Share Transfers Agreed/Cooling off period

Money laundering eh-perhaps solicit some help from the Southside.

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Originally Posted by CropleyWasGod

Right.....the auditors.

As far as getting evidence about the write-off of the debt is concerned, a signed letter from that company on its headed paper should be sufficient as a starting-point. However, given the amount of the write-off, my instinct would be to find out a little more about the company itself. Not necessarily from an audit-evidence point of view, but from the perspective of finding out more about the environment in which Hearts/UBIG/UKIO operated. Remember, of course, that Johnston Carmichael found it difficult to get any information out of UBIG and their auditors, so any additional information would be very useful.

On to money-laundering.

The writing off of a debt does not, of itself, suggest money-laundering. (That term, by the way, has become a bit of a misnomer.... we are really talking about "profiting from the proceeds of crime"... but ML is easier to say.) However, again given the lack of clarity around UBIG etc, it would have been good practice on JC's part to establish "why" the debt was written off. Good practice from an audit point of view, but also to try and satisfy their anti-ML obligations.

Did they do that? We can't know.

Let's assume that they did, and that the reasons appeared to be sound, sensible, commercial etc. In that case, JC have nothing to be concerned about in that particular aspect.

Now, let's assume that they did, and that the reasons are none of the above. If that is the case, the law is quite clear. If an accountant/lawyer etc has "suspicion" (not evidence, or knowledge.... mere suspicion) that someone with whom they have come into contact in their business dealings has profited from the proceeds of crime, then they MUST report that suspicion to the authorities. (at the last count, that was the National Crime Agency, but they keep changing the bloody rules.)

So, if JC suspect that Impex or Hearts have profited from crime, and they report that suspicion, they have satisfied their obligations..... whether or not anything comes from that report. If they don't report it, they (specifically, probably the auditor in charge of the job, and their Money Laundering Reporting Officer) could be liable to 7 years in the jail.

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We need a leak of the calls recorded from Vlad's mobile by the intelligence services. Is Edward Snowden a Hibby? :greengrin

Sounds like the kind of operation that would offer to pay Craig Thomson to give a penalty & red card in the cup final in 2012

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Originally Posted by Springbank

Sounds like the kind of operation that would offer to pay Craig Thomson to give a penalty & red card in the cup final in 2012

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Thomson doesn't need bribed to give a decision against us. Indeed he'd reject such an offer out of hand just to prove that he can be an incompetent cheat without being given an incentive.

In 2008 Hearts converted £12million of debt into equity i.e. shares, which were valued at 10p per share. In 2010 they converted a further £10 million of debt for equity on the same basis, all of which gives a total or 220 million shares. After the second swap the Hearts website indicated that this would mean that the number of ordinary shares would total something in the order of 142 million, which doesn't make arithmetical sense. Their website also indicated that, at that time, UBIG owned slightly less than 47 million ordinary shares or 95% of the company. That doesn't make arithmetical sense either of course. However, at the point, just before it all went belly-up, they asked the fans to provide around £1.8 million for a 10% share of the club, which, unsurprisingly, doesn’t make any arithmetical sense either.

None of these transactions were queried at the time nor have they been since by our dynamic, investigative Scottish media i.e. a journalist with a calculator and opposable thumbs. These figures and statements alone would surely warrant investigation because the shareholders and creditors of both UKIO BANKAS and UBIG might just feel it is reasonable to know exactly how many shares were purchased on their behalf and what percentage they constitute in terms of the overall value of Hearts. It does, after all, reflect on their value. If the club, its shares and assets are now worth £2.5 million, I reckon those fans who provided the £1.8 million should actually own over 70% of Hearts, which I believe is around the amount of shares that are now being purchased for £50K to the apparent delight of the Hearts fans who paid £1.8 million for them last year...or am I just confusing things?
How well all of this reflects on Scottish journalism is fairly obvious...pathetically.

