LONDON – Tax evasion and money laundering is suspected in the transfer of soccer players between England and France, authorities in both countries said Wednesday after a wave of arrests and raids on clubs.
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The investigation centers on whether payments were hidden to players, agents or third parties to evade income tax and social security contributions, French prosecutors said.
Premier League leader Chelsea, London rival West Ham and Newcastle are the only clubs in England so far to be publicly embroiled in the far-reaching probe. Britain's tax authority, which seized financial records, computers and phones in raids, said the suspected fraud amounts to 5 million pounds ($6 million).
Her Majesty's Revenue and Customs provided no details of the "several men" arrested or locations searched, while French prosecutors said four people were detained after raiding 10 locations.
"(The investigation) focuses on aggravated tax fraud and laundering of money from that fraud during transfers of football players from French clubs and Premier League clubs," the French financial prosecutor's office said.
Chelsea said investigators arrived at Stamford Bridge and "requested certain information which the club will provide."
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West Ham said it was "cooperating fully with Her Majesty's Revenue and Customs to assist their enquiries" after officials were pictured during an early morning swoop on its new Olympic Stadium home.
Newcastle confirmed that a "member of its staff has this morning been assisting HMRC with their inquiries," after Britain's Press Association reported that club managing director Lee Charnley was arrested.
HMRC only said that it "arrested several men working within the professional football industry."
"Investigators have searched a number of premises in the northeast and southeast of England and arrested the men and also seized business records, financial records, computers and mobile phones," the agency said.
"This criminal investigation sends a clear message that, whoever you are, if you commit tax fraud you can expect to face the consequences."
The escalation in the investigation on Wednesday followed HMRC telling legislators in December that 43 players and 12 soccer clubs in the British leagues, alongside eight agents, were being investigated.
HMRC head of enforcement and compliance Jennie Granger told a British parliamentary committee that it was investigating the issue of image rights.
Earnings from image rights are treated as a separate income stream from cash taxed at domestic rates for playing for a team. Players can pay different tax rates on image rights earnings from commercial deals. HMRC has questioned clubs and players in the past when a player lacking a public profile claims that significant earnings are from image rights.
AP Sports Writer Samuel Petrequin in Paris contributed to this report.
Rob Harris is at www.twitter.com/RobHarris and www.facebook.com/RobHarrisReports