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Italy’s finance police raided the headquarters of Serie A football club AC Milan on Tuesday as part of an investigation into potential irregularities over its 2022 sale by US hedge fund Elliott Management to private equity group RedBird.
Prosecutors launched their probe following allegations that Elliott still controls AC Milan despite the sale to RedBird, according to a search warrant seen by the Financial Times that authorised the raids at the Casa Milan complex in the city’s district of Portello.
The search warrant alleges the club’s current chief executive Giorgio Furlani and his predecessor Ivan Gazidis fraudulently concealed information that should have been communicated to the Italian football federation concerning the ownership structure of the club.
“It seems that the majority of the funds used to buy the club originate from an investment vehicle that does not belong to RedBird. The suspicion is that Elliott currently maintains effective control of the company,” according to the search warrant.
The warrant also claims Elliott indirectly controls French football club Lille, which the prosecutors allege to be in breach of rules set by the governing body of European football Uefa.
Elliott rejected the allegations as “false”, adding it has no control over AC Milan or any stake in the club since the sale two years ago.
“We note reports this evening that the current and former CEOs of AC Milan are under investigation in connection with an allegation that the football club still belongs to Elliott, and it was hidden from the football federation,” the company said. “This allegation is false.”
RedBird also denied on Tuesday that the hedge fund controls the club.
The allegations are based on filings with the US Securities and Exchange Commission and other documents previously seized by Italian investigators, said people close to the investigation.
Italian financial police also searched the homes of Furlani and Gazidis, according to the warrant, over allegations that they were obstructing Covisoc, the Italian football supervisory commission.
A spokesperson for AC Milan confirmed the raids and said the club was not involved in the investigation. “The club is providing full co-operation with the investigating authority,” the spokesperson said.
New York-based RedBird acquired AC Milan from Elliott less than two years ago for €1.2bn. As part of the deal, Elliott agreed to lend RedBird €600mn via a so-called “vendor loan” to finance the transaction.
RedBird later appointed Furlani as AC Milan chief executive. He had long worked as a portfolio manager at Elliott and managed the football club for the hedge fund, which was founded by Paul Singer. AC Milan’s current chair Paolo Scaroni was also appointed by Elliott in 2018. Gordon Singer, son of Paul, continues to sit on the board of AC Milan.
The investigation stemmed from a complaint lodged by AC Milan’s former Luxembourg-based investor, Blue Skye, which “raised doubts” over the RedBird deal immediately after the sale, accusing Elliott of “lack of transparency over the terms of the sale”, a lawyer for Blue Skye said on Tuesday.