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Originally Posted by tomf

In 2008 Hearts converted £12million of debt into equity i.e. shares, which were valued at 10p per share. In 2010 they converted a further £10 million of debt for equity on the same basis, all of which gives a total or 220 million shares....

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Aye but.... Shhh... :wink:

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Originally Posted by tomf

In 2008 Hearts converted £12million of debt into equity i.e. shares, which were valued at 10p per share. In 2010 they converted a further £10 million of debt for equity on the same basis, all of which gives a total or 220 million shares. After the second swap the Hearts website indicated that this would mean that the number of ordinary shares would total something in the order of 142 million, which doesn't make arithmetical sense. Their website also indicated that, at that time, UBIG owned slightly less than 47 million ordinary shares or 95% of the company. That doesn't make arithmetical sense either of course. However, at the point, just before it all went belly-up, they asked the fans to provide around £1.8 million for a 10% share of the club, which, unsurprisingly, doesn’t make any arithmetical sense either.

None of these transactions were queried at the time nor have they been since by our dynamic, investigative Scottish media i.e. a journalist with a calculator and opposable thumbs. These figures and statements alone would surely warrant investigation because the shareholders and creditors of both UKIO BANKAS and UBIG might just feel it is reasonable to know exactly how many shares were purchased on their behalf and what percentage they constitute in terms of the overall value of Hearts. It does, after all, reflect on their value. If the club, its shares and assets are now worth £2.5 million, I reckon those fans who provided the £1.8 million should actually own over 70% of Hearts, which I believe is around the amount of shares that are now being purchased for £50K to the apparent delight of the Hearts fans who paid £1.8 million for them last year...or am I just confusing things?
How well all of this reflects on Scottish journalism is fairly obvious...pathetically.

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Are you suggesting the thick maroon dipsticks already own their club but are on levels of stupidity previously unreached in that they are paying for the club yet again in long term installments while surrendering ownership to an extremely wealthy woman from Drylaw?

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Originally Posted by tomf

In 2008 Hearts converted £12million of debt into equity i.e. shares, which were valued at 10p per share. In 2010 they converted a further £10 million of debt for equity on the same basis, all of which gives a total or 220 million shares. After the second swap the Hearts website indicated that this would mean that the number of ordinary shares would total something in the order of 142 million, which doesn't make arithmetical sense. Their website also indicated that, at that time, UBIG owned slightly less than 47 million ordinary shares or 95% of the company. That doesn't make arithmetical sense either of course. However, at the point, just before it all went belly-up, they asked the fans to provide around £1.8 million for a 10% share of the club, which, unsurprisingly, doesn’t make any arithmetical sense either.

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Hearts are too big to be bound the laws of traditional mathematics. They have their own yamathematics to cope with the apparent inconsistencies you identify.

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Originally Posted by CropleyWasGod

Right.....the auditors.

As far as getting evidence about the write-off of the debt is concerned, a signed letter from that company on its headed paper should be sufficient as a starting-point. However, given the amount of the write-off, my instinct would be to find out a little more about the company itself. Not necessarily from an audit-evidence point of view, but from the perspective of finding out more about the environment in which Hearts/UBIG/UKIO operated. Remember, of course, that Johnston Carmichael found it difficult to get any information out of UBIG and their auditors, so any additional information would be very useful.

On to money-laundering.

The writing off of a debt does not, of itself, suggest money-laundering. (That term, by the way, has become a bit of a misnomer.... we are really talking about "profiting from the proceeds of crime"... but ML is easier to say.) However, again given the lack of clarity around UBIG etc, it would have been good practice on JC's part to establish "why" the debt was written off. Good practice from an audit point of view, but also to try and satisfy their anti-ML obligations.

Did they do that? We can't know.

Let's assume that they did, and that the reasons appeared to be sound, sensible, commercial etc. In that case, JC have nothing to be concerned about in that particular aspect.

