700,000The original estimated breach for 2010

2007 & 2009The premierships stripped from the club

Eye of the 163kThe documents reviewed as part of the investigation

06 specialreport friday, july 16, 2010 dailytelegraph.com.au

An extraordinary

SUZUKI JAYCOUNITY FOUNDATION

The NRL was not advised of any cars belonging to the Suzuki fl eet being provided to players. But in March 2009 former CFO Matt Hanson recieved an email asking how to record vehicles that were provided to players. Hanson advised to “put one in as the CFO’s car’’. E-mails also confi rm that vehicles were provided to one player’s immediate family

Caravan giant owned and founded by Gerry Ryan, one of the club’s four independent directors who were sacked yesterday. In July 2007, Ryan received an email from then-Storm CFO Cameron Vale suggesting three options for a $150,000 re-imbursement to Jayco for payments the company may have made to Melbourne players.No evidence was found to confi rm that Jayco actually paid players directly

A charitable foundation that listed the Storm as a donor. Between 2006 and 2009, Unity paid Inglis and Cronk for “community development work’’, with emails confi rming that sum to be at least $85,000. Within the same period, Unity issued 20 invoices to the club for $145,000, all of which were paid.After going into receivership, Unity’s liquidator requested the return of wages because the players did not do any actual work for the charity.

THE McMANUSGROUP

Field of schemes The tangled web

Owned by multi-millionaire event promoter Andrew McManus, the company was hired by the Storm for gameday entertainment.E-mails between the company and former Storm CFO Matt Hanson showed McManus’s “consulting fees’’ corresponded directly to amounts paid to players as salaries - $800,000 in total.A total of 11 players received money from the McManus Group

Received payments from the McManus Group, the Unity Foundation and also other payments set out in side letters. Paid for charity work he never did

Greg Inglis

Storm captain received

payments from the McManus Group and payments set out in side letters

Cam Smith

Star fullback who received payments

from the McManus Group and was named as having received payments in side letters

Billy Slater

A total of 13 Storm players were identifi ed as having received payments that breached the salary cap. They included the superstar players known as “The Big Four’’

Josh Massoud

IT WAS a web of deception andduplicity the likes of which the NRLhas never seen — and hopefully willnever see again.

With stunning complexity, themost senior officials at theMelbourneStorm colluded to keep vigil over aseries of secrets and lies that grewmore scandalous the longer thesilence continued.

But yesterday the MelbourneStorm’s salary cap rort was finallyand fully exposed— and the extent of

the club’s brazen breaches werenearly as astounding as the fact theyweren’t uncovered much earlier.

Indeed, that was the question thattrumped all others once the grandscale of the larceny was revealedby the club’s owner News Limited(publisher of The Daily Telegraph)during yesterday’s extraordinary45-minute press conference.

How could a scheme that includedmore gift vouchers, boats, cars andcash than Sale Of The Century goundetected for so long? A plot thatrelied upon the co-operation of fivesenior officials over four years. A plansloppily bandied about in emails andbounced off various player agents.

‘‘When there is collusion betweenthe most senior executives of thecompany it gets extremely difficultfor the auditors and, in fact, anybodyto identify something going on,’’News Limited chief operating officerPeter Macourt said.

‘‘[A] fundamental principle of in-ternal control is separation of duties.Where there is collusion that separ-ation ceases to exist. Unless you’veidentified the fact that the collusion isoccurring, you rely on separation ofduties to provide the control.’’

Even before yesterday we knewthere were blurred lines of separationat the Melbourne Storm, a club wherethe top officials resorted to hiding

documents in their own homes toprotect the awful truth.

What we didn’t know was just howsophisticated the mix of crude andcunning was.

First the crude. Some of the club’smethods were little more imaginativethan the cursory brown paper bag fullof cash that many believe is still inoperation at most NRL clubs.

Deloitte, the global auditor hiredby News Limited to investigate therorts, found three ‘‘side letters’’addressed to star players Greg Inglis,Cameron Smith and Billy Slater. Theletters simply promised the trio moremoney than was registered on theirNRL contracts. A lot more money.

New facesto decideif lawsuitproceedsMattMarshall

Sacked:PeterMaheryesterday

THE fate of Melbourne Storm’slegal action against the NRL restswith the club’s new board.

The Storm’s four independentdirectors Dr Rob Moodie, GerryRyan, Peter Maher and PetraFawcett were yesterday sacked byValimanda Pty Ltd, the NewsLimited subsidiary that financiallybacks the Storm.

News Limited chairman JohnHartigan revealed a $14 millioninjection into the MelbourneStorm had been required thisyear— more than double its$6 million annual investment.

‘‘In these circumstances it isunacceptable to News andcompletely objectionable that theindependent directors of theStorm have launched and focusedtheir attention on the court actionagainst the NRL to challenge thedecision about the penalties,’’ MrHartigan said.

‘‘Are these directors seriouslysuggesting there has been nobreach? Are they suggestingcheating, in any form by whateverdegree, is OK?

‘‘We do not believe the inde-pendent directors have shownsufficient willingness to resolvethe most pressing issue facing theclub, to field a team next seasonthat is under the salary cap.’’

The future of the deposedquartet’s joint legal action toreinstate the club’s stripped 2007and 2009 premierships, now lieswith the Storm’s new board.

It comprises acting CEO FrankStanton, Craig Watt and Stormand News Limited chief financialofficer Stephen Rue, who wasappointed to the board yesterday.

