementation of new European regulation on foreign subsidies that distort the internal market. The complaint about City, it can now be reported, concerned alleged “financing mechanisms [that] cause a serious distortion in the internal market of the European Union (EU)”.
Tebas said he believed the commission, which has been contacted for comment, was still looking at the case. La Liga’s complaint – categorically denied by the club – was filed “on the grounds that Manchester City has received foreign subsidies from the United Arab Emirates (UAE), allowing the club to enhance its competitive position and cause significant distortions across various national and EU markets”.
‘We want Manchester City to be sanctioned’
Tebas added: “I can’t speak to any sanctions for Manchester City on this matter yet. All I can say is when a company in Europe, in general, is seen to have distorted the market, they often have to return funds. We want Manchester City to be sanctioned. The case is currently in the investigation phase. We haven’t had a reply yet. Remember, the EU have lots of cases.”
Tebas’s attack on City comes as the club await the outcome of their landmark case brought by the Premier League into 130 alleged financial breaches.
A verdict is imminent although an appeal by either parties – as has been seen in previous financial breach cases – could delay the process, potentially beyond May.
The charges against City, who deny wrongdoing, include 54 failures to provide accurate financial information from 2009-10 to 2017-18, 14 failures to provide accurate details for player and manager payments from 2009-10 to 2017-18, five failures to comply with Uefa’s rules including financial fair play (FFP) from 2013-14 to 2017-18, seven breaches of the Premier League’s profit and sustainability (PSR) rules from 2015-16 to 2017-18 and 35 failures to co-operate with Premier League investigations from December 2018 to February 2023.
Allegations came to light in leaked material published by German newspaper Der Spiegel. City have always said these leaked emails were obtained illegally and the club denies wrongdoing.
In a 2020 judgment, Uefa banned City from the Champions League for two seasons and fined them €30 million (£25 million). However, the punishment was overturned by Cas.
The unrelated Enron saga, meanwhile, was an accounting scandal sparked by an American energy giant filing for bankruptcy after news of widespread internal fraud became public in October 2001.
