Tuesday, 6 September 2011

Liverpool, Steve McMahon and Profitable Group.

Liverpool warm up in Bangkok with Profitable Group in the background

In our last article we looked at the launch of a new football academy in India – a joint venture between Steve McMahon and his former club Liverpool.
Two years ago, in July 2009 to be precise, McMahon and Liverpool also teamed up as the Reds played exhibition matches in Singapore and Thailand in their so called 'The Kop Comes to Asia' tour. At the time, McMahon was commercial director of Strategic Sports Investment Co Ltd: the company that organised the tour. SSI was a part of Profitable Group one of Liverpool's 'official partners' (i.e sponsors) on the tour.

So why is that tour meritorious of an article in this blog? Because Profitable Group (PG) has, at the time of writing, 304 complaints lodged against its land-banking arm Profitable Plots (PP) by disgruntled investors who believe the company to be scammers and fraudsters. PG is currently being investigated by the Commercial Affairs Department (CAD) in Singapore and is being sued by ESPN for allegedly defaulting on advertising payments. The company's website no longer exists and PG is destined for the Hall of Shame occupied by the likes of Polly Peck and Stanford.

Our main concern in this article is the link between one of the world's great football clubs and an unpleasant little get-rich-quick fly-by-night company. However, a little background information on the PG scandal is necessary so that you can judge whether this is the type of company that Liverpool should be doing business with.

Profitable Plots was in the business of selling undeveloped land in England to investors, most of whom were from Asia. The idea is that, through PP, you buy your small piece of land and then, one day, a housing developer will want to buy your land from you and thus you make your profit. The problem is that most of the land PP held was green-belt land. The whole point of green-belt is that it provides, well, a green belt between urban and rural areas so as to prevent urban sprawl. As such, it is practically impossible to get planning permission. As one analyst put it "it's a legal scam. Once you buy your plot you can't build on it and you can't sell it. Who's going to buy [i.e which housing developer is going to buy] a small plot surrounded by other plots owned by other people? Yes, on paper it increases in value, in practice you can never sell." Sure enough, the complaints started rolling in as promised returns never materialised, and investors were either ignored by PP or given endless excuses.

In August 2010 the CAD raided PG's offices in Singapore and seized thousands of documents. Two months later, the CAD delivered their first report stating that "Profitable Plots' liabilities and obligations far exceed its assets. Therefore, CAD has grounds to suspect that the schemes were introduced to defraud its clients." By March of 2011, 229 complaints totalling $23.5m had been received by the CAD. By July those figures had risen to 304 and $30m. The courts in Singapore have repeatedly granted the CAD time extensions in their investigations as the complaints continue to pour in. The next hearing is due on November 8th.

But let's get back on track. How exactly do Steve McMahon and Liverpool fit into this? You might be forgiven for saying "Hang on! The CAD only raided PG in August 2010; Liverpool's PG-organised and sponsored tour occurred thirteen months earlier. How were they to know PG were dodgy?" The answer is simple: Because it was common knowledge well before July 2009 that PG was a highly suspicious outfit.

In 2008, the company's UK-based arm Profitable Plot Co Ltd went into liquidation for "failing to produce accounts". And PP's Malaysian subsidiary Profitable Plots Sdn Bhd was raided in October 2008 for "offering investments in illegal land investment schemes." As 2008 became 2009, the complaints from cheesed-off investors were already coming in by the dozen and in April 2009, PP first defaulted on a payment to ESPN. It was against this backdrop then that Liverpool decided to allow PG to organise and sponsor the Reds' Asian tour.

Liverpool wouldn't have known about the ESPN situation, but it's ludicrous to think that they wouldn't have known about, at least, the collapse of Profitable Plot Co Ltd, and in all likelihood the Malaysian subsidiary too, as the story had made the national press in England and, of course, Steve McMahon was a senior employee of PG. It's a very safe assumption that Liverpool chose PG on the recommendation of McMahon. From a business point of view it was a strange decision: PG had no experience of organising such tours and it showed. This was what Singaporean financial expert Hun Boon had to say: "My suspicions were raised by the Profitable Group's website. I first visited it when I wanted to purchase tickets for the Liverpool football match in Singapore in May 2009. The website was poorly designed and I couldn't find any information on how to buy. Why is an investment company in the business of organising football matches? The coordination and traffic management on match day were poor, highlighting their lack of experience in event management. They even played the Liverpool club anthem 'You'll Never Walk Alone' twice, but failed to broadcast the Singapore anthem when the Singapore national team marched in, displaying blatant disrespect for the host nation."

