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N’Golo Kanté refused Chelsea’s insistence of paying him through an offshore company – Mediapart

French outlet Mediapart report that French international midfielder N’Golo Kanté created an offshore company but refused Chelsea’s insistence that he be paid through a tax haven.

Football News takes no responsibility for the authenticity of the content.

After initially setting up an offshore enterprise with the help of an agent, Kanté changed his mind and for a period 18 months refused to validate a tax package that he had agreed with his London club, which delayed a €1.9m payment to him. The company was due to receive his image rights fees tax free, but Kanté changed that and set up the company in England and will be paying taxes on them. The only question that remains is why he has not dissolved the original offshore company.

Despite multiple requests for comment on the part of Mediapart, neither Chelsea nor N’Golo Kanté or his entourage have responded to requests for comment.

Kanté is the king of modesty in the football business – in 2016, in Leicester, he drove around in a Renault Megane which he had bought in Normandy. At Chelsea, he has upgraded cars, but only to a Mini Cooper.

Kanté comes from a modest family of Malian immigrants and has been fatherless since the age of 11. He grew up in Reuil-Malmaison and began his youth career at Suresnes.

His talent had been ignored for too long, he was rejected by a number of youth academies, before joining US Boulogne in 2010, where he played in the fifth and then the third division. He joined Caen in 2013, before exploding onto the Ligue 1 scene, where he began being courted by clubs in the summer of 2015. Marseille & Leicester City fought over the player, with the latter winning the race in exchange for an a €8m fee.

Leicester commissioned an agent specifically to get Kanté, Frenchman Gregory Dakad, a member of the famed Wasserman sports agency, who negotiated with Philippe Flavier, Kanté’s agent, who had been following the player’s career since he was at US Boulogne.

The money coming from Kanté’s first major transfer appears to have been followed by a period of greediness. Right before signing with Leicester, Kanté brutally dismissed Flavier, who spoke to Mediapart: “I was emotional, I had known him since he was very young, I treated him like my son. It took him time to make his impact, but this is the football business. I am very proud of N’Golo. We were exchanging text messages throughout the World Cup. He is an exceptional player and wonderful boy.”

N’Golo Kanté had chosen a new intermediary/agent, Abdelkarim Douis, who is just 31 years old today. Douis is originally from Nanterre, he started a transport company in 2012 that went into liquidation two years later and has no prior experience in football. Flavier had the following to say on Douis:

“He has no particular experience in football, he is just someone in N’Golo’s entourage. It happens often that players become closer to or fall in love with people that they knew when they were younger from the same environment. And they think that they are better placed to look after the player’s interests.”

Kanté’s Leicester contract saw him earn a €1.6m a year salary pre-tax and an agents commission of €160k – curiously, this money was given neither to Gregory Dakad, who had represented Leicester, nor to the player’s new advisor Abdelkarim Douis. It instead went to a company owned by Kamel Bengougam, the agent of Ryiad Mahrez. Did Bengougam redistribute the money to the two agents? Nobody responded for a comment.

Douis and Dakad continued to oversee Kanté’s interests as well as their own and barely a year later they had hit the jackpot. Kanté was a Premier League title winner with Leicester, received his first France call-up in March 2016 and was a European Championships finalist. In the space of a season, Kanté established himself as one of the world’s best defensive midfielders. Arsenal, Manchester City, Chelsea and PSG all came knocking.

As reported by L’Équipe and Le Parisien, the member of PSG who was charged with convincing Kanté to join was then Sporting Director Olivier Létang, who met with the player and then negotiated with his representatives. But a problem arose at the beginning of May 2016. It had nothing to do with the player’s salary or the project on offer, but relating to agent commission.

French law prevents commissions from reaching a point worth more than 10% of a transfer fee, a limit that does not exist in England. According to an internal PSG document obtained by Football Leaks it is “basically certain” that with a 10% commission, Kanté will not join PSG.

Les Parisiens were hoping to get around this, with Chief Financial Officer Philippe Boindrieux even involved, and they came up with a solution, according to Mediapart, that would have seen the club pay a 10% commission to each of the player’s agents, one as a PSG representative and another as Kanté’s – but dual representation is illegal in France, forcing PSG to give up.

A meeting was held at the club’s headquarters on 24th May 2016 with the player’s representatives to find an agreement, but it was unsuccessful.

The midfielder chose Chelsea, who completed a £32m deal with Leicester on 15th July 2016. On the same day, according to Mediapart, Chelsea’s Deputy General Manager Marina Granovskaia, wrote to key board members as follows: “Do not faint!” as she informed them that the two agents involved, Gregory Dakad and Abdelkarim Douis, would be receiving a £6m and £4m commission respectively, £10m in total and more than 30% of the size of the transfer. A stratospheric percentage, even in England.

Kanté received a very sizeable salary: €5m a year net, but an offshore company was created in order to reduce taxes and costs to the club – a portion of his salary was due to be paid to him in the form of image rights, half of which to a company registered in Jersey, an infamous tax haven.

Mediapart claim that it is unclear as to who came up with the scheme, but the company was set up six weeks before the transfer, while the player was still negotiating with several English clubs (Arsenal). On June 2nd 2016, Douis, who had become a registered intermediary with the FA, created his own company in London, KDS Football Management Limited, which was to receive his commission on the N’Golo Kanté deal.

On the same day, N’Golo Kanté created a company in Britain called NK Sports. The following day, a company named NK Promotions was registered in Jersey. Dummy directors are placed on the company’s filing and N’Golo Kanté’s name does not appear anywhere.

On June 22nd 2016, N’Golo Kanté transferred his UK image rights ownership to NK Sports. On July 19th 2016, four days after his transfer to Chelsea, he transferred his image rights for the rest of the world to NK Promotions in Jersey. Both of these contracts were signed by the player and by his agent Abdelkarim Douis “as a witness”.

The scheme was to work as follows: N’Golo Kanté would receive only 80% of his annual income (€7m a year pre-tax) in the form of salary, taxed at 47%. The rest (€1.4m) would be paid in the form of image rights, which would enable Chelsea to pay no taxes. 10% of that would go to British company NK Sports, which only pays 20% taxes.

And 10% to the company registered in Jersey, which held the rights of N’Golo Kanté for the rest of the world. In theory, this money should be taxed in other countries in which Kanté appears in advertisements (e.g. in France) – but the British tax authorities decided that this was not their problem. Taxes on the amount given to the Jersey company = 0%.

Football Leaks calculate that the amount saved by Kanté & Chelsea during this scheme would have been €1m a year. This type of manoeuvring is common in England, but not uniform. Olivier Giroud for example pays taxes on all income in England at the normal 47% tax rate.

This type of tax scheme has become increasingly risky, with HMRC (Her Majesty’s Revenues and Customs) starting to catch on. Since 2015, HMRC have recouped £330m in football and is currently investigating 171 footballers, 44 clubs and 31 agents. The British law is clear: the system should not disguise salary. In exchange for the €1.4m a year that was to be paid to Kanté’s two holding companies, Chelsea would receive 50% of advertising revenues from the sponsorship agreements that he has concluded since his arrival (excluding his big deal with Adidas). To make a return for Chelsea therefore, Kanté had to bring in new sponsorship contracts worth more than €2.8m a year, according to Mediapart.

In the player’s first 18 months at Chelsea, the midfielder attracted just two new sponsors, deals that were worth a few €10,000s a year that did not even come off in the end. Does this not amount to tax evasion?

In July 2016, Chelsea were relaxed, especially because Kanté appeared to have given the all clear to pursue this form of tax set-up, formalising a company in Jersey. After some negotiation, the final version of his image rights contract was sent to his advisers at the end of September, with Kanté’s lawyer informing Chelsea via email that the client “will approve”.

But Kanté did not sign – several months later, Chelsea approach his representatives again. A new version of the contract was formulated, the club then began to get upset. In April 2017, Chelsea’s Director of Football, David Barnard, went to see Kanté personally to ask him to sign. Kanté again refused.

An explanation is received for the first time on 11th May 2017 via an email sent to the club’s executives by Kanté’s tax advisor: “After reading numerous press articles about image rights and tax investigations launched against players and clubs, N’Golo is more and more concerned by this scheme that is being proposed to him and that it could be called into question by the tax authorities… N’Golo decided… that he did not want to take any risks.”

Chelsea began to drag its feet because they wanted to commercialise the player’s image. Chelsea also fire back that this manoeuvre was perfectly legal, but it was not enough. On the 22nd May 2017, Kanté’s tax advisor said: “N’Golo is unflinching, he simply wants a normal salary.”

The midfielder even refused to touch the 20% remuneration that related to his image rights until the problem was solved. By May 2017, Chelsea already owed him €1m, but Kanté did not care. In June, his advisors were worried, because more money than usual was paid into his account as a salary. But Chelsea assured him that they would not pay him his image rights without his consent and instead he was receiving a bonus for winning the title of Premier League “Player of the Year”.

But there was an issue: if this tax avoidance scheme was to be pulled, who would pick up the taxes. For Chelsea, the replacement of the 20% image rights pay-out with a salary would cost the club an extra €190k a year in taxes. Not to mention the hundreds of thousands of euros in additional taxes that N’Golo Kanté was expected to pay.

Who would pay the tax bill? Mediapart claim that N’Golo Kanté demanded that Chelsea pay all his taxes – the club did not want to, causing a negotiation to begin, with the final agreement only signed on 5th February 2018, a year and a half after his arrival at the club.

Kanté ended up agreeing to a compromise, agreeing to receive 20% of his salary in image rights, two times less taxed than wages, but through his British company NK Sports, which will pay corporation tax in the UK.

The tax bill relating to the money that was due in Jersey was to be picked up by Kanté and Chelsea, 50-50, according to an ultra-complicated distribution agreement on the future revenues from sponsors. Mediapart allege that a Chelsea executive said the following when he got wind of the compromise: “Was the person who came up with this on ecstasy?”

The final mystery, which remains, was the fact that Kanté is yet to dissolve his company in Jersey, which has given away its rights to his image for the rest of the world back to the UK company, NK Sports. Is this a simple oversight? Kanté did not answer a request for comment.

As for Chelsea, the agreement was a relief. In mid-February 2018, the club was finally able to pay N’Golo Kanté the image rights fee that he had been due for 19 months because he refused to be paid in Jersey. €1.9m.

In the meantime, his agent, Abdelkarim Douis, has expanded his client base. In late July 2017, he facilitated the €7m transfer of striker Aboubakar Kamara from Amiens to Fulham, picking up a tidy €250k commission for his troubles. He also negotiated a future profit of up to €670k in commission on the future resale of the player, which is prohibited by FIFA regulations. After reviewing the contract, the FA asked Fulham to remove the clause.

 


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