High Court judge: Laurence Bassini had authority to organise Watford FC loans

Judge Mackie QC this week dismissed the Hornets’ claims that the Stanmore businessman was not acting in the best interest of the club when he arranged £2.6 million of loans in breach of Football League regulations.

His ruling came after the company who lent the Golden Boys the money, LNOC, took the club to court over £900,000 plus interest it hadn’t repaid.

The judge also found against Watford FC's counter claim against LNOC for the money it had already repaid on the loan.

Watford have said they are appealing the decision.

At a trial last month, Watford FC argued they were not bound to repay the money as Mr Bassini had organised the loans knowing he was risking serious harm to the club by breaching football League rules.

However in his judgement, Judge Mackie said: "I conclude from both considering the four matters raised by the club and looking at things in the round it has not been shown that when Mr Bassini entered into these transactions, he was not acting in what he honestly believed to be the best interests of the club .

"The club was free to delegate wide ranging authority to a managing director but it has to take the consequences of doing so. The club, acting through the de facto managing director it appointed, borrowed money but has not paid it back. It should now do so. The defences of lack of actual or apparent authority fail as does the counter claim."

During the court case the judge heard Mr Bassini had met with a sport financier, Nigel Weiss, in July 2011 to explore ways raising money to build the South-West Corner with "forward funding" loans.

This is where a club will borrow against payments coming to it in the future.

The court was told that at first Mr Bassini looked to borrow £900,000 against £1 million Swansea was due to pay Watford as part of the Danny Graham transfer.

However, later Mr Bassini said he also wanted to borrow £1,700,000 against £1,800,000 the club was getting in Football League Pool money.

Mr Weiss lined up LNOC, a company owned by a married couple Nicholas and Lesley Francis, to fund the transactions.

Both transactions were later found to be in breach of Football League regulations.

The judge heard that in September 2011 Mr Bassini was told by the Football League pool money loan would breach regulations and incur a transfer embargo. After this he told Mr Weiss to restructure the loans and not tell the Football League about them.

However the court heard there were later numerous delays and missed deadlines for the repayments which led Mr Weiss to threaten Mr Bassini that he would inform the Football League about the loans.

By June last year Mr Bassini was in the process of selling the club to the Pozzo family and when Mr Weiss requested the remaining £900,000 from the club it said it had no knowledge of the agreement and was not paying.

In the trial the club argued it was not paying as "both transactions were manifestly in breach of the Football League regulations and in entering into them the club was exposed to extremely serious sanctions."

Watford also said at the time there were alternative methods of funding available to the club and the club did not benefit from the transactions.

Nicholas Randall QC, Watford’s barrister, said Mr Weiss knew from the nature of the transactions that Mr Bassini and his advisor Angelo Barrea did not have authority to make them.

During their argument the club’s barrister highlighted the LNOC money went to the club’s Bassini-owned parent company, Watford FC Limited.

However in his judgement, Judge Mackie said: "I accept LNOC’s submission that there was nothing unusual or improper about directing that payment to be made to the holding company that to the club itself. WFCL had authority to receive funds for the club."

The judge also dismissed the evidence of Watford FC’s head of finance Katie Wareham, who he described as having "an impressive grasp of the financial issues", that Watford FC Limited had "obtained very substantial amounts of cash at the expense of the club."

In her evidence Ms Wareham said her accounts showed Mr Bassini’s company was around £4 million up when his tenure ended.

Judge Mackie said he found the evidence suggested that "it was the club that may have, in cash terms, benefited at the expense of Watford FC Limited and that the position was, at worst, neutral."

Judge Mackie added: "It follows that this is not a case where it is alleged that a director has benefited personally at the expense of the company."

He also rejected the club’s argument that Bassini hid the loans from the other directors as he knew he was not acting in the best interest of the club.

The judge described Bassini’s failure to inform the board as "remiss" but pointed out key documents regarding the transactions were signed in the club offices with other staff as witnesses.

He also pointed to the fact the board had tasked Bassini with finishing the construction of South-West Corner as proof he had authority to organise the loans.

The judge added: "The board delegated authority to Mr Bassini and let him get on with it in a way that many public companies in other spheres would not. That is not neglect on their part but recognition that the owner of a football club must be allowed to call the shots.

During the trial Mr Randall argued that Mr Weiss knew Bassini was "up to no good" when asked him to hide the transactions from the Football League.

He pointed to an email sent by Mr Weiss to Mr Barrea in April last year when the club was a month and a half late on the second repayment of the Danny Graham money.

In it, Mr Weiss said if the club did not pay he would have to go to Swansea for the money and this would lead to the Football League being notified.

He continued: "That would be a dreadful outcome and would place the club in a very difficult position with the FL (including a large fine and possibly even a points deduction for breach of regulations).

"It would also be very bad for me personally. Given that I went out of my way to structure this without reference to the FL I wish had not done so."

In his evidence Mr Weiss said he had been talking about the regulations generally in the email had did not believe the transactions breached specific Football League regulations due to the way they had been structured.

The judge said he felt Mr Weiss was putting pressure Mr Bassini to pay up and not expressing a considered view about the consequences of the regulations.