And things were just as bad for the match in Bangkok. This from an expat who attended the match there: "The crowd control was appalling. We had to go through an extremely narrow gate to reach the concourse where our tickets were checked. There was a huge crush at the entrance as hundreds of people tried to push their way through. The location of this gateway was at the top of a set of steps so the crowd were on all different levels. It also seemed to be the only way to gain access to the East stand - all the other ways in had be fenced off and were manned by security staff. This was an hour before kick off so it wasn't as if everyone had arrived late and was rushing to get in."

In 2011, Liverpool used ProEvents to organise their tour of Malaysia and China. ProEvents have an exemplary twenty-year history of organising such tours. The fact that they weren't used in 2009 suggests Liverpool were listening to McMahon rather than to their heads. Indeed, as Red Sports said in April 2009 "With the growing presence of Profitable Group in Singapore, it is unsurprising for the English side to be scheduled a visit to Singapore as Profitable Group's Commercial Director is none other than former Liverpool star Steve McMahon."

Despite the poorly organised tour and despite the mounting complaints against his employers, McMahon was in typically bullish mood just two days after the Singapore match as PG ended their interest in a takeover of Newcastle United.

PG had announced very loudly their intention to buy out Mike Ashley and bring the good times back to St James's. Their plans included expanding the stadium up to a 60,000 capacity and installing Alan Shearer as manager. But on 28th July 2009, it was reported that PG had pulled out owing to a lack of "communication and response" to their bid. McMahon blasted Newcastle and Ashley: "We [PG] wanted to come in and turn the club around because it clearly needs something at the minute. We have put in a bid and we have had no communication, no response – nothing. It really is poor form from Newcastle, but if that's the way they want to run their business good luck to them."

That last line should haunt McMahon and keep him awake at night. Newcastle are now back in the Premier League whilst PG are in the gutter. Mike Ashley may not win many popularity contests on Tyneside, but he absolutely made the right decision by ignoring PG's advances. Remember what the CAD said: "Profitable Plots' liabilities and obligations far exceed its assets". In layman's terms, they've got no dough. Had Ashley accepted PG's offer, it's not difficult to imagine the Magpies 'doing a Leeds', ending up in administration and having a local derby with Hartlepool instead of Sunderland.

It's unclear when McMahon eventually cut his ties with PG, but it was likely to have been sometime in 2010 when the shit really started to hit the fan. Undeterred, he has resurfaced in India and has again convinced his former club to put their faith in him. It goes without saying that we will be monitoring the Steve McMahon Football Academy, and the little-known Carnoustie Group behind it, very closely indeed.

In many ways, Liverpool is a great football club, but the way they conduct their overseas business does a disservice to their great name, traditions and remarkable fans back in England. Again and again when we look at Liverpool's activities in Asia we are left wondering,

What would Shankly say?


Mike said...

I'm English so one of the colonials that you despise. You are on the ball with Profitable Group. But here is the thing . I first flagged it as a scam in 2007 to ESPN, Starhub, , press and authorities in Singapore and Malaysia and got threatened with a S$500K lawsuit by lawyers who harassed my friends and customers because some big PP potential customers cancelled. The Singapore media reported nothing against them. I spoke the truth but I couldnt afford to fight it in court. When Liverpool were being sponsored by Profitable to come to Asia I wrote to them with a dossier of why it was a scam which i also copied to the Singapore press. Again nothing done. But the UK press did carry my letters and articles and eventually ESPN had enough pressure to stop promoting the PG ponzi scheme, MAS put them on a blacklist and the whole deck of cards crumbled

Four years later the Directors including Mcmahon have taken their money overseas to their French Chateaus and bno charges have been made. McMahon went on to something called the London Nominees Limited Football Fund which has the same odour of tacky scam about it and is based out of offshore places where their financial records cant be looked at and recently were exposed on TV in the UK. Their website is now down while they claim innocence.

These assholes may be English but they ran their scam in Asia supported by Asian lawyers and the Asian media and ESPN star sports. The blogs were the only place willing to report it.

If Singapore wont condemn it why would you expect Liverpool to ?

