• Club claim Paul Duffen breached duty as director
• Allegations that agents paid for business deals
Hull City today accused the club’s former chairman Paul Duffen in the high court of personally accepting “bungs” from agents in return for making sure the club did business deals with those agents.
That claim was made in a court action in which Hull are suing Duffen for damages, for the alleged bung money to be paid to the club, and for the return of money and property they claim Duffen “acquired” for himself while he was a director. Duffen accepted that a legal charge be placed on a property he owns, in favour of the club, to secure the money claimed, although he denied all the allegations made against him.
In their claim to the court, City allege that agents, who are not named, paid bungs to Duffen via Reef Securities, a company registered in the Bahamas with an office in Guernsey.
“In breach of his employment contracts and fiduciary duties to [the club] as … director,” the claim states, “certain monies were paid by third-party football agents to [Reef Securities] on [Paul Duffen's] behalf, in return for which [Duffen] procured that [the club] contract with the agents for business.”
The claim also alleges that Duffen: “Used [the club's] monies for his own personal expenditure”, and that “property, monies and other rights [were] acquired by [Duffen] through his use of [the club's] money in breach of authority and breach of trust”.
A further allegation is that Duffen “was very frequently absent from the stadium, which was his designated place of work” while he was the chairman.
The document states that Duffen did not simply resign as a director on 26 October last year, as announced at the time, but that his resignation followed “his suspension”.
This court action, thought to be the first by any English football club alleging that one of their employees or directors have accepted bungs, follows the turmoil in the autumn when Duffen resigned. The club’s accounts, filed several months late, included a statement from the auditors that Hull had to find £16m additional funding within a year if they survive in the Premier League, and £23m if they are relegated. The accountants warned: “These matters represent a material uncertainty that may cast significant doubt over the company’s ability to continue as a going concern.”
The former chairman Adam Pearson returned to the KC Stadium, having been appointed as chairman by City’s owner, the Essex-based property investor Russell Bartlett, and immediately appointed accountants to undertake a thorough investigation of the club’s financial affairs. The new chairman warned that the wage bill had risen far too high and too many players had been signed under Duffen’s period in charge, during which Hull had won their promotion to the Premier League in 2008 and survived in the top flight last season.
In December, Pearson said Hull had contracts committing them to paying agents “over £4.5m” during a 12-month period. It was, however, not known until yesterday that City had instigated proceedings against Duffen, accusing him of taking bungs from agents and using club money for himself and to acquire property.
Duffen denied all the claims, with his barrister, Lexa Hilliard, saying that the agreement for him to have a charge over his property “is not to be taken in any way at all as an admission by Mr Duffen of any of the allegations made against him”.
Duffen has claimed that Hull owe him money for the early termination of his contract as the club’s chairman, although the club denied that any legal proceedings had been issued.
City’s lawyer, Clive Zietman, of the firm Stewarts Law, said: “The club will be vigorously pursuing this claim.”
Duffen is required to file his defence next month.
Hull CityBusinessDavid Connguardian.co.uk