Now, let's assume that they did, and that the reasons are none of the above. If that is the case, the law is quite clear. If an accountant/lawyer etc has "suspicion" (not evidence, or knowledge.... mere suspicion) that someone with whom they have come into contact in their business dealings has profited from the proceeds of crime, then they MUST report that suspicion to the authorities. (at the last count, that was the National Crime Agency, but they keep changing the bloody rules.)

So, if JC suspect that Impex or Hearts have profited from crime, and they report that suspicion, they have satisfied their obligations..... whether or not anything comes from that report. If they don't report it, they (specifically, probably the auditor in charge of the job, and their Money Laundering Reporting Officer) could be liable to 7 years in the jail.

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The accounts were also not signed off by the auditors for a number of years iirc which would imply that they must have been unhappy with the answers they were getting from the Liths.

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Originally Posted by Filled Rolls

He's tried to be their pal, and now they are turning on him and saying its all his fault. The fact is they haven't needed anyone to point out the shambles - it's been staring them in the face for years, in the shape of a stand built in 1914.

The minute Vlad told them about his plan to replace Archie Leitchs masterpiece, they should have suspected a crock. The fact that they didn't run him out of town, but lamely went along with his lunacy, has been their biggest failing.

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This!

The fact that despite all the evidence that Vlad was a shyster they chose to back him or were at least compliant in their silence makes them complicit in the death of their club. They've done this to themselves and we should never let them forget it.

OK, a couple of fairly random but associated thoughts on recent posts.
1. Washing the Lithuanian money. IIRC was there not a period where most of Yams marquee signings were officially Kaunas players? I know someone has commented on wages being transferred from Lithuania but I'm sure it would have been possible for loan fees also to have been charged. Mind you, how this would have escaped the eagle eyes of Johnson Carmichael is a mystery! I think GG's probably on the money however re large sums being moved through offshore entities.
2. Building on the above it's yet another wonderful example of Yam ignorance. There are many posters both on Brokeback & EEN who somehow claim we are cheating by playing loan players. This not only ignores the Kaunas situation but forgets recent beauties such as Danny ( nae suspension ) Wilson, Ngoo, who helped them to the LC final & currently McCallum, who TBF, they're desperately trying to forget!
Thank heavens for Yams, it really helps us avoid thinking about our own situation!

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Originally Posted by Stonewall

The accounts were also not signed off by the auditors for a number of years iirc which would imply that they must have been unhappy with the answers they were getting from the Liths.

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They were signed off, with clean audit reports

Edit... Apologies, I misread your post. See Cav's much more expansive, and correct, post below :)

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Originally Posted by CropleyWasGod

They were signed off, with clean audit reports

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Thanks CWG - memory playing tricks again, another senior moment.

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Originally Posted by tomf

In 2008 Hearts converted £12million of debt into equity i.e. shares, which were valued at 10p per share. In 2010 they converted a further £10 million of debt for equity on the same basis, all of which gives a total or 220 million shares. After the second swap the Hearts website indicated that this would mean that the number of ordinary shares would total something in the order of 142 million, which doesn't make arithmetical sense. Their website also indicated that, at that time, UBIG owned slightly less than 47 million ordinary shares or 95% of the company. That doesn't make arithmetical sense either of course. However, at the point, just before it all went belly-up, they asked the fans to provide around £1.8 million for a 10% share of the club, which, unsurprisingly, doesn’t make any arithmetical sense either.

None of these transactions were queried at the time nor have they been since by our dynamic, investigative Scottish media i.e. a journalist with a calculator and opposable thumbs. These figures and statements alone would surely warrant investigation because the shareholders and creditors of both UKIO BANKAS and UBIG might just feel it is reasonable to know exactly how many shares were purchased on their behalf and what percentage they constitute in terms of the overall value of Hearts. It does, after all, reflect on their value. If the club, its shares and assets are now worth £2.5 million, I reckon those fans who provided the £1.8 million should actually own over 70% of Hearts, which I believe is around the amount of shares that are now being purchased for £50K to the apparent delight of the Hearts fans who paid £1.8 million for them last year...or am I just confusing things?
How well all of this reflects on Scottish journalism is fairly obvious...pathetically.

