7.11.18

National Associations sanctioned by UEFA for granting licenses to clubs in breach of the Club Licensing & FFP Regulations



On Tuesday, UEFA announced that its Club Financial Control Body (the "CFCB") had entered into settlement agreements with a number of national associations, following breaches of the 2015 UEFA Club Licensing and Financial Fair Play Regulations ("the Regulations").[1]

The CFCB oversees the application of the Regulations and may impose disciplinary measures in the event of any non-fulfilment of obligations contained in those Regulations. The CFCB is competent to determine not only whether clubs have complied with licensing criteria or financial fair play requirements but also whether national associations have fulfilled their obligations. There are a number of disciplinary measures open to the CFCB in the event of non-compliance including the option to enter into a settlement agreement with the offender.[2]

Up until yesterday, the CFCB had only concluded settlement agreements with clubs but following a number of investigations in relation to the granting of licenses by national associations, under the Regulations, settlement agreements were entered into with the Football Association of Albania, the Football Association of Kazakhstan and the Football Federation of Serbia.[3]

What is a UEFA CFCB Settlement Agreement?


According to the Procedural Rules governing the Club Financial Control Body ("Procedural Rules"), the purpose of a settlement agreement is to establish a roadmap for future compliance with the Regulations and may include a number of disciplinary measures within it. The discretion to enter into a settlement agreement rests solely with the CFCB's Chief Investigator who has the choice to either conclude such an agreement or refer the case to the CFCB Adjudicatory Chamber who may impose other disciplinary measures. It should be noted that the settlement agreement may also include various disciplinary sanctions that are also capable of being imposed by the Adjudicatory Chamber, should it be considered that a settlement agreement would not be appropriate in the circumstances. The decision to enter into a settlement agreement provides the offender with an opportunity to get compliance back on track.[4]  

The Individual Cases


Football Association of Albania [5]

In November 2017, UEFA commenced an investigation into the Albanian Association's compliance with the Regulations, after a license was granted in May 2017 to its affiliated club KF Tirana ("Tirana"), who had been in breach of the Regulations.

Tirana had overdue payables of €152,000, owed to their local tax authorities, as of 31 March 2017. This was a breach, by the club, of Art. 50bis of the Regulations. Despite this, the Albanian Association granted a license to Tirana to allow them to compete in UEFA Club Competitions. UEFA held that the granting of such a license, in light of the overdue payables position, was in direct breach of the Regulations.

The Chief Investigator considered that the circumstances of the present case justified the conclusion of a settlement agreement because the Albanian Association had already taken steps to bring itself into compliance with the Regulations including: the appointment of an external audit company as financial expert; implementation of additional assessment procedures; improvement of the quality and reliability of the club licensing documentation; increased support and assistance to clubs; and increased support and assistance provided to its decision-making bodies.

The Settlement Agreement places a number of obligations on the Albanian Association and requires the organisation to amend its relevant rules and regulations to ensure that all relevant changes to the club licensing system are reflected in its national club licensing regulations. The obligations imposed on the association aim to increase the quality and reliability of the financial information reviewed and improve the association's assessment procedures, whilst ensuring that those members involved in its licensing committee are suitably qualified and have the relevant expertise. 

Obligations placed on the Albanian Association are in addition to those requirements already in the Regulations and include:-

  • The introduction of an additional preliminary date for the assessment of overdue payables criteria with regards to clubs applying for a UEFA license - The introduction of a preliminary date will not replace the assessment date of 31 March but provides the association with preliminary information in relation to overdue payables.
  • Organisation of additional workshops and bilateral meetings for clubs with at least one workshop and one meeting being held on an annual basis.
  • The preparation of a detailed report by the licensing expert
  • Each of the criteria experts are to prepare separate individual club reports (i.e. financial, legal, personnel and administrative) and those reports should focus on documents received, any issues identified, any follow-up information required and a summary of the assessment steps performed together with conclusions.
  • Members of the club licensing first instance and appeals body must include at least two qualified lawyers and two qualified financial experts.

In addition to the imposition of additional obligations, the Albanian Association is required to pay a financial contribution of €100,000. This sum will be withheld from incentive payments that are allocated to associations for implementing and applying the Regulations.

In moving forward, the Albanian Association is required to regularly submit progress reports to UEFA whilst carrying out self-assessment exercises to allow their performance to be scrutinised over a three season period.

The settlement agreement can be viewed here

Football Association of Serbia [6]

In November 2017, the Chief Investigator commenced an investigation into the association's compliance with the Regulations after it granted a license for UEFA Club Competitions in 2017/18 to its affiliated club, FK Vojvodina.

UEFA held that Vojvodina had overdue payables of €172,000 that were owed to employees as of 31 March 2017. Despite that, the Serbian Association granted a license to allow the club to compete in UEFA Club Competitions. The CFCB noted that it was clear that the club had failed to comply with Art. 50 of the Regulations and therefore the license should not have been granted.

