EFL 'failed to execute rules' on finance with Bury
The Football League has been accused of "failing to execute" its own rules in the demise of Bury earlier this year.
EFL executive chair Debbie Jevans was called to give evidence at the start of a select committee inquiry into football governance.
Damian Collins told Jevans that, in his view, the EFL had not been robust enough in challenging the takeover of Bury for £1 by Steve Dale in 2018.
Jevans said Dale passed the EFL's fit and proper person's test.
But she said he subsequently failed to provide evidence of funding.
"The EFL failed in its duty to execute its own rules," said Collins, the chairman of the Digital Culture Media and Sport select committee.
Jevans defended the EFL's stance.
She said dealing with Dale had been difficult and that he had repeatedly ignored the EFL's correspondence. Then, when he did indicate where the funding for running the club was going to come from, the EFL's own investigations found the sources simply did not exist.
"He complied with owners and directors test as it was written but that was when the problems started," said Jevans. "There was no evidence of funding."
"We want to learn lessons from this. That's why we're having an independent review into this and I don't want to pre-empt or anticipate what the results of that may be."
Jevans said there had been a good deal of "evasiveness" from Dale when the EFL had sought information regarding funding.
"He was in hospital a lot and if someone says that they're in hospital and recovering from cancer, you don't want to say that that's wrong at all," she said.
"There were any number of excuses. He provided evidence of funding, we then investigated what that source of funding was and we found that on every occasion the funding didn't exist and couldn't be backed up."
Jevans told the committee a financial sustainability review was being led by Jonathan Taylor QC, which is likely to result in a strengthening of the EFL's procedures for assessing the suitability of club owners.
"We have to ensure what has happened at Bury is a one-off occurrence and doesn't happen again," she said.
Bury were expelled from the EFL on 27 August are due back in the High Court on 30 October to answer a winding-up petition.
FA chairman Greg Clarke said he had only been formally made aware of the full extent of Bury's situation after the club had gone out of business and that football's regulatory framework kept the organisation at arm's length in dealing with such financial issues.
He told the committee Dale had written to him three weeks ago to say he had been unfairly treated but had subsequently received no response to a request for a meeting.
'People made a lot of money out of Bury's failure'
Former club director Barry Roth used the Parliamentary privilege afforded by the committee hearing to outline his thoughts deals done by Stewart Day, the man who sold Bury to Dale.
Roth said Day took out two loans against Bury's Gigg Lane stadium, worth £2.5m, from Capital Bridging Financial Solutions.
"Only 60% of that money went into the club's bank account," said Roth. "The rest went as an introductory fee for securing the loan at an interest rate of seven percent.
"This was in the 2017-18 season, the accounts for which have never been published."
Roth said he had tried to find out where the missing £1m had gone but without success.
"The sole director of Capital Bridging Financial Solutions is Paul Dalton. I have reason to believe a former director at Bury is Paul Dalton's brother in law.
"My understanding is Capital Bridging Financial Solutions remortgaged the loan with a company in Malta, that has a link to the Virgin Islands, at a far lower business rate."
When it was put to Roth that some people had made a lot of money out of Bury's failure, he replied: "Yes."