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There's a confusion between nominal value, issue price and share premiums here. The 2008 share issue consisted of £34,285,714 shares with a nominal value of 10p - that increased the share capital by £3.4m (rounded off). They were issued at a price of 35p - a premium of 25p - which increased the share premium by £8.5m. The issue reduced debt £12m - 34m x 35p. The other conversion followed a similar pattern.

The real question was why this was done. The club was already worthless and this action reduced UBIG's potentially recoverable debtor into an unrecoverable (i.e. worthless) investment. Since UBIG was an investment-based concern it seems likely that the motive was to falsely inflate their balance sheet by massively overvaluing the HoMFC shareholding.

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Originally Posted by CropleyWasGod

They were signed off, with clean audit reports

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Was there not a wee qualification that JC had limited information regarding UBIG and that the Yams were entirely dependant on UBIG's continued support? I think this appeared for a few years.

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Originally Posted by tomf

In 2008 Hearts converted £12million of debt into equity i.e. shares, which were valued at 10p per share. In 2010 they converted a further £10 million of debt for equity on the same basis, all of which gives a total or 220 million shares. After the second swap the Hearts website indicated that this would mean that the number of ordinary shares would total something in the order of 142 million, which doesn't make arithmetical sense. Their website also indicated that, at that time, UBIG owned slightly less than 47 million ordinary shares or 95% of the company. That doesn't make arithmetical sense either of course. However, at the point, just before it all went belly-up, they asked the fans to provide around £1.8 million for a 10% share of the club, which, unsurprisingly, doesn’t make any arithmetical sense either.

None of these transactions were queried at the time nor have they been since by our dynamic, investigative Scottish media i.e. a journalist with a calculator and opposable thumbs. These figures and statements alone would surely warrant investigation because the shareholders and creditors of both UKIO BANKAS and UBIG might just feel it is reasonable to know exactly how many shares were purchased on their behalf and what percentage they constitute in terms of the overall value of Hearts. It does, after all, reflect on their value. If the club, its shares and assets are now worth £2.5 million, I reckon those fans who provided the £1.8 million should actually own over 70% of Hearts, which I believe is around the amount of shares that are now being purchased for £50K to the apparent delight of the Hearts fans who paid £1.8 million for them last year...or am I just confusing things?
How well all of this reflects on Scottish journalism is fairly obvious...pathetically.

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:top marks

So it all makes sense now. If you can borrow money from yourself, you can then use that money to buy your football club, from yourself. Presumably you then repay the loan from the money you received from yourself in payment for the club you sold to yourself. Then everybody is happy, especially yourself.

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Originally Posted by Caversham Green

The real question was why this was done. The club was already worthless and this action reduced UBIG's potentially recoverable debtor into an unrecoverable (i.e. worthless) investment. Since UBIG was an investment-based concern it seems likely that the motive was to falsely inflate their balance sheet by massively overvaluing the HoMFC shareholding.

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These transactions, along with the debt forgiveness and inter co invoices, are going to be the ones that will interest and be scrutinised by the Lith Fraud Squad. I would guess that these investigations will have to be completed before any assets are let go. Thoughts?

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Originally Posted by CropleyWasGod

They were signed off, with clean audit reports

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They were signed off, but apart from the 2012 ones they weren't 'clean'. They all carried a qualification to the effect that the auditors could not establish whether UBIG were capable of providing the support they claimed to be offering, therefore they (the auditors) were unsure whether the accounts gave a true and fair view.

The unqualified report given for the 2012 accounts, signed and published only a few months before HoMFC entered administration looks to me like a massive misjudgement at the very best.

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Originally Posted by Kaiser1962

These transactions, along with the debt forgiveness and inter co invoices, are going to be the ones that will interest and be scrutinised by the Lith Fraud Squad. I would guess that these investigations will have to be completed before any assets are let go. Thoughts?

