Former Northampton Town chairman David Cardoza takes the stand in Cobblers missing millions hearing
The former Northampton Town chairman has admitted he was aware the development firm into which most of the council's missing Â£10.25 million loan had been passed had paid invoices on a revamp of his house.
Northampton Borough Council is suing former Cobblers boss David Cardoza, his wife Christine and his father Anthony over their part in what they say amounts to breaches of the loan agreement made in 2013.
The millions handed to Northampton Town Football Club over 2013 and 2014 was meant to pay for a stadium revamp, but in 2015, builders walked off the site at Sixfields after the contracting firm not being paid.
The football club then defaulted on interest repayments on the loan - and in September 2015, the council demanded the full £10.25 million back.
Today, on the sixth day of a High Court civil trial brought by the borough council, David Cardoza was quizzed over an agreement made between himself and the stadium developers County Group.
As part of the heads of terms agreement with County Group, the two parties said County Group would carry out £750,000 worth of work to David Cardozxa's home in Church Brampton, known as Cheriton.
The court heard how David and his father Anthony, were hoping to recoup around half of the directors' loans they had put into Northampton Town since taking over in 2003 and the £750,000 work would form part of David Cardoza's portion of this.
As County Group planned to build hundreds of houses adjacent to Sixfields stadium, Mr Cardoza told the court that building materials could be used for both the housing development and his own property.
But the works to the home were not documented as part of the heads of terms agreement.
"You didn't want others to find out you were having works done to your house did you?" the borough's acting barrister James Morgan QC asked Mr Cardoza in court.
"