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The Birmingham Mail today led with a front page story about Peter Pannu taking £430,000 expenses from Birmingham City in the accounts released last week. There has been some understandable anger and Pannu has seemingly reacted badly to questions about his remuneration.
“When the going gets tough, the tough get going” sang Billy Ocean in the eighties. In Pannu’s case, he’s gone all the way to Hong Kong and has now bunkered down after an onslaught of questions from the local media about his pay package from Blues. Tom Ross has been tweeting over the last couple of days about the questions he has put to Blues’ “acting chairman” whilst the Mail have spent the last two days solid putting questions to Pannu via email to try to build a clearer picture of what is happening.
The Birmingham City Football Club accounts show “Directors’ emoluments” of £687,611 from the previous year, of which £687,611 was paid to one director. This means that a single director of BCFC’s total pay package was £687,611 for the year ending June 2012.
We know that this pay package went to Mr Pannu as he confirmed that he was paid £250,000 gross (circa £125,000) net by the club for his role. However, it’s the remaining £430,000 that is the interesting bit. Mr Pannu told the Birmingham Mail that these were “pocket expenses”, chiefly for funding his team of assistants’ wages when in Birmingham and working for him, and travel to and from Hong Kong.
I find this explanation bizarre in the least. I’d like to know why Birmingham City are paying the wages of his assistants via Mr Pannu’s salary rather than being paid direct – it seems an odd way of doing things. I can understand that whilst Mr Pannu is in Birmingham he requires a place to live, a car and that sort of thing and I’d fully expect him to receive benefits in kind of that nature because of the position he is in. However, to received £430,000 in benefits in kind seems excessive.
Having spoken to an accountant, I’ve been reassured that these are not business expenses. Receipted business expenses would be accounted for elsewhere in the accounts as there are different tax rules for them. Expenses which are not purely business-related are taxable and are included as benefits in kind. What concerns me – and is a question I’d like to put to Mr Pannu – is that the club may be paying excessively for his spending. For example, if Mr Pannu handed in a credit card bill and asked for it to be paid without receipts then it would have to be paid as a benefit in kind, with the club paying PAYE and National Insurance contributions on top. Thus an expense of £500 would actually cost the club closer to £1000. I’d like some sort of reassurance from Mr Pannu that isn’t the case.
I think the thing that Mr Pannu doesn’t understand is that if Birmingham City were flying high in the Premier League – or even if we were just in a situation where the club wasn’t hurting for cash then whilst I think there would be some grumbles most people would accept it. For example, in the relegation season whilst the football club paid out 80k in directors’ emoluments the UK parent Birmingham City PLC paid out £729k to directors, including £383,000 in benefits in kind – which passed without much comment.
Secondly, and again I don’t think Mr Pannu understands this is that people are confused as to who he is employed by. He receives a wage from BCFC but does he also receive a wage from BIH as an executive director, chief executive officer and managing director? Admittedly, he only was appointed to that role in recent times but the announcement made clear that he had a consultancy role with BIH via his company Asia Rays Ltd – was he being paid by them too via that?
Thirdly the parent company Birmingham City PLC’s accounts have not been released and are overdue. I’d be intrigued to see if the total directors’ emoluments in those are the same as they are for the club – and if not, I’d want to know who was being paid by the holding company.
Mr Pannu has complained about media pressure from the Birmingham Mail and Tom Ross because of the questions over the last few days. It appears that once the questioning becomes anything he might be remotely uncomfortable with that he shuts the door and bunkers down, blaming anyone and everyone for the club’s financial misfortunes. To blame the fans for a deal not going through is incredible; to imply that it’s his management that has kept the club solvent is just shocking.
Mr Pannu – if you think this is media pressure and this is hatred from the fans, all I can say from past experience is that you’ve not seen anything yet. I personally wouldn’t like a situation whereby it’s the fans versus the board and I don’t think it necessarily has to come to that. Rather than hide in Hong Kong the time has come to face up to what is happening and to prove that like L’Oreal, you are worth it.
Tags: Peter Pannu