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Indeed. In total these transactions 'cost' UBIG something in the region of £67m - since UBIG will not be paying their creditors a sum in excess of that amount HoMFC are ultimately responsible for those creditors' losses. In effect they stole that money from them - that's cheating, taking players on loan and paying off your debts as they fall due is standard business practice.

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Originally Posted by Caversham Green

They were signed off, but apart from the 2012 ones they weren't 'clean'. They all carried a qualification to the effect that the auditors could not establish whether UBIG were capable of providing the support they claimed to be offering, therefore they (the auditors) were unsure whether the accounts gave a true and fair view.

The unqualified report given for the 2012 accounts, signed and published only a few months before HoMFC entered administration looks to me like a massive misjudgement at the very best.

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Sorry. It was the 2012 accounts I was talking about.

Damn these Monday mornings....

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Originally Posted by CropleyWasGod

Sorry. It was the 2012 accounts I was talking about

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Ah, right. I think Stonewall was talking about accounts for a number of years though.

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Originally Posted by Caversham Green

There's a confusion between nominal value, issue price and share premiums here. The 2008 share issue consisted of £34,285,714 shares with a nominal value of 10p - that increased the share capital by £3.4m (rounded off). They were issued at a price of 35p - a premium of 25p - which increased the share premium by £8.5m. The issue reduced debt £12m - 34m x 35p. The other conversion followed a similar pattern.

The real question was why this was done. The club was already worthless and this action reduced UBIG's potentially recoverable debtor into an unrecoverable (i.e. worthless) investment. Since UBIG was an investment-based concern it seems likely that the motive was to falsely inflate their balance sheet by massively overvaluing the HoMFC shareholding.

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I seem to recall talk at some time of increasing the book value of UKIO/UBIG assets as the LT authorities required exposure to be within a certain percentage - they didn't have enough assets on the books for the debt they carried or some such thing. This was also the times Vlad was allegedly pumping his own money into various organisations, which the yams took to illustrate just how minted he was.

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Originally Posted by Caversham Green

There's a confusion between nominal value, issue price and share premiums here. The 2008 share issue consisted of £34,285,714 shares with a nominal value of 10p - that increased the share capital by £3.4m (rounded off). They were issued at a price of 35p - a premium of 25p - which increased the share premium by £8.5m. The issue reduced debt £12m - 34m x 35p. The other conversion followed a similar pattern.

The real question was why this was done. The club was already worthless and this action reduced UBIG's potentially recoverable debtor into an unrecoverable (i.e. worthless) investment. Since UBIG was an investment-based concern it seems likely that the motive was to falsely inflate their balance sheet by massively overvaluing the HoMFC shareholding.

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That's exactly what they were up to. Vlad valued the Yams at £ 50 million, not because he had any hope of getting a fraction of that amount, but to put on his balance sheet to justify the vast sums of Ukio Bankas cash " apparently " spent on them.

That's why he went bananas when FoH. went public with their £ 200 K offer for the whole shooting match. :greengrin

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Originally Posted by brog

OK, a couple of fairly random but associated thoughts on recent posts.
1. Washing the Lithuanian money. IIRC was there not a period where most of Yams marquee signings were officially Kaunas players? I know someone has commented on wages being transferred from Lithuania but I'm sure it would have been possible for loan fees also to have been charged. Mind you, how this would have escaped the eagle eyes of Johnson Carmichael is a mystery! I think GG's probably on the money however re large sums being moved through offshore entities.
2. Building on the above it's yet another wonderful example of Yam ignorance. There are many posters both on Brokeback & EEN who somehow claim we are cheating by playing loan players. This not only ignores the Kaunas situation but forgets recent beauties such as Danny ( nae suspension ) Wilson, Ngoo, who helped them to the LC final & currently McCallum, who TBF, they're desperately trying to forget!
Thank heavens for Yams, it really helps us avoid thinking about our own situation!

