A former employee of Birmingham City FC's holding company is believed to have made off with £2.55 million of the club's cash, the owners have revealed.
Birmingham International Holdings says it plans to investigate and suspended trading six weeks ago.
"The Board has recently discovered that as at the date of this announcement a former employee of the Company may have misappropriated a sum of at least HK$30 million belonging to the Group since December 2013," it said yesterday in a statement.
"The Company has reported the suspected misappropriation of funds to the Hong Kong Police Force and they are currently investigating the matter."
It says it expects the loss to have a 'material impact' on the financial situation of the group, and adds that it's concerned that the misappropriation was missed by the auditor - believed to be JH CPA Alliance of Hong Kong - last summer.
"The Board will consider setting up an investigation committee to look into the Suspected Misappropriation and see how to improve the internal control system of the Company," it says.
Last year, the former owner of Birmingham City, Carson Yeung, was convicted of money laundering in his native Hong Kong and jailed for six years. Shortly before, he resigned as president of Birmingham City FC, director of Birmingham City plc and director and chairman of Birmingham International Holdings.
However, he is still the major shareholder in the club, and last week called for three existing directors of Birmingham International Holdings to be removed and replaced with his own nominees.
Club supporters have asked the Football League to investigate whether Yeung is acing as a 'shadow director'. If he is, the club could be subject to sanctions including fines, points deductions or a transfer embargo.
The Championship club currently sits in 11th place in the Championship table, and only narrowly avoided relegation last year. It's had something of a revival, though, since the appointment of Gary Rowett as manager.
The alleged loss shouldn't lead to a shortfall in funds, as it's believed that the money was accounted for as having been spent. The company says that say-to-day operation of the team shouldn't change. The Football League says it's been in dialogue with the club over recent months, and that it's satisfied with the current situation.
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