Lawyers scouring the world for the assets of an Indonesian investor, it said, wanted to know if he had parked any of his money in the Washington soccer club D.C. United.
But what would appear to be a straightforward question — did he? — got no answer this week from city and team officials, who refused to comment even as they push ahead with a politically unpopular $300 million stadium proposal.
The purported money trail left by Rosan P. Roeslani — accused of leaving a $201 million “black hole” of unjustified business expenses during his time as head of PT Berau Coal Energy Tbk, Indonesia’s fifth-largest coal producer — reportedly led to many different places.
Castles in France, a golf resort in Spain, a five-bedroom Beverly Hills mansion and, as recently as October, an ownership stake in the three-time European Champions Inter Milan, the Italian soccer giants who were acquired by a group including Roeslani and the Indonesian media mogul Erick Thohir (who is himself now a managing partner in D.C. United).
Accountants claim Roeslani leased a company jet from another company he controlled, but that flight records were shoddy — making it hard to justify the expenses; that he had taken interest-free advances of more than a half million dollars which he had yet to repay on his departure; and that he had awarded himself $3.8 million in compensation — or five and a half times the amount he had declared to the board of his parent company, Bumi plc (now known as Asia Resource Minerals plc).
Then there was the matter of the $75 million in company funds which appeared to have “gone walkies” in mysterious investments made via a Cayman Islands mutual fund that has caught the eye of the Serious Fraud Office, Britain’s economic crimes agency.
And then, last year, without admitting fault or liability, Roelsani signed an agreement to repay $173 million. But as a December deadline to pay Berau approached, Roeslani reneged, claiming he in fact owed nothing. The two sides girded for arbitration in Singapore.
After Roeslani’s emergence as a surprise investor in Inter Milan, the British financier Nathaniel Rothschild, a co-founder of Bumi, was incensed: How could the board of the company stand by while Roeslani refused to pay up even as he found the scratch to join in one of the flashiest possible investments in the world?
Roeslani, for his part, told Bloomberg it would be “illogical” to connect the supposed missing millions to the Inter investment as the two were “completely separate.” (He left the board of Inter two months later, just four months after his investment had been announced.)
But Inter itself may have spilled the beans, when, in a little-noticed passage of a statement in October, the club made the following claim:
“Mr. Roeslani also owns a stake in D.C. United alongside Mr. Thohir.”
Funny. One would have thought D.C. United should mention this on its “ownership” page.
Calls and emails to Roeslani’s investment firm Recapital Advisors in Jakarta, Indonesia were not answered. And Andreina Renna, a spokeswoman for Inter, referred questions about the Inter press statement on Roeslani back to D.C. United.
But D.C. United refuses to state publicly whether Roeslani is now or ever was an investor.
“We decline to comment at this time,” Craig Stouffer, the team’s director of communications, wrote in an email.
However, Tony Robinson, a spokesman for City Administrator Allen Y. Lew, an architect of the proposed stadium deal, said the team had already spoken on the matter.
“It is our understanding that you were informed by D.C. United that Mr. Roeslani has no involvement with the team,” said Robinson, adding that his office had no further comment.
A request for comment from outgoing Mayor Vincent C. Gray was not answered.
“My head spins,” said Jack Blum, a money laundering expert and chairman of the Tax Justice Network USA, when told that the city was contemplating a deal with D.C. United, which would not say whether Roeslani was an investor.
Hopes for greater transparency appear to grow dim at this point.
D.C. United is incorporated as “D.C. Soccer LLC” in Delaware, a domestic tax haven home to countless corporate registrations from around the world. Among its many charms, Delaware is renowned for the anonymity it provides to companies’ beneficial owners.
While sporting franchises may be private entities, they can have a unique place in public life due to their use of public infrastructure and land, and often cozy tax arrangements (not to mention the sentimental weight they can have in the public’s spirits).
Sports ownership has long been prone to varied scandals and soccer in particular has been prey to the worldwide influence of organized crime in match fixing.
But legally both teams and their leagues can be very opaque, according to Mark Conrad, a law professor and expert in sports business at Fordham University.
“Generally speaking, clubs are not required to disclose the same sorts of information to the public as a corporation that issues stock,” he said. “We can never know exactly, when a league is saying we don’t make enough money, we’re struggling.”
Internally, leagues may require due diligence and background investigations before allowing investors to take a stake in a member franchise, said Conrad. But such reviews are not always thorough.
“Sometimes the quality is not there and the leagues have gotten burnt. Sometimes the financing is not that solid,” said Conrad, citing the example of the Dallas investor John Spano.
Spano signed a deal to buy the New York Islanders, the Long Island hockey team, for $165 million in 1996. But the deal almost immediately collapsed when it turned out Spano was a charlatan, not a mega-millionaire. He was sentenced to 71 months in prison for fraud in a saga that became an ESPN documentary.
“It turned out it was a huge embarrassment for the league. They had to rescind the sale after one payment,” said Conrad. “They did no due diligence and believed him.”
Michael Teevan, a spokesman for Major League Baseball, said his league required a “thorough background check” during the application process for prospective owners and that other baseball clubs had to vote to approve a “designated control person” for new franchises.
Like the Washington franchise, Major League Soccer, however, had nothing to say about whether Mr. Roeslani had invested in the club.
“We are going to politely decline comment,” said Dan Courtemanche, the league’s chief spokesman.
Taxpayers on the Hook
The owners of D.C. United, have embarked with the District of Columbia on an ambitious campaign to build a $300 million stadium complex in Southwest Washington at the inauspiciously named “Buzzard Point.”
Recently discussed terms would require the city to swap valuable, centrally-located real estate at U and 14th Streets. The deal would give the city’s Reeves Municipal Center to the developer Akridge in exchange for part of the site of the proposed stadium, which the city would then lease to D.C. United for $1 a year.
Under a preliminary agreement concluded with the club in July, the city would invest up to $140 million in the deal, with a maximum of $50 million in public funds used to fund construction in connection with the stadium — which the team itself would pay for and build.
The deal would include some conditional tax arrangements to help guarantee that the team meets operating expenses as well as the city’s construction of adjacent roads and traffic signals. It would also call on the city to promote the building of a stadium streetcar stop.
“It seems to me at a minimum that before they give tax breaks and special deals they should know who owns the company,” said Blum, of the Tax Justice Network. “They should find out whether one of the stock holders is a guy who’s taken a powder on obligations in another jurisdiction.”
Ahead of the recent Democratic mayoral primary, D.C. Council Member Muriel E. Bowser, the victor and the chairwoman of the committee on economic development, opposed the planned land swap in favor of devoting municipal capital expenditures to improving public middle schools.
Councilman David A. Catania, also running, has expressed concern about tax arrangements for the stadium.
The discovery of accounting irregularities at Berau Coal caused the suspension of Bumi’s shares in London last year. This followed the collapse in share price of the scandal-tarred Kazakh miner Eurasian Natural Resources Corporation. The two mishaps caused hand-wringing among politicians and investors, who claimed that the London exchange’s listing of poorly run and possibly corrupt companies from far-flung countries had damaged its prestige.
The approval of a so-called “soccer-specific” stadium for D.C. United, however, would immediately make any investment in the team more valuable. Forbes estimated last year that 90 percent of the average revenue for MLS teams comprised “in-stadium” income from tickets, sponsorships and non-MLS events.
Teams that do not operate their own stadiums are less profitable and the construction of stadiums was long seen as vital to the economic viability of the league. D.C. United, which currently plays at the outdated RFK Stadium, is among the money-losing franchises in the newly prosperous MLS.
Roeslani and Thohir, the main player in the 2012 takeover of D.C. United, appear linked in several ways.
Roeslani sits on the board of Mahaka Media, Thohir’s Indonesian broadcast, advertising and publishing conglomerate. Furthermore, in 2009, Thohir’s brother Garibaldi Thohir and Handy P. Soetedjo, a fellow investor in the Inter Milan takeover, sold their shares in Berau Coal (the subsidiary from which the millions reportedly later went missing) to PT Bukit Mutiara, a company controlled by Roeslani.
Questions for Thohir submitted to Mahaka Media were not answered.
According to Blum of the Tax Justice Network, the identities of the owners of a sporting franchise with business before the city should not be a matter of investigative journalism.
“The bottom line is are you doing deals with a group of respected individuals?” he said. “If you don’t ask the question that’s a terrible mistake.”