Stop EPL Colonialism said...

Hi Mike. Thanks for a great comment. You've filled in a few blanks for us regarding McMahon's movements after Profitable Group.

Please don't take this group/cause the wrong way. I don't have a problem with English football clubs or English people; I have a problem with Asian people supporting these clubs and I have a problem with the way these clubs often conduct themselves in the Asian market. Our Facebook group has over 100 supporters from England.

In response to your final question, I don't think I do particularly expect Liverpool to condemn PG; I'm sure they would just rather it were all forgotten. Perhaps I do expect them not to get into bed with such a company in the first place, but, then again, maybe that's expecting too much from an EPL club in the 21st century.

Do you work in finance, Mike? Just wondered how you came to so clued up about PG so early on.
Again, thanks for your comment.

Mike said...

I have international experience but not in finance. This is my tale.

A Singapore friend bought Profitable Plots in 2007. He tried to earn some referral commission selling plots to me. I had seen the adverts on ESPN didnt know what it was. I was spending a lot of time in the UK so I looked into it. I discovered it was a complete scam. PP was being shut down in the UK. They cut a deal with the UK FSA to avoid forcible closure and director suspension. It would seem PP used Asian investor’s money to pay off UK investors to solve their FSA problem. Nice huh?

While being closed down in the UK, PP were offering the same investments via ESPN advertising on Saturday night TV in Asia. Once I understood how it worked I was horrified that people I knew and liked were being ripped off by English crooks. How could a scam that was running out of steam in one territory be moved to another territory with no communication between the authorities about the scammers ?
I had a bit of free time in the UK between projects and spent a week or so pulling together a set of information on PP. To me it was an open and shut scam. I presented the information to ESPN in the USA, and the Singapore press and posted some on a blog. I thought all would appreciate me telling them.

All that happened was ESPN passed it down to Profitable Group and I started getting legal letters from Profitable Plots lawyers saying I had to take full page adverts in the Singapore press to apologise for defaming them. I would be liable for any losses they incurred. I told them to fuck off. I told them would go to jail before I apologised. I was proud of that.

Basically I was told by my Singapore lawyer I was a foreigner interfering in a valid Singapore business and thats how the courts would see. That was my lawyer so you can imagine what their lawyers said! The Lawyers were trying to arrange meetings in the Singapore Supreme Court to scare me. They succeeded!

After some time hiding from lawyers trying to serve me with letters I had to quit Singapore because i couldnt afford to lose the half million dollars a lawyer told me it would cost me to fight it. I was less proud of that.

Since then i've dedicated an hour a week with some friends and family to do what I can to bring down PP and other UK landbanking scams operating in Asia. About half of what you read criticising them on the web over the last four years was generated by us to counter the bullshit press release they were putting out about things like buying Newcastle.

I discovered the way to get it done was to get a letter or article published in the UK press and then get that article quoted in blogs and the Singapore press. Singapore media wont criticise anything directly even if they know its true for fear of legal action but once its been published elsewhere they will quote it. People have to sue the original article publisher. Cowardly but effective.

Also the UK has a freedom of information act where we could ask about the development prospects of every Profitable Plots "amazing" investment site. The local authorities would always say the land was protected with no prospects for development.

This could be quoted by us in articles in the UK and outside.

Several UK national newspaper articles on PP were initiated by us. We also gave some advice on the London Nominees TV program but were not directly involved in the production.

Lately of course everyone is writing about it being a scam which is excellent but sadly for investors a little too late.

ESPN are suing them as well. How many people bought PP because of ESPN adverts that were never paid for? ESPN were told about the scam and did nothing. They deserved to lose the money. The investors did not because the local press did nothing.

I read about the Maddoff ponzi being known about for years and people being fired for trying to expose it. I know exactly how they feel.

There is no money or career in exposing scams. However it can be an interesting and rewarding hobby.

Stop EPL Colonialism said...

Thanks Mike.

Have you provided the CAD with your information, or do you consider your work done now that the CAD are investigating? Do you think charges will be brought against people from PG/PP?

I notice that the Football Fund site is down but the main London Nominees site is still up and potential investors can still apply for information. I note that Robson and the company both give firm responses to the Channel 4 documentary.

Anonymous said...

This might bring a smile to your face.

Word on the street is that a high profile PP Director has a bit of an aggression problem and picked on the wrong person recently.