Budapest football club on the verge of liquidation

Offshore companies channeled funds away from Újpest Football Club through false invoicing and VAT fraud, according to a Hungarian tax authority report obtained by atlatszo.hu. The football club was financed from state and municipality budget.

In November 2013, the government agreed to take over the debt of six Budapest football clubs. There has not been any step taken in the case yet; in the meantime Újpest got on the verge of liquidation.

The club is owned by a Belgian businessman Roderick Duchatelet. The Duchatelet family has a history in football club management.

Roderick Duchatelet acquired “Újpest Football Club Kft.” the company running the club for one euro, and founded “Újpest 1885 Futball Kft.” The original football club licence would have been transferred to the new company but Újpest Football Club’s HUF 500 million debt blocked the transfer.

Debt was accumulated before Duchatelet purchased the football club, by the previous management. Tax Authority found out, that previous owners and managers of Újpest FC hide behind offshore companies chanelling away the football club’s incomes.

The leaked 2012 tax authority report listed fake contracts, false invoicing and VAT fraud that caused the club’s immense debt. Duchatelet sent some documents to Belgium for handwriting analysis, the results demonstrated that contracts between offshore companies were allegedly signed on the same day.

The companies involved in false invoicing presented a winding up petition, at the same time Újpest reported fraud and forgery to the Budapest police department. Duchatelet is reportedly not willing to invest more money in the club, but now Újpest’s licence and championship participation is at stake.

However, the Hungarian football federation MLSZ did issue the licence between 2008 and 2013.

Read more in Hungarian here. The original post was posted on 13 March 2014.