News that Sir Allen Stanford has been charged with fraud has rocked the England and West Indies cricket establishments particularly hard. It is particularly embarrassing for the ECB as it made a very public association with Stanford, culminating in the spiritless and somewhat embarrassing 20/20 for $20 million where Sir Allen was seen sat with the England players’ wives.
The first things that came to mind when this news broke yesterday were straight and simple questions:
- Who performed the due diligence assessments?
- How deep did those assessments go?
- What does this say about Giles Clarke and the ECB’s judgement?
Due diligence is one of those business speak phrases which means finding out as much as you can about a person or company with which you intend to associate, merge, take over or otherwise become involved with. In my experience this is often done by accountants, hence my cynicism about any claims of “full due diligence” being undertaken being made by anyone. This usually involves checks on credit, company directors, financial reports and regulatory involvement if there has been any.
When dealing with operational companies (a scenario I have seen more than once in my career), due diligence should also require an investigation or discovery report into what actually goes on within the “other” company. There’s no point trying to merge two companies claiming a Total Cost of Ownership saving on the ICT front if you merge with them and suddenly find a totally incompatible system at the other company.
In today’s Guardian Andy Bull asks some very straight questions about the “due diligence”. He says that “The ECB spent 10 days performing due diligence checks on Stanford Financial before they entered into the sponsorship deal.”
Now that could mean anything. Someone sat at a PC for an hour or so each day sending off e-mails to Stanford’s referees whilst watching YouTube (there’s some excellent Dave Allen stuff up there) could qualify as “performing due diligence”. Anything remotely like that is hardly excellence in research. Given the fact that the US Authorities have charged Stanford with fraud, I suggest that the ECB makes public its due diligence research in its entirety, including who performed it.
Then we will all know who did what and how far it went.
Andy’s article covers the issue well. Do check out the comments section, particularly the comment made by “crunch” about Giles Clarke and Stepstone.
Leicestershire CCC chairman Neil Davidson, a man whose recent paper about Kolpak players in the English game was well-written, interesting reading and thought-provoking has claimed that Giles Clarke should now resign. In the same article Lord Marland, who recently opposed Clarke in the ECB elections but didn’t get backing from short sighted county chairmen, says:
“The ECB has walked into the open arms of a man who has now been charged with fraud. What due diligence was carried out? The picture of Giles Clarke, David Collier [the ECB chief executive] and Allen Stanford standing behind all those dollars will haunt English cricket for a long time. In any other organisation, heads would roll.”
Derek Pringle (the former Essex and England all-rounder now at The Telegraph) writes interestingly, as ever:
When Stanford’s involvement with the ECB last year became inevitable I emailed an old university friend who began his banking career in Texas and asked him to see what his contacts there knew of cricket’s most unlikely benefactor. Not a lot came the answer, but while a few had heard of Robert Allen Stanford (the Sir bit came from being knighted by Antigua not the Queen), they knew nothing of how or where he had made his fortune.
Those of a sceptical nature sensed trouble long ago – 6 ft Texans are interested in oil, money and power, not cricket, as both George Bushes only too readily revealed. But if that fact alone did not set alarm bells ringing, the helicopter stunt and the big perspex box full of cash at Lord’s ($20 million in $50 bills), must surely have been the clincher that this was going to be a monumental mistake.
Apparently it was a Venezuelan economics magazine that raised the alarm about Stanford.
In conclusion, regardless of whether Stanford is acquitted or found guilty, the ECB’s reputation has taken a massive hammering. By associating with someone who is now seen as a fraudster people will perceive that there is dirt in the ECB’s money, dealings and board.
This needs more than a damage limitation campaign and people refusing to resign. It needs a public disclosure of who did what and the executive board of the ECB to stand up, take responsiblity and do the right thing. Which is to resign.