Godiva. I take it we agree that they didnt understand the business that they were investing millions in then ? We agree that they had a man on all the Boards from day 1 and that the board of directors would get monthly financial figures presented to them ? We agree that the only source of funds was from SISU investors acting as a bank?
I agree that hedge funds or private equity firms etc generally operate in a hands off manner. But usually they will have representation on the board and it is a one off or structured investment. In this case as has been stated several times SISU acted as the bank - banks have different criteria and require more current financial info. There was no planned or ordered draw down of funds from Day 1 - they failed in their duties to their investors if we just accept they were totally hands off. They cant say they didnt have access to the info because they had someone on the board. To be clear I am not talking about the number of kit washes paid for, the major financial transactions they should and will have been aware of particularly as the only way those transactions happened was by draw down of SISU investor funds and that it quickly went off budget. But they sat back and let it go tits up for four years ?
SISU accepted RR's budgets etc ......... so where was their proper due diligence, where was their risk assessment, where was their strategy for planning the clubs future and protecting their investors. Apparently they trusted in RR to get it right. Borders on negligence to me if I were an investor
First thing business recovery people do when they go into a company is look at and reduce cost. They were looking at a business recovery (we were all but out of business) and left the cost cutting until 4 years later. They had seen the financial info prior to takeover, had seen RR budgets etc I fail to see why they were so blissfully unaware and trusting for 4 years. This was a high risk investment in a high risk industry.
Given that they knew very little to do with football, had no real interest in it, surely a prudent investor would want to know more, make sure they knew more and would take extra steps to protect their clients money. To do otherwise puts that money at great risk. It doesnt mean that Joy Seppalla ran the thing but perhaps they put someone in place to monitor the situation? It didnt matter that RR was there or it might step on his toes SISU could out vote him any time they chose to.
I can accept that what you say is normal business practice, I can accept what you say as what may have happened. BUT in accepting that I strongly believe that it is another indicator of poor business practice by SISU, lack of knowledge and understanding and frankly seems negligent towards their investors. These problems didnt just happen after 4 years - the info was there month by month and SISU through Onye had access to it. Surely business practice has to adapt to the individual requirements of each individual case, or do we accept all cases have to be treated in only one way.
From day 1 there was the matter of going concern...... SISU had to be closely involved in the forward planning budgets etc together with a good understanding of the business and its practice. They controlled the flow of funds to CCFC - how did they control that or monitor that if they didnt know what was going on ? They had to know and be involved in all that info to be able to give any assurances as to going concern - to not have that control or info is grossly unprofessional, negligent and puts them at risk should the business collapse
Of course decisions were made in the board room but they were sanctioned by SISU because SISU controlled the "bank" How do they contol the bank if they dont know what is going on and are not involved. In the first year we exceeded the budgets because costs came up that were not expected and that restricted funds going into the squad. Shouldnt alarm bells have rung at that point - or are we saying that they know there is a problem but stay out of it because RR is dealing with it. This is SISU's investment reputation on the line (probaly their most public investment) and they just leave it to RR?
I accept what is normal practice but this is not and never has been a "normal" business proposition - SISU should have been on their guard from day 1. Clearly some large mistakes have been made in the last five years and if what you say is true then none larger than accepting normal practice and staying hands off - its cost their clients over £30m. I am damn glad i do not invest with them if thats the case
I think it is generally accepted that things have not been worse than over the last year or so, isnt that coinciding with SISU taking even more control of things ? Trying to salvage something for their investors after not reacting quickly enough in the first place maybe? Not on about the micro management of the business but the major financial decisions and strategy.... andthe only source of additional funds was ? - SISU
SISU messed up from Day 1 ...... but they were not the only ones
