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Ajax appeal 5.2 million euro charge of back taxes

03 December: Ajax is appealing the charge of 5.2 million euros worth of back taxes over the tax year 1997, recently imposed on the Amsterdam club by the Dutch fiscal authorities. According to the Dutch Fiscal Investigation Service (FIOD), the back payments are due over the transfer fees paid for Shota Arveladze and Michael Laudrup.

The essence of the fiscal problems in which Ajax now finds itself is the difference between money paid as a transfer fee (to the employer of the player involved) and so-called 'signing money', paid to the players himself, as a direct reward for signing his contract with his new club. In The Netherlands, transfer fees are tax free. 'Signing money' to an individual, however, is subject to tax charges.

In both cases, a FIOD investigation showed that parts of the respective transfer fees for Arveladze and Michael Laudrup went directly to the individual player and therefore has to be considered as (taxable) signing money. Ajax, however, claims that a transfer fee was paid to the respective employers of Arveladze and Laudrup, and that they may have paid a sum of signing money to the players.

Ajax claims that no signing money was paid by Ajax to the players directly, that Ajax was unaware of the fact that the former employers of Laudrup and Arveladze forwarded parts of the transfer fees to the player, as signing money. Also, Ajax claims that such deals between players and their former employers are none of Ajax' business. Therefore, the Amsterdam club has appealed to a higher court, in protest against the charges.

The responsible directors at the time were long-time treasurer and financial director Arie van Os and director Maarten Oldenhof. Shortly after Ajax' notice of appeal, their proceedings were compromised by an article in weekly magazine Voetbal International (VI), written by journalists Stephan Wageman and Peter Wekking. Their quest brought to the surface several remarkable financial constructions. The following paragraphs are a summary of their findings.

In the event of the Shota Arveladze transfer, from Turkish side Trabzonspor to Ajax, there were remarkable money-trails between Trabzonspor and the club where he started his career: Dinamo Tblisi, in his native country of Georgia. Arveladze's contract at Trabzonspor expired on 30 June 1997. Thusly, he was allowed to join Ajax on a free transfer.

Arveladze signed his player contract in Amsterdam on 16 June, but two weeks later he was surprisingly and suddenly bought by Dinamo Tblisi. Dinamo Tblisi paid a transfer fee of 1.5 million Deutschmarks to Trabzonspor, after which Ajax started negotiations with Dinamo Tblisi, where Arveladze was not playing. The Amsterdammers paid Dinamo Tblisi a transfer fee of 3.3 million Deutschmarks. It seems like Arveladze's instant transfer to Tblisi was a way to turn a large sum of taxable signing money for Arveladze and his agent (the notorious Ivan Benés) into a tax free transfer fee.

Remarkable detail: in the event of a player transfer, the player involved (or his agent) has to fill in an official FIFA Transfer Certificate, to formally ask permission to start playing in another country. One of the standard questions reads: 'Did you request any other transfers this year?' On the form Arveladze (or his agent) filled after his transfer to Ajax, the 'no' box is ticked. This is factually incorrect. Just before his transfer to Ajax, Arveladze was transferred from Trabzonspor to Dinamo Tblisi.

The transfer of Danish veteran Michael Laudrup to Ajax was settled in a similar way. Laudrup played in Japan's Second J-League for Vissel Kobe, when Ajax coach Morten Olsen first asked him to join Ajax. Vissel Kobe was in financial trouble and knew that Laudrup's 1.2 million dollar salary was going to be an insuperable problem in the next season. Therefore, the club was happy when Laudrup, in June of 1997, proposed to dissolve the contract. This gentleman's agreement would lift the burden of his salary off Vissel Kobe's shoulders, while it would allow Laudrup to join Ajax on a free transfer. Club and player agreed on the dissolution of Laudrup's contract, effective on 30 June 1997.

Whether Ajax was or was not aware of this deal is uncertain. Fact is, however, that Laudrup's personal manager and Ajax agreed on a transfer fee of 2.2. million dollars. But whom would Ajax have to pay this fee to? Not to Vissel Kobe, as Laudrup no longer had a contract there. He was officially free.

Just before he officially signed his contract with Ajax, Laudrup was suddenly transferred from Vissel Kobe to Celik Zenica, a club playing in the highest division of Bosnia-Hercegovina, on a free transfer. Ajax officially buys Laudrup from Celik Zenica, a club for which the Dane never played. Once again, it seems like the 'diversion' via Bosnia-Hercegovina was created for the sole of purpose of turning taxable signing money into a tax free transfer fee.

In its appeal to a higher court, Ajax will claim that the club was unaware of these 'diversions', that the transfer fee simply was paid to the party that officially had the players under contract and that it's not Ajax' responsibility to keep an eye on who raked in the money next.

Whatever the court's judgement may be, say Wageman and Wekking in their VI article, one thing is strange all the same: in the event of the Laudrup transfer, Ajax did not transfer the fee of 2.2 million dollars to the official account of Celik Zenica FC, but to the private account of a player agent. He claimed to be the manager of Celik Zenica, but very strict FIFA regulations say that transfer fees may only be paid to the football club that is the official employer of the player involved. Paying transfer fees to individuals or any other third parties is strictly forbidden. It is highly unlikely, if not impossible, that Van Os and Oldenhof were unaware of these rules.

In recent weeks, Feyenoord was involed in a similar case, albeit in the role of receiver instead of payer. The Rotterdam club, as well as its chairman, Jorien van den Herik, was cleared of all charges. (MP)

(Source: Voetbal International)