Similarly to the case of the Albanian Association, it was concluded that a Settlement Agreement was reasonable in the circumstances as the Serbian Association had taken steps to bring itself into compliance with the Regulations including the implementation of additional assessment procedures; improvement of the quality and reliability of the club licensing documentation; and providing further education and support to all members of the club licensing body. 

The Serbian Association is also faced with amending its rules and regulations to ensure that all relevant changes to the club licensing system are also reflected in the national club licensing regulations. 

Obligations and financial contributions imposed on the Serbian Association are as per those imposed on the Football Association of Albania. Again, the Association's progress will be monitored closely by UEFA for a period of three seasons.

The settlement agreement can be viewed here.


Football Association of Kazakhstan [7]

In November 2017, the Chief Investigator commenced an investigation into the association's compliance with the Regulations after it granted a license for UEFA Club Competitions in 2017/18 to its affiliated club, FC Irtysh.

FC Irtysh was found to have had overdue payables in the sum of €1,800,000, owed to social/tax authorities as of the assessment date of 31 March 2017. The CFCB considered that this was a clear breach of Art 50bis of the Regulations and as a result, the license that the Kazakhstan Association issued was not in accordance with the Regulations and should never have been granted. 

As per the cases above, a Settlement Agreement was considered reasonable in this case as it allowed the association to follow a special regime to ensure proper licensing processes and licenses were correctly granted. Further, it was taken into account that the national association had taken steps to bring itself into compliance with the introduction of additional assessment procedures; regular support and assistance to clubs; the improvement of the quality and reliability of club licensing documentation as well as changing the composition of the association's club licensing decision-making bodies.

The Kazakhstan Association is also faced with amending its rules and regulations to ensure that all relevant changes to the club licensing system are also reflected in the national club licensing regulations. 

Obligations and financial contributions imposed on the Kazakhstan Association, are as per those imposed on the Albanian Football Association. Again, the Kazakhstan Association's progress will be monitored closely by UEFA for a period of three seasons.

The settlement agreement can be viewed here.


Non Compliance of Settlement Agreements by National Associations


In the event that a National Association fails to comply with a settlement agreement, the Chief Investigator shall refer the case to the CFCB Adjudicatory Chamber in accordance with Article 15(5) of the Procedural Rules. Under Article 29(1) of the Procedural Rules [8], the Adjudicatory Chamber may impose a number of further disciplinary measures including a:-
  • warning
  • reprimand
  • fine
  • withholding of revenues
  • prohibition on registering new players in a UEFA competition, such as Euros
  • disqualification from competitions in progress and/or exclusion from future competitions
  • withdrawal of a title or an award

Disciplinary measures may also be combined.

Lessons to be Learned


The settlement agreements imposed on the above national associations should serve as a stark warning to other member associations that they must assess and scrutinise the financial information received from affiliated clubs adequately and effectively, whilst ensuring that licenses are not granted to clubs who are in breach of the Regulations. 

National associations can take steps to ensure good governance and best practice in club licensing by reviewing the composition of their licensing committee and recruiting members who have the appropriate balance of skills, experience, independence and knowledge to enable them to discharge their respective duties and responsibilities effectively, under the Regulations.

All members of a licensing committee should ensure that they allocate sufficient time to study the relevant case files and documents effectively. National associations should provide members of the committee with induction training and thereafter, regular education and training sessions to ensure that their skills and knowledge are kept up to date.

Regular support and assistance should also be provided to affiliated clubs to ensure that they are aware of their responsibilities under the Regulations and any concerns of falling foul of the Regulations are raised as soon as reasonably practicable. 

The above points are all steps that national associations should be taking not only to ensure that they are in line with the Regulations but that their integrity cannot be questioned. 


IMPORTANT: This post is not intended to be a legal briefing, it is not intended to be a statement of the law and no action should be taken in reliance on it without specific legal advice.

References
  1. https://www.uefa.com/MultimediaFiles/Download/Tech/uefaorg/General/02/26/77/91/2267791_DOWNLOAD.pdf
  2. https://www.uefa.com/insideuefa/disciplinary/club-financial-controlling-body/index.html
  3. https://www.uefa.com/insideuefa/disciplinary/news/newsid=2579776.html
  4. http://www.tas-cas.org/fileadmin/user_upload/Award_Final_5808.pdf
  5. https://www.uefa.com/MultimediaFiles/Download/OfficialDocument/uefaorg/ClubFinancialControl/02/57/94/49/2579449_DOWNLOAD.pdf
  6. https://www.uefa.com/MultimediaFiles/Download/OfficialDocument/uefaorg/ClubFinancialControl/02/57/94/50/2579450_DOWNLOAD.pdf
  7. https://www.uefa.com/MultimediaFiles/Download/OfficialDocument/uefaorg/ClubFinancialControl/02/57/94/51/2579451_DOWNLOAD.pdf
  8. https://www.uefa.com/MultimediaFiles/Download/Tech/uefaorg/General/02/28/72/46/2287246_DOWNLOAD.pdf



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