Forget the transfer market: Follow the money from Chelsea FC's sale
Todd Boehly paid several billion dollars to buy Chelsea FC. How much of that money will make its way to Ukraine, per the pledge of Roman Abramovich and the demands of the UK government?
“Follow the money” is exactly the sort of traditional journalistic practice that is so obvious and effective it’s become a mainstream cliché even as it’s become the last thing anyone brandishing the job title (or worse, degree) of journalism would dare to do. It’s hard work, and a lot of risk: you might find out The Cause or The Current Thing is just another grift. So I’m not particularly optimistic that anyone in the British media or global sports media will follow the money from Todd Boehly & Friends paid for Chelsea Football Club that should be going to the people of Ukraine.
If no takers, how about a bet? What percentage of Boehly’s Bucks will end up in Ukraine, vice in the pockets of variegated cronies in the NGO-foundation-politics complex?
Mission creep outpaces the sale itself
In his 02 March announcement that he would sell Chelsea, Roman Abramovich said:
I have instructed my team to set up a charitable foundation where all net proceeds from the sale will be donated. The foundation will be for the benefit of all victims of the war in Ukraine. This includes providing critical funds towards the urgent and immediate needs of victims, as well as supporting the long-term work of recovery.
Abramovich didn’t have many options at this point. One week earlier he had transferred control of the club to the Chelsea FC Foundation. However he initially saw this temporary move, the only outcome space within a few days had narrowed to full government confiscation, the club being disbanded or a sale. Establishing a foundation seemed the most neutral way that he could dissociate himself from his asset – in the form of the club or the money from the sale - without risking government seizure, receivership or foreclosure.
This would have been an atypical foundation. Foundations may have a single cause, but they rarely, if ever, have a single purpose. They don’t exist to do a job and then go away. Their financial and regulatory structures are designed for an open-ended lifespan, one where an initial bequest is invested – not disbursed – to generate recurring revenue. That revenue is then what the foundation puts towards its operating costs and its ostensible charitable purpose, with the foundation rarely tapping principal – the “seed donation” and any future donations.
As such, foundations are second only to government programs in their approach to immortality. Which is why the UK government dictating the terms of the foundation should be the hunting horn that summons the watchdogs to follow the money.
Among the many aspects of the expropriation of Chelsea Football Club that raised not a single eyebrow (Carlo Ancelotti’s doesn’t count – it’s always like that) was the appointment of the former chief of executive of UNICEF UK, Mike Penrose, to oversee the foundation that will receive and manage the disbursement of the money from the sale; and Penrose’s statement of intent as the sale approached completion.
Mike Penrose said, "The only request I received was to use my experience and contacts to create a Foundation that would have the greatest impact on conflict affected people in Ukraine, and in other countries affected by conflict across the globe." (italics added)
Among those contacts: “The person I have to be the chair is a former UN chief, one of the most respected humanitarians on the planet. And the people to govern the money are world leaders. To manage the money that’s coming out, I have one of the world’s leading law firms, and I’m contacting some of the best fund managers on the planet.”
“Money from the sale would go into an account managed by one of the world’s leading law firms, completely independent of Chelsea and Roman Abramovich. That firm and me would have to validate any money being spent.
“If they give us the green light in the next few days, we can have the foundation set up in a couple of months and have money on the ground in hours or days after that.”
Months to do legal paperwork, hours or days to move the money. This comes after various governmental and non-governmental officials lamented delays (attributed to Abramovich) in the sale process as costing Ukrainian lives. The UK government should have all financial channels in place to minimize the amount of time between Boehly & Co. finishing the sale and the money landing in or around Kyiv. The government has had over a month to plan for the immediate disbursement of these life-saving funds, so an inspector general or independent auditor should be sufficient to ensure the funds reach Ukraine and benefit the victims of the war.
Not about Chelsea, not about Roman, not about Ukraine
Penrose describes this foundation as a “gamechanger.” But Penrose himself is the game-giver-away-er.
The most important quote is the first one I included above: “...create a Foundation that would have the greatest impact on conflict affected people in Ukraine, and in other countries affected by conflict across the globe." (italics added again)
Shouldn’t there have been a period after the word Ukraine? Isn’t this entire thing about Ukraine?
No. It was never about Ukraine… and... Penrose just… Penrose came right out and said it.
Penrose’s statement was a few weeks ago. As I’m writing this, I see that last week Canadian Deputy Prime Minister and Finance Minister Chrystia Freeland made the implicit explicit at a meeting of G-7 finance ministers. Freeland proposed “allowing” Russian oligarchs to “buy” their way out of sanctions by authorizing the governments who freezed their assets to transfer those assets to Ukraine. According to the AP:
“The proposal could help remove a legal hurdle for authorities in countries such as Germany, where the bar for confiscating frozen assets is very high. By voluntarily (sic) giving up a share of their fortune abroad, oligarchs would save Western governments the potential embarrassment of being rebuffed by their own courts.”
Yes, we’d hate for Western governments to be embarrassed by the constraint of rule of law. Much better that they gin up a superficial extortion scheme them gin up a losing legal argument.
In fairness, Freeland would struggle to understand such concerns. She was thoroughly gleeful – not a trace of embarrassment! - when she froze her own citizens’ assets during the Canadian Truckers’ Convoy. Not unlike the response of British pols and media when the UK government sanctioned Roman Abramovich in the first place. Like I said: I’m not optimistic.
Not the beginning of the end: it’s the end of the beginning
Given the humanitarian situation in Ukraine, the three months between Abramovich announcing the sale and the sale being completed, and the international attention on this matter, this next stage should be like Brewster’s Millions on amphetamines. Instead of “can you spend a lot of money in a month starting now,” it’s “how quickly can you transfer an incredible amount of money with a few months notice?”
It should also be the final stage, but that is not Mike Penrose’s or the UK government’s intent. Which it means it should be the beginning of a multiyear effort by the media to follow the money.
Anyone interested in following the money could start with these points:
Penrose said “hours or days.” OK, then. Over any time frame – hours, days, weeks, months, years - what percentage of the sale price of Chelsea Football Club has been disbursed by the foundation? Did the foundation set up a time table for the disbursement of that amount – the foundation’s ostensible principal – and are they on track to meet that timeline?
What are the retainers, salaries and honoraria of everyone involved in the foundation? What are the fund management fees being charged by the law firms and fund managers Penrose is bringing into the process? What are the annual administrative and operational costs of the foundation?
Who are the direct recipients of the foundation’s disbursements? Is the foundation transferring money to other foundations? Is the foundation giving the money to aid groups currently working in Ukraine? What is the process for choosing these recipients, and what will be the standards for selecting recipients?
Do countries other than Ukraine receive funds before the full disbursement of Chelsea-related funds to Ukraine?
What are the final transactions in the chain of money that starts with the foundation and ends with goods or services “on the ground” in Ukraine? Is the money being used to buy food and water? Medical and sanitation supplies? Providing shelter or relocation services? Is the money actually buying these products, or funding service contracts to organizations that process and distribute products bought by other organizations?
Who / what are the other sources of money coming into the foundation?
What guardrails will ensure that no money is used to buy weapons or fund combatants?
Many of those questions can be answered in this one: For every dollar that leaves the foundation, how many cents are realized by a Ukrainian?
The British media (not just the sports media) have spent the last 20 years wailing about how Roman Abramovich’s money “broke” the sport of football. Now they have the chance they always wanted: following his money. Who’s up for it?