Millwall and New Bermondsey: even the tax issues are not black and white

Millwall and New Bermondsey: even the tax issues are not black and white

Earlier this week, I wrote that the dispute between Millwall Football Club and Lewisham Council over the proposed redevelopment of land adjacent to the club is not a tale of  “community resistance” to a venal alliance between “Blairite” politicians and a property developer chum as portrayed by the Guardian, but the fallout from the council resorting to its sternest planning powers to hasten what it believes would be the beneficial transformation of that patch of south-east London.

Readers declining to be swayed by my argument, or to accept the findings of the succession of in-depth scrutinies that buttressed it, have repeated their objection that, whatever else may be said, it is morally wrong for Lewisham, a public body, to partner with a private company, Renewal, that is registered in an offshore tax haven, namely the Isle of Man. Will it trouble them to learn that the American company that owns most of Millwall is itself registered in a tax haven, one once described on the website of the very same Guardian as top of the pile of the most secretive jurisdictions for “hiding wealth”?

Millwall FC operates as part of Millwall Holdings PLC, which is 70% owned by Chestnut Hill Ventures LLC, a private equity firm based in the US. Chestnut Hill’s chairman and chief executive is John Berylson, who is also chairman of Millwall FC and routinely described as its owner. Chestnut Hill’s address is in Wellesley, Massachusetts, but that is not where it is registered for tax purposes. Rather, like hundreds of thousands of other companies, it is registered in the state of Delaware, which features prominently in the USA section of the Financial Secrecy Index.

How did I learn of Millwall’s Delaware connection? By stumbling across the information in an article in…the Guardian. Scroll down to “M” in an item published in April 2015 listing English football clubs with overseas owners and find Millwall right there after Manchester United, complete with these words from the club: “Should Chestnut Hill Ventures realise its investment in Millwall Holdings at a gain for tax purposes this would be allocated to the individual members of CHV in the USA.”

Millwall Holdings PLC is a UK company and I make no judgment at all on the morality of the tax arrangements of Chestnut Hill Ventures or John Berylson. I mention them solely in order to invite readers to reflect on the fact that the Guardian’s copious coverage of the Millwall-Lewisham story has questioned the appropriateness of Lewisham working with Renewal on the grounds that the latter is, as the Guardian has put it, “an offshore-registered developer whose business is located beyond UK tax scrutiny in an offshore haven” while making no mention at all that I can find of Chestnut Hill Ventures, let alone the fact that it too is registered in a tax haven beyond UK tax scrutiny, as the Guardian itself has separately reported quite recently. I am alone in finding that strange?

The point of my article earlier this week was not to champion Renewal over Millwall or to comment on the virtues or otherwise of the former’s council-backed plans – entitled New Bermondsey – for that part of Lewisham, but to contend that the Guardian’s good-versus-evil characterisation of the issue has been fanciful and misleading. The tax arrangements of the private businesses involved are a good illustration of how this entire situation is a web of grey areas from which Lewisham, in its role as local planning authority, has a responsibility to extract what it deems the best possible outcome for the borough.

Let us agree, for the sake of discussion, that neither Millwall’s main financial stakeholder nor Renewal have tax arrangements the Guardian would approve of. It is nonetheless the case that John Berylson is a significant philanthropist, particularly in the field of education. And Lord Dyson’s recently-published report clearing Lewisham of all allegations that it has behaved inadequately or improperly in relation to the New Bermondsey scheme documents with helpful clarity some interesting aspects of Renewal’s finances (see paragraph 3) that are relevant to this debate.

It says that Renewal Group Limited, to give it its full name, has two shareholders, both of which are overseas companies. One is called Independent Advisers Limited and is registered in another well-known tax haven, the British Virgin Islands. It is owned and controlled by the Mushtaq Malik Family Trust. Malik is Renewal’s chief executive. The other shareholder company is called Incorporated Holdings Limited and is, like Renewal, registered in the Isle of Man. Dyson writes that Incorporated Holdings “is owned and controlled by a charitable trust of which the principal beneficiary is the Jack Petchey Foundation”.

The Jack Petchey Foundation is a famous British charity which funds programmes and projects to help young people aged 11-25, mostly in London and Essex. Dyson also records that Councillor Alan Smith, Lewisham’s deputy mayor, who was in the chair when the council’s cabinet took important decisions about New Bermondsey, told him that the involvement of what Smith called the “rock solid” Petchey organisation helped give him confidence that Renewal was up to the task of delivering the project (paragraph 286). And we can reasonably conclude that a part of any profits eventually accruing to Renewal from the New Bermondsey scheme will therefore benefit children and young people in London through the Jack Petchey Foundation’s work.

Again, this is not to take sides in the argument about New Bermondsey as a whole. Rather, it is to show that, like all large and complex redevelopment schemes in London, it is an argument with many sides in all respects, even in terms of the transparency and ethics of the taxation arrangements of the business interests involved. It should also be noted that non-resident developers are liable for UK tax on their profits and that a director of Renewal has said publicly that she “absolutely” expects the company to pay it.

Millwall has long made the case that the council has treated it unfairly, especially with regard to the sale of land right on its doorstep (that case is laid out in paragraph 100 of the Dyson report). For its part, the council has continued to maintain that its decision to tie up with Renewal and use compulsory purchase powers to take control of that land and sell it to Renewal was in the public interest.

It abandoned that decision as a result of an allegation by the Guardian that Dyson could not find supporting evidence for (paragraph 341) and which served as a catalyst for the setting up of Dyson’s inquiry in the first place. The Guardian said at the time that this could cost “up to £500,000 of public money”. All journalists make mistakes and misjudgements, me included, often in good faith. But that is a lot of cash. Perhaps Lewisham should send an invoice to King’s Place.

Last updated 9 December 2017.

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