The lawyer Felice Raimondi has provided his take on the news that AC Milan are being investigated by the authorities for some perceived irregularities with their sale and ownership.
Raimondo has written an in-depth article about the situation on his website, that we will attempt to pick out the key bits from as they provide some reassuring news for fans regarding any potential wrongdoing.
He writes that there is only one type of crime being contested: that provided for by art. 2638 of the Civil Code, i.e. ‘Obstacle to the exercise of the functions of public supervisory authorities’.
In detail, it is stated that the current CEO of Milan – Giorgio Furlani – together with the previous CEO Ivan Gazidis acted in a way that hindered the supervisory bodies, concealing facts that should have been been communicated. These facts pertain to the economic, patrimonial and financial situation relating to the ownership structure of the club.
The investigation starts from BlueSkye’s old complaint from 2022 which which has to this point not got very far in the Courts. For example, Blue Skye lost the case against Elliott Management in Italy and will have to pay the legal costs.
A first complaint, which appears evident from the indictment, is connected to the public nature of the Italian Football Federation. In fact, the complaint referred to in art. 2638 c.c. can only be carried out against public supervisory authorities.
However, the Council of State said the opposite in 2021. In fact, with the ruling of 15 July 2021, n. 5348, the Fifth Section of the Council of State stated that the F.I.G.C. it is not a body governed by public law.
If, therefore, the magistrates considered the FIGC to be a private law body which in this case would have acted as a legal entity having no public relevance, all this would make criminal investigations lapse as there would be no crime to investigate.
In addition to that, it would also allow the suspects to appeal to the review to have searches carried out, and thus the evidence collected would be deleted as they were based on an erroneous assumption: that of the public nature of the FIGC.
Then, the investigators believe that are some ‘anomalies’ regarding the corporate structure and the AC Milan board communicated to the FIGC.
In particular, it is hypothesised that at the top of the corporate structures that control the Rossoneri club it is not RedBird Capital or Gerry Cardinale (as always publicly repeated) but an American company, RB FC Holdings GenPar LLC.
This company is based at the same address where King are located and Genio Investment LLC, the companies attributable to Elliott Management that control the vehicle that provided the loan to Cardinale (i.e. Rossoneri Sport Investment) in the form of a vendor loan.
Furthermore, it is also hypothesised that part of the money paid by RedBird came through a vehicle, RB Fund IV FC AIV C.V., which ‘does not appear to be attributable to RedBird’. Finally, there are suspicions regarding the presence of representatives of the Elliott fund on the Milan board.
Raimondo remarks that first of all the fact that this company shares an address with Elliott’s is not a big surprise, because 300,000 companies are registered at the same address including Coca Cola, Apple, Walmart, Google, American Airlines. He has already written about why Delaware is such a hotbed for corporate registration.
In addition to that, the lawyer also investigated RedBird’s control chain in 2022, and from the documents it was clear that all the vehicles cited and mentioned were referable to RedBird, meaning Cardinale is very much the owner of said vehicles.
RB Fund IV FC AIV C.V. – i.e. the vehicle under Dutch law which, according to the prosecutor’s office, paid a good part of the money to Elliott and which ‘does not appear to be attributable to RedBird’ – is in reality a vehicle absolutely attributable to RedBird. A simple look at the Dutch Chamber of Commerce shows it.
RB FC Holdings Fund IV AIV C.V. is owned by RedBird Capital Partners Fund IV GenPar LLC (registered at the usual address in Delaware where there are thousands of other companies).
RedBird Capital Partners Fund IV GenPar LLC, a fund registered with the SEC under number 805-5462648909, is a vehicle attributable to Gerald Cardinale and, therefore, to RedBird.
Finally, looking at the presence of Elliott’s members on the AC Milan board, it must be specified that, since the closing of the takeover the only effective member is Gordon Singer, given that Furlani and Cocirio had resigned from their positions at Elliott before starting new roles as Milan.
Raimondo asks, ‘How can the presence on the board of a representative of the creditor who lent around 550 million appear strange?’
On the contrary, the presence of only one board member (less than the two agreed upon at the time of the sale, and this in itself is indicative) rather certifies that everything is ordinary.
Why is it normal for Elliott to keep a board members? Because the creditor (through the vendor loan) want to verify the management of the asset to protect their credit.
The vendor loan does not conceal a disguised sale, but a payment deferral – at lower rates than a loan – and with a pledge on the share capital. The advantage of the debtor is to enjoy a more advantageous interest rate; that of the creditor is that they get a capital gain on the sale and a profit from the interest received on a super guaranteed loan.
To purchase the shares, the money obtained from the sale of the shares must be allocated to the release of the loan up to the value of the pledge of the shares as guarantee. Otherwise, the creditor would not express consent to the transfer of the shares, to secure their credit.
In the document presented to investors, which is mentioned by investigators and the media, this was precisely what was talked about. That is, the current 99.93% owner of Milan (RedBird) is proposing to investors the entry with minority shares, equal to 41.7% and corresponding to 80% of the vendor loan (the loan) which, therefore, would be reduced to 20% equal to approximately €122m.
Raimondo concludes: “How all this can be interpreted as a ‘disguised sale’ and, therefore, potentially as an administrative offence relevant to the Code of Sports Justice… remains a mystery to which the magistrates will have to answer.”