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Point 1 I would suggest the fees have been "charged" against profits and added to the Loan accounts of UBIG, UKIO or whomever and no "cash" will have changed hands.

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Originally Posted by CropleyWasGod

They were signed off, with clean audit reports

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There was a qualification n 2012 around support rom Lithuania.

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Originally Posted by Caversham Green

There's a confusion between nominal value, issue price and share premiums here. The 2008 share issue consisted of £34,285,714 shares with a nominal value of 10p - that increased the share capital by £3.4m (rounded off). They were issued at a price of 35p - a premium of 25p - which increased the share premium by £8.5m. The issue reduced debt £12m - 34m x 35p. The other conversion followed a similar pattern.

The real question was why this was done. The club was already worthless and this action reduced UBIG's potentially recoverable debtor into an unrecoverable (i.e. worthless) investment. Since UBIG was an investment-based concern it seems likely that the motive was to falsely inflate their balance sheet by massively overvaluing the HoMFC shareholding.

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Spot on.

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Originally Posted by The Falcon

Was there not a wee qualification that JC had limited information regarding UBIG and that the Yams were entirely dependant on UBIG's continued support? I think this appeared for a few years.

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2012

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Originally Posted by Kaiser1962

These transactions, along with the debt forgiveness and inter co invoices, are going to be the ones that will interest and be scrutinised by the Lith Fraud Squad. I would guess that these investigations will have to be completed before any assets are let go. Thoughts?

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I would think this is a racing certainty.

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Originally Posted by Caversham Green

They were signed off, but apart from the 2012 ones they weren't 'clean'. They all carried a qualification to the effect that the auditors could not establish whether UBIG were capable of providing the support they claimed to be offering, therefore they (the auditors) were unsure whether the accounts gave a true and fair view.

The unqualified report given for the 2012 accounts, signed and published only a few months before HoMFC entered administration looks to me like a massive misjudgement at the very best.

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That should have been the clue and, in my opinion, a massive misjudgement by the auditors.

Have a look at the BDO creditors list a see what the Aduitors were due !

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Originally Posted by Weststandwanab

There was a qualification n 2012 around support rom Lithuania.

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You're having the same Monday morning as me :greengrin

Cav's right. The 2012 accounts were unqualified. The earlier ones had the note about continuing support from Lithuania.

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Originally Posted by Jack

I seem to recall talk at some time of increasing the book value of UKIO/UBIG assets as the LT authorities required exposure to be within a certain percentage - they didn't have enough assets on the books for the debt they carried or some such thing. This was also the times Vlad was allegedly pumping his own money into various organisations, which the yams took to illustrate just how minted he was.

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The share issue took the number of shares in issue to just under 47m - at the issue price of 35p that confers a fictional value of about £16.5m on the club before 'goodwill'. Add the £34m debt that was left and you get to Mr Romanov's valuation and that was probably the asset that UBIG were showing in their accounts. One look at HoMFC (IA)'s accounts would show that they were in fact worth furcall.

Yeah, Johnston Carmichael due £ 100, they made sure they got their £140,000 or whatever fee before signing.

Their solicitors, HBJ Gately Waring , got stung for £ 44,313.00 which was pleasing, as I'm sure they would have been behind many of the legal " tricks " employed by the Yams over the Vlad years.

Just back from a weekend away lots of catching up tp do

any meeting confirmation yet ??

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Originally Posted by Greenworld

Just back from a weekend away lots of catching up tp do

any meeting confirmation yet ??

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Your missing the point .They aren't going to announce it as they want to try and surprise us before the Derby to give them some good news and try and flog their allocation in case we start buying up the tickets .

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Originally Posted by Ronniekirk

Your missing the point .They aren't going to announce it as they want to try and surprise us before the Derby to give them some good news and try and flog their allocation in case we start buying up the tickets .

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Excellent love surprises:greengrin