News Limited chief John Hartigan has rejected suggestions the company could have done anything more to uncover salary cap rorting at the Melbourne Storm as the overpayments were hidden through third-party agreements between players and other companies.
News Limited, which owns the Melbourne Storm and owns a 50% share in the NRL competition, says it had no knowledge of the salary cap rorts, which occurred over the past five years, during which time the Storm won the premiership twice.
But Hartigan says the rorts were hidden from News Limited through a complex system of third-party payments, where money from suppliers and other outside businesses was paid directly to players outside the clubs accounts.
“Everyone is suggesting why didn’t we pick it up through the books of the Storm? I think you’ve got to understand the majority of these payments came through third-party guarantees,” Hartigan told reporters in Melbourne.
“These guarantees were something between player managers and ‘side letters’ that were held at the home of one of the officials.
“I’m all for exacting audits, but it’s very difficult to find that out when they’re being kept on the side at a person’s house.”
Hartigan again said News Limited would stand by the Storm, but ruled out an appeal against the club’s punishment. The Storm was stripped of its 2007 and 2009 premierships, fined $1.1 million and will not be awarded any premiership points for matches it wins this season.
Hartigan has also told Storm players that several will have to leave the club at the end of the season to ensure the team gets back under the salary cap.
But as News Limited’s forensic auditors from Deloitte pour over the Melbourne Storm’s accounts, there are growing suggestions that salary cap rorting is widespread in the NRL.
A report in the Sydney Morning Herald quotes one unnamed chief executive who claims a number of NRL clubs are paying over the $4.1 million cap.
“There’s probably six or seven clubs that come to mind and certainly one in particular who has been doing it for years,” one club chief executive told the paper.
”But that club will never get caught because they hand out money in brown paper bags and don’t leave a paper trail like the Storm.”
With claims of a “brown paper bag” culture seemingly rife in the NRL, it is little wonder that calls for some sort of inquiry in the running of the game are continuing.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
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