How Swindon Town's Lee Power was taken to court over 'club sale'

Power texted Clem Morfuni, a Sydney-based construction mogul. The text, published in court documents, read: "Clem, don't know why every1 is getting involved in this…it's finished had no offer nor have I put club on market…no need for any1 to get involved it feels like it's a set up. Mate…like people r trying 2 create something.”

Eight months on and with thousands of pounds paid to lawyers, Power, Morfuni and an international footballer’s adviser wound up in court wrangling over who owned Swindon’s 140-year-old football club – and whether it could be sold.

This is the story of how it happened, pieced together from the court papers here and here.

Power, the adviser and the Premier ace

Born in London in 1972, Power was a talented youth footballer, taking the field for Ireland as a youngster. His professional career started at Norwich City in 1990 and ended, a decade later, in Boston, Lincolnshire. He acted as a football agent and went into club management.

His involvement with Swindon Town began in 2013. That year, former Banbury United owner Jed McCrory led a consortium that bought the club from Betfair founder Andrew Black.

According to court papers, in March 2013 Power met Michael Standing, a former Bradford City and Walsall footballer-turned adviser and agent, and his childhood friend and client Gareth Barry. They met at England international Barry’s home, it was said.  

Gareth Barry, playing for West Brom in 2018 Picture: DAVE EVANS

Power said he came to an agreement that Barry would help buy the club, stumping up £800,000 in return for half the profits from any increase in the club’s value and half the net profits from the sale of some players. He would be expected to fund half of the club’s expenses and take on equal responsibility for a £2m loan from Andrew Black.

Standing’s account differed. He said there was an oral agreement around March 20, 2013 that he and Power would buy the club 50-50. In return for an initial £800,000 investment and payment of his half of the expenses “from time to time”, 50 per cent of the shares in the club would be held in trust for him by Power.

The adviser's involvement in the club would be kept confidential, it was revealed in the court papers. The judge said that was significant because under Football Association rules, agents and intermediaries are banned from owning or having a beneficial interest in a football club. A similar rule applied to Barry.

The gentlemen’s agreement went unwritten. But the evidence supports it. Standing’s accountant, Stephen Crouch, was said to have been appointed a director of Swinton Reds 20 Ltd – the company that owns Seebeck Ltd which, in turn, owns Swindon Town. Cash has been paid to Town consistently by Standing, although Power claims he thought this was on behalf of Standing’s star client.

Cracks began to emerge in 2016. In July, former Town winger Matt Ritchie was sold by AFC Bournemouth to Newcastle United for, it was rumoured at the time, between £10m and £12m. Whatever the fee, it earned Swindon £1.85m.

Matt Ritchie in 2012 Picture: DAVE EVANS

Under Standing’s version of his agreement with Power - detailed in the court judgement - that cash should have been split equally between them, netting each around £925,000.

That did not happen. According to High Court papers, Power told Standing that Andrew Black wanted his £2m loan repaid out of the proceeds from Ritchie’s sale. Standing even handed over another £75,000 in order to make up the difference between the £1.85m windfall and the £2m loan.

In mid-2019, he discovered that the loan had not been repaid. Deputy High Court judge Michael Green QC concluded: "No explanation has been provided by Mr Power as to why he said one thing and did another and the strong suspicion is that those monies were paid to Mr Power not the Club.” 

The Australian

Separately, Power was negotiating the sale of a 15 per cent stake in the club to Sydney-based businessman Clem Morfuni.

To describe the 50-year-old Australian as a builder is perhaps unfair. A press release issued by Town in 2017 spoke of his companies building stadiums in Sydney, hotels, office blocks and hospitals. “I love football, I love construction and I think it is a good match for Lee and I, and hopefully we can build a world class facility here for the community and for the Swindon fans,” he said upon being named Swindon’s vice chairman in July 2017.

In fact, Morfuni’s involvement in the club went back two years earlier, when he was introduced to Power by a mutual friend. His company, Axis, became a shirt sponsor.

Clem Morfuni Picture: STFC HANDOUT

Court documents show share sale agreement was signed in June 2018, with Morfuni’s company Axis agreeing to pay £1.1m in return for 15 per cent of the shares in Swinton and 15 per cent in Seebeck.

The cash was paid by the end of December 2018. Under the terms of their agreement Power should have sent his new business partner documents confirming the shares had been transferred and Axis registered as a “member” on the companies’ paperwork. That is yet to happen.

In early 2019, Power flagged a problem. The court heard he told Morfuni he was worried he could face a substantial capital gains tax bill on the sale of the Swinton shares. He asked for the “consideration” in the share agreement to be revised from £1.1m to £1. Axis’ lawyers drafted a revised share agreement and another contract for a £1.1m loan between Axis and Swindon Town. The documents were never signed.

By June, the English Football League had approved Morfuni as a fit and proper person to be a football club owner after checks showed he had the funds to run a club and wasn’t disqualified by virtue of, for example, a conviction for dishonesty.

With that hurdle jumped, Morfuni asked Power to let the English Football League know that Axis owned 15 per cent of the club. Power responded by email on June 27, saying the Australian needed to sign the “new share agreement we all agreed”.

Wrangling followed between lawyers acting for both sides. On August 9 it was agreed that the shares would be transferred by the following Friday.

But it wasn’t until October 3 that Power’s lawyers sent a copy of a stock transfer form, transferring 15 ordinary shares in Swinton to Axis.

There were two problems, as far as Morfuni was concerned: the business name was incorrectly spelled and the form listed the “consideration” as £1, not £1.1m. To date no share certificate proving Axis’ part-ownership of Swinton has been received, it was said.

Sales

Standing only found out about the sale to Axis in June last year. According to him, Power said Morfuni had not paid any money for the shares. He had, in fact, paid £1.1m.

Two months later, court papers suggest Power told Standing that US firm Able was interested in buying Swindon Town. In a Letter of Intent, dated September 11, the company offered £7.5m for all the club’s assets – and promised a windfall for Power if talented right back Jayden Bogle was sold by Derby County. Bizarrely, Power later said he had not seen the Letter of Intent until the dispute between him and Standing ended up in court. Judge Green described that claim as most odd.

In August, Standing’s accountant was removed as a director of Swinton. The log-in details for Swindon Town’s online bank accounts were changed, meaning Standing wasn’t able to check the accounts.

In protest, Standing – who was said to have paid the club over £6m in loans since 2013 - refused to pay anything towards the club’s expenses.

On October 22, Power received two letters. The first, from Standing’s solicitors, demanded he send the relevant forms so their client could transfer his 50 per cent share to a new nominee. The second was sent by Axis demanding from Swindon Town the £1,367,500 paid to it over the years. Axis has since withdrawn that statutory demand for repayment.

READ MORE: US firm makes £7m bid to buy Swindon Town (but club denies any knowledge)

READ MORE: Documents reveal US firm's interest in Swindon Town - club continues to deny any interest

Sale ban

On November 22, Standing applied to the courts for an interim injunction – granted by the judge – banning Power from selling the club or shares in Swinton and Seebeck without his permission.

Standing offered his £450,000 share in the family home, shares in his football agency business, £50,000 cash and his 50 per cent share in Swinton as a cross undertaking, the name given to a legal promise to compensate the other party for any losses they might suffer as a result of the injunction being granted.

Discussions between the lawyers in January and February revealed that conversations with Able over the sale of the club were ongoing, but it was unlikely there would be a deal until April. Standing’s lawyer said his client was keeping an open mind over any sale and “would consider them so long as he had full details of the transaction”. On January 25, Power’s solicitor said: “We have agreed subject to contract to proceed with the Able sale.”

By February, it appeared the lawyers had reached a broad agreement to keep talking – and possibly even pause the court proceedings – in order to pursue the sale of the club to Able or another buyer.

Standing wanted 50 per cent of the proceeds of any sale, as long as he had agreed in writing to the sale of the club. Power’s lawyer said in late February he had received a draft share agreement from Able that was 120 pages long, but encouraged Standing’s advocate to keep pursuing other possible buyers. The latter took that to mean there wasn’t much confidence that the sale to Able would go ahead.

The more collegial tone between the lawyers ended with a bang on February 28, when Power’s lawyer wrote to his opposite number claiming he had not received a reply to a letter sent almost two months earlier warning that the cash offered by Standing as compensation for the injunction wasn’t enough.

Lee Power watches Swindon Town play Exeter in February Picture: DAVE EVANS

Back to court

On March 18, a fortification application was issued demanding that Standing offer more than £5.8m in a cross-undertaking. Power claimed that the Able sale could fall through if the injunction remained in place and, if the sale was dropped, the club would have to be put into administration.

Power said he stood to lose £6.3m if the Able sale failed. That assumed the US buyers would pay £7.5m. The club’s assets were worth around £88,000 and he’d have to pay 15 per cent of the £7.42m profit to Morfuni, leaving £6.3m. He claimed the compensation offered by Standing in his injunction application only amounted to half a million pounds, potentially leaving Power £5.8m out of pocket.

Standing’s lawyers said the injunction did not prevent Power from selling the club – if Standing approved the sale. They also challenged the Town chairman’s sums.

In a witness statement, Gareth Barry said he had never agreed anything with Power and was not the investor. He admitted lending Standing some of the £800,000 needed to buy the club, but said he had done that to help out a good friend.

By the day of the court hearing – May 6 – Power’s legal team had drastically slashed the amount they were asking for in fortification, from almost £6m to just £1m.

However, they said their opponent should be entitled to only 50 per cent of the increase in the club’s value from £800,000 to £7.5m.They also asked account should be taken of Standing’s failure (or Barry’s failure – as Power believed his agreement was with the West Brom ace) to pay the club’s expenses since September 1.

A letter from Able and exhibited to the court showed the US firm was still interested in buying the club. In it, Able’s solicitor William Keravuori wrote: “As you know the worldwide pandemic has had an impact on transacting business. However, we remain determined to conclude negotiated terms with you to purchase the club as soon as conditions allow it.”

The judge concluded: “The letter really says nothing at all to indicate that the sale has got anywhere and I got the impression from it that, if anything, they would be biding their time until they could negotiate further and in particular to pick up the club as cheaply as possible in the difficult circumstances of the pandemic affecting the value of football clubs.”

He said the injunction did not prevent Power from selling the club. However the “total lack of transparency” meant Standing was not able to consider any deal. There was no evidence of the sale to Able going ahead, he said. The judge dismissed the application for fortification. The interim injunction remains in place.

In a separate set of court proceedings, Michael Green QC granted Axis an interim injunction preventing the sale of Swindon Town’s shares or assets without the company’s prior written consent.

Where does this leave Swindon?

So, where does this leave Swindon Town, which now looks likely to be crowned League Two winners after a spectacular run of form?

Who owns the club?

In the legal proceedings, the judge did not comment on whether the shares were rightfully owned by Standing or his client Gareth Barry. Even if it was the latter, he told the court he was prepared to transfer his claim to Standing for a nominal £1 payment.

Power disputes that Barry and Standing have a 50 per cent stake in the club, but acknowledges Barry may have some contractual rights.

Under Standing’s version of the contract, Power now owns 85 per cent of the club (15 per cent was sold to Axis) – although 50 per cent of the shares are held in trust for Standing.

The Arkell's Stand this morning Picture: DAVE COX

Standing and Power are yet to respond to an Adver request for comment.

Clem Morfuni said he remained committed to Town, describing it as a great sporting club. He added: “We’ve got to run it like a proper business and have transparency and open dialogue with the fans.”

During the legal proceedings, current chairman Power said the club would be likely to have to go into administration if the Able sale fell through. His evidence was that Town would need in the region of £700,00 to £750,000 between May and August this year in order to continue operating, which he was not able to provide. The judge concluded there was no evidence to back up Power’s assertions.

This week, Power told BBC Wiltshire that between 30 and 40 per cent of League One and Two clubs might not make it to next season without financial support. He said: "Unless there's some help from higher up the food chain, there's going to be a number of clubs that won't see the start of [next] season.”

The FA said it was aware of the case and "would consider its outcome in due course".