The Weekend: 31st July 2023

Joe Lewis's tribulations, and the possible effects-or lack thereof-on Spurs.

Joe Lewis has been charged with secuirities fraud in New York, but is he Joe Lewis “of Tottenham Hotspur” or just… “Joe Lewis”? It’s not straightforward.

The government has made an egregious error in judgment in charging Mr. Lewis, an 86-year-old man of impeccable integrity and prodigious accomplishment.

Mr. Lewis has come to the U.S. voluntarily to answer these ill-conceived charges, and we will defend him vigorously in court.

So said David M. Zornow, lawyer to the owner of Tottenham Hotspur, in response to a statement previously issued by Damian Williams, the US attorney for the southern district of New York, which had made some fairly serious allegations against his client:

We allege that for years Joe Lewis abused his access to corporate boardrooms and repeatedly provided inside information to his romantic partners, his personal assistants, his private pilots and his friends

Those folks then traded on that inside information and made millions of dollars in the stock market, because thanks to Lewis those bets were a sure thing.

None of this was necessary, Joe Lewis was a wealthy man, but as we allege he used inside information as a way to compensate his employees or shower gifts on his friends and lovers.

There is little question that the allegations made against Lewis are very serious. There are 13 counts of securities fraud against him, each of which carries a maximum sentence of 20 years in prison. In addition to this, there are also three counts of securities fraud, each of which carries a maximum sentence of 25 years in prison, and three counts of conspiracy, each a maximum sentence of five years in prison.

And if the allegations made against him do have the substance alleged by the US authorities, that substance seems fairly egregious. It is alleged that Lewis shared inside information about companies to which he had privileged access in order to tip off friends and business associates, including “his personal pilots, personal assistants, romantic partners.”

This information would have enabled them to profit from trading in these securities with the obvious advantage of holding privileged information ahead of disclosure to the public or to which the public might even not get access at all. As to motive, the The indictment alleges that Lewis did this “as a way to give them compensation and gifts”. According to Forbes, Joe Lewis is worth a shade over £5bn. You’d have thought he might have been able to afford a few WH Smiths vouchers or a bottle of pink fizz in a fancy bag.

So far so murky, then, but what is the impact upon Tottenham Hotspur, here? Lewis is pretty routinely described as the “Spurs owner”, but as with just about anything connected with this particular football club, the truth is slightly more complicated than that. The initial Spurs response to the indictment was to distance themselves from the allegations.

This is a legal matter unconnected with the club and as such we have no comment.

Well… kind of.

The owner of Tottenham Hotspur Football Club is ENIC, with majority control held by a Family Discretionary Trust of which Mr Joseph Lewis is not a beneficiary.

The Trust is managed by two independent professional trustees on behalf of its beneficiaries. Mr Lewis ceased to be a person with significant control of the Club, in October 2022.

This is a US legal matter unconnected with the Club and as such have no comment.

Certain members of Mr Joseph Lewis’s family are potential beneficiaries of a discretionary trust (“the Trust”) that ultimately owns 70.12% of the share capital of ENIC Sports Inc (“ENIC”). Of the total issued ordinary share capital of Tottenham Hotspur Limited (THL), ENIC owns 86.58%. ENIC also owns one THL convertible A share.

Mr Joseph Lewis ceased to be a person with significant control of THL on 5th October 2022.

At the time, it all seemed fairly uncontroversial and unremarkable. In October 2022, without much of a fanfare, the shares in ENIC passed from Joe Lewis to a Trust acting on behalf of the family of Joe Lewis. He is 86 years old, and provision needs to be made for what comes after his retirement—which seems unlikely—or passing.

But the revelations of the last couple of weeks cast a new light upon that on that hitherto inconsequential story. It’s very easy for Spurs to say, “Mr Joseph Lewis ceased to be a person with significant control of THL on 5th October 2022”, but such matters aren’t always as cut and dried as that, and ultimately it might even be argued that whether this is the case isn’t even really their choice.

Shadow directorships, whereby a person or company that has significant influence over a company's affairs without being formally appointed as a director, are legal, but on the very clear understanding that a shadow director has the same legal responsibilities as any director whose name actually appears on formal paperwork. Saying that you have no significant control over the dealings of a business and having no control over the dealings of a business are not always quite the same thing, and it is worth noting the extent to which the club was keen to spin the restructuring as a continuation of ‘business as normal’ at the time of its announcement, in comparison with the last week or so.

The question of the extent to which Lewis stepped away from Tottenham Hotspur in October 2022 isn’t quite as cut and dried as the paperwork—or the club’s comments on the subject—would seem to indicate. And while that question didn’t really matter last year, it suddenly does this time around because a position like this adds a layer of uncertainty to a club which has broadly—as a business, if not always as a football club—been very well run, over the last two decades.

It is understood that Lewis is prepared to go to trial over this and has already pleaded not guilty, with bail set at $300m. And while this could change—a plea bargain of some description will remain a possibility for some considerable time—it is entirely plausible that it could take several years to get to the end of this legal entanglement. And in the long run, while the Premier League may be satisfied over Lewis not having been a person of no control at Spurs since October 2022, that may have little bearing in the event that Lewis is found guilty of the charges made against him and the seizure of his assets becomes a possibility.

But this is something approaching a worst conceivable scenario. It is highly unlikely that anything like this could come to pass for years, and at the very worst. And for all the low comedy that the team has delivered on the pitch, that small matter of them having been fairly prudently run over the years would count for a lot, were the club to be a little more explicit in courting offers to buy them.

They have one of Europe’s finest new, large stadia, part of a wider entertainment group on the northern outskirts of one of the world’s great cities, and for all that yes, all this may call to mind Keith Burkinshaw gesticulating in the direction of the boardroom and muttering, “there used to be a football club there” as he left for the last time in 1984, in the cold light of day these are precisely the sort of buzzwords that push bean-counters into a state of tumescence in the 21st century.

As for stories linking Jay-Z—who, it would appear, still has to be described as “the rapper” rather than “the billionaire businessman”—with the club, well, it would be understandable if he was interested, but any sale of Spurs likely remains around as far off as it did before this story broke. And of course, any explicit interest in the club would likely spark interest from elsewhere, as well, what the end result of that might be is just about anybody’s guess.

Still, at least watching Harry Kane attempting his post-match interviews in German should be entertaining.