The journal Legal Week has reported that former Arsenal director and shareholder Lady Nina Bracewell-Smith has filed new court papers against her lawyers, Linklaters, in connection with the sale of her 15.9% stake in Arsenal to Stan Kroenke at the time of his takeover. Lady B-S is suing both Linklaters and the accountancy firm Deloitte over their advice, which, she says, influenced her decision to choose to sell to Kroenke.
Nina got her Arsenal shares from her husband, Sir Charles Bracewell-Smith, who is the grandson of Sir Bracewell Smith, one of the major Arsenal shareholders of the 1930s. The Bracewell-Smiths and Hill-Woods became leading board members following the departure of Henry Norris, the man who had saved Arsenal from bankruptcy in 1910, moved the club to Highbury in 1913 and ran it until 1927 when he resigned in an attempt to head off an investigation from the FA into various financial irregularities.
Nina and Sir Charles were married in 1996 following the death of Charles’ first wife Carol two years earlier. Nina took over her husband’s business affairs and the remaining Bracewell-Smith family Arsenal shares were transferred into her name. She joined the Arsenal board in 2005 as the first and so far only female member, but fell out with Danny Fiszman and was ousted in December 2008.
Stan Kroenke had joined the board three months before this, but did not make a full offer for the club until April 2011. Alisher Usmanov immediately made a counter-offer and there was much speculation about who Lady B-S would sell to. Had she chosen Usmanov, Kroenke may still have got the required 50 per cent plus one share to take full control, but it would have been much closer. Usmanov would have held 46 per cent and would have been much more difficult for Kroenke to ignore. An early decision by Nina to sell to Usmanov may also have influenced other small shareholders to side with the Uzbek, and it’s possible no one would have had an overall majority. We could have been left with the billionaires holding between 45 and 49 per cent each and several hundred small shareholders holding the balance of power. AGMs would certainly have been interesting, as would the composition of the board. What would have happened then is anyone’s guess. Would Kroenke and Usmanov have worked together? Would one have agreed to sell to the other? It seems unlikely the current stable situation would have lasted if neither could be sure of winning any vote.
We will never know, because it seems that Nina favoured Kroenke over Usmanov, following the lead of all the other directors and former directors at the time, apart from David Dein who had already sold to Usmanov. So why is she now complaining? She has said previously that she regrets selling to Kroenke because of the way he runs the club, but the legal papers don’t take that line. For legal reasons at least, her problem is that allegedly bad advice meant that her profit from the sale was subject to capital gains tax, costing her £10m. She has also, she says, been forced into tax exile in Monaco until at least 2019 to avoid further liabilities, a move that has cost a further £1.25m, and paid £400k in legal fees that she shouldn’t have needed.
The exact issue is that Kroenke’s KSE raised loan notes registered in the UK as part of the deal, and Nina’s advisors failed to get this amended to an offshore location, meaning that she was liable to taxes as a UK resident. So she does not now appear to have any philosophical problem with Kroenke, she is saying she would have just preferred to sell in a way that meant she kept more of the money. The shares had been in her husband’s family for three generations and who she chose to sell to probably influenced what happened to Arsenal for decades to come, but that – according to the legal papers at least – was not the important point. She appears to be saying that if her own lawyers had just been a bit better at checking things then she’d have been as happy to sell to Kroenke as to anyone else.
Nina is also seeking damages for the “distress and inconvenience” of having to move to Monaco, as she can’t see friends and family in the UK as often as she likes. I think this may be pushing the hard luck story slightly. I’m sure it’s a drag when Lewis Hamilton keeps calling round for a cup of tea, but considering she made over £100m profit from this she could either just stay in London and accept her tax liabilities like the rest of us, or fly her family and friends to Monaco to see her. My levels of distress at her plight are too small to be measured.