Mr Hartigan said all four sack-ed directors were cleared of anywrongdoing by Deloitte’s audit,but that only Ms Fawcett had co-operated with the investigation.

He said the new board’spriorities were to appoint a newCEO and begin working, as amatter of urgency, towards com-piling an NRL roster for 2011 thatis under the salary cap.

‘‘I don’t know what the NRLcan offer but I know if you go tothem rather than try to litigateagainst them you’re more likelyto get an outcome,’’ he said.

Dr Moodie is a Victorian medi-cal figure who was named Victo-rian Father of the Year in 2005.

Ms Fawcett has a sales andmarketing background in mediaand communications.

MrMaher is a regular presenteron 3AW radio in Melbourne. Hefounded and formerly owned Re-hame, a business that monitoredand analysed media content.

Mr Ryan OAM is the ‘‘caravanking’’ owner of Jayco, a majorStorm sponsor.

1.28 What is now believed tobe the breach for 2010

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1.7The original amount the club was believed to have breachedm 3.17 The amount

the Storm were over the cap from 2006

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dailytelegraph.com.au friday, july 16, 2010 specialreport 07

league of lies

Disgraced former CEO who is widely accepted to be the chief architect of the salary cap rorts.

Brian Waldron

Halfback who received payments

from the McManus Group and the Unity Foundation. Like Inglis, Cronk was paid for charity work he never did.

Cooper Cronk

Three players - Greg Inglis, Cameron Smith and Billy Slater - were all given side letters promising payments well in excess of their registered contract value. Letters pertaining to Inglis and Smith were signed by both players as well as their respective agents, Allan gainey and Isaac Moses. Slater’s letter was unsigned.No evidence was found that any players or managers knew the payments could amount to a salary cap breach.

At least one player received a retail gift voucher to purchase items. In an email dated March 31, 2010, then-CFO Paul Gregory addressed

an administrative assistant about how to account for the gift

voucher given to the player, saying “The Cap Auditors

will not even see the list as it is not on the

books’’.

uncovered by Deloitte

Former Storm CFO who assumed Waldron’s job at the start of this year. Forced to stand down when the salary cap scandal was revealed three months later

Matt Hanson

Hanson’s predecessor in the CFO role who left in 2008 to join AFL club North Melbourne, where he still works.

Cameron Vale

(Not pictured)

Latest club CFO who stood down with Hanson when the cap penalties were handed down in April.

Paul Gregory

(Not pictured)

Others who were benefi ciaries which breached the salary cap:

Ryan Hoffman Anthony Quinn Steve Turner Will Chambers Michael Crocker

Brett White Antonio Kaufusi Matt GeyerDallas Johnson

Former recruitment manager who lured superstars Greg Inglis and Israel Folau to the club. Departed in 2007 to join the Roosters in the same role, which is now under review following yesterday’s revelations

Peter O’Sullivan

In the case of Inglis and Smith theletters were signed by both the playerand their respective agents, AllanGainey and Isaac Moses. But despitethe autographs, there was no hardevidence to prove any of thesignatories were complicit in the rort.

One document that formed part of163,000-strong dossier that Deloittereviewed also mentioned the possi-bility of direct payments from‘‘Gerry’’, a presumed reference toGerry Ryan, one of four independentdirectors sacked yesterday.

His multi-million dollar companyJayco Caravans— also a major Stormsponsor — just happened to receivea major mention in the Deloitte

report as a possible source of illegit-imate income.

In a 2007 email sent from the clubto Mr Ryan, former CFO CameronVale suggested several ways in whichthe Storm might offset $150,000 inpayments made by Jayco to players.

All the options amount to book-keeping deception, whereby invoiceswere generically described as ‘‘spon-sorship’’ or ‘‘promotional costs’’ andnever actually paid. And this is wherethings get more complex and, byconsequence, harder to detect.

According to Deloitte’s findings,the two richest streams of illegitimatepayments came from a now-defunctcharity, the Unity Foundation, and

promotions conglomerate The Mc-Manus Group. Between 2006 and2009, Unity directly paid Stormplayers for ‘‘community develop-ment work’’.

Within that period the MelbourneStorm organisation made $145,000worth of ‘‘donations’’ to Unity.

The liquidator who has assumedcontrol of Unity’s affairs recentlywrote to both Inglis and halfbackCooper Cronk, asking them to payback wages in the belief neither haddone any actual ‘‘work’’.

No hard evidence could be ob-tained to prove Inglis, Cronk or anyother players on the Unity payrollknew they were breaching the cap.

Both stars were also beneficiariesof The McManus Group which was,on face value, engaged by the Stormto provide game-day promotionsand entertainment.

McManus and its subsidiaries in-voiced the Storm on a monthly basisfor ‘‘consulting fees’’.

But documents for September andNovember 2008 showed that the‘‘consulting fees’’ were identical tomonies paid to 11 Melbourne playersthat were listed as ‘‘salary’’.

Melbourne paid The McManusGroup $800,000 in ‘‘consulting fees’’— and almost a quarter of thatamount ($198,000) was received byInglis and Billy Slater.

Most damning was an email sentfrom a former McManus chief finan-cial officer to the Storm in September2008, which promised: ‘‘I will pay theplayers tomorrow.’’

When asked by the NRL to explainthe ‘‘consultancy fees’’ exactly12 months ago, the Storm said thatthey related to hospitality packagesand signage for major events such asthe F1 Grand Prix and the SpringRacing Carnival.

But none of the Storm recordscontained any payments to matchthose invoices.

And that was when the NRL beganto wonder just how far this crookedpaper trail might lead.