KLD IN/SD OUT: AN ACCOUNTANT’S EXPLANATION



In all of the comings and goings at Companies House, some people are jumping to all sorts of conclusions about what it all means. Has Donald gone for ever? Who is Igor Levin? Does any of it really matter? ALS’ resident accountant, Giles Mooney explains all…


The directors of a company are, simply, the company. They run it. They make it operate. If the company does something wrong (legally) they are to blame. If the company is to sign something, one of those directors will hold the pen. A director is a position of power and accordingly has a legal duty to act in the best interests of the company at all times.


They answer to the owners of the company, the shareholders. When it comes to shareholders, while they all have rights, the only real power lies with a controlling ownership. If the shareholders vote on anything and one person has more than 50% of the shares, the vote was a waste of time.


The club is effectively owned (as we understand it) by four people, KLD, Stewart Donald, Juan Sartori and Charlie Methven. Whether this is actually the case will become clear when the share ownership is reported to Companies House in the future but, the truth is, it’s irrelevant. KLD we know owns around 60%. At that point he is in control. End of story.


So back to the board of directors, the people who will run the company and whose heads are above the parapet when it comes to legal responsibilities. There are currently six directors and I would expect and hope that to become eight in the next few weeks.


None of the Madrox owners or their colleagues remain on the board. The departures of Donald, Sartori and Rodwell (across various group companies) mark a clear line in the sand on that point.


The presence of Angela Lowes as Financial Director and Jones and Sloanes as Non-executive Directors is not news. Most large companies have a number of non-executive directors who are involved to bring some specific skills to the room without actually working for the company and you’d also always hope the person responsible for the Finance function of the company was on the board.


The appointment of KLD is also not a surprise and, if you want to stop reading, let me give you the summary. KLD as a director is responsible for running the company and reports to the law and to the shareholders, which is mainly him. He is, as they say, the gaffer and don’t let anyone tell you different.


But what of the two other appointments made today? And who do I think is missing?

Everyone knows that KLD’s wealth came as an inheritance following the sad loss of his father, billionaire businessman Robert Louis Dreyfus. As you’d expect in that situation, the billions aren’t handed over to a (at the time very) young man, they are held in a trust and looked after by certain appointed people, sometimes family members, often lawyers and financiers. In a situation where the wealth comes from a particular business or group of businesses, you’d expect a senior from within that business to be involved as trustee too. The role of a trustee is similar to the role of a director for a company. They have to look after it, make sure it effectively works towards its goals and is able to support the beneficiary of the trust for many years to come.


The fact that the Louis Dreyfus family lawyer, Igor Levin, and the Chief Finance Officer of the Louis Dreyfus Company, Patrick Treuer, have joined the Sunderland board shouldn’t come as any surprise. I obviously don’t know for certain, but I’d be surprised if they are not there in their capacity as trustees of KLD’s trust – helping to look after the money, helping KLD as he takes the top job in a company he controls personally for the first time.


Today’s news is good news for those supporting Sunderland AFC. The evident control of one person is a positive, the removal of others as directors will, to some, calm the nerves of those who still fear it’s somehow fake news and the trustees presence represents another tier of control over spending, bad management and decision making (not that I expect that to be a problem).


The only thing I’d like to see on top of this is the appointment of the executives within the business to the board. The people tasked with running the business and footballing sides of the company day to day. Traditionally, when people join a business, there is a short period of time before they are appointed to the big table. I anticipate Steve Davison and Kristjaan Speakman will be made board members after whatever period the club’s HR systems require and then, dare I say it, the club will have the right pegs in the rights holes at board level.