An investigation by German magazine Der Spiegel shows that a subsidiary of a failed Icelandic bank was deeply involved in Manchester City football club’s violation of UEFA finance rules.
Kaupthing was one of the three banks that went bankrupt ten years ago, and its operations in the notorious tax-haven of Luxembourg were sold soon after the collapse. This new revelation was in the second of a series of reports on continued corruption in international football.
Kaupthing’s Luxembourg subsidiary was central to the bank’s international operations. This was revealed by documents used in the prosecution of bankers for market manipulation and other crimes. During the financial crisis of 2008, the banks were split into domestic operations, which were bailed out by the state, and foreign operations that went into formal bankruptcy. Their foreign subsidiaries were sold quickly, while Kaupthing’s Icelandic operations became Arion Bank.
The Luxembourg branch was bought by brothers David and Jonathan Rowland, who renamed it Banque Havilland. The bank specialised in services for clients depositing in Switzerland, Lichtenstein, and the Bahamas—all notorious tax havens. Former Icelandic Prime Minister Sigmundur Davíð Gunnlaugsson was brought down by his accounts in Tortola, British Virgin Islands, which was disclosed in the 2016 Panama Papers leak.
The Brothers Rowland assisted Manchester City in violating UEFA rules that prevent clubs from spending more than they earn. These rules were intended to stabilise clubs’ finances and prevent foreign funds from distorting the game. Banque Havilland set up shell companies in the tax havens which were used to funnel money from Abu Dhabi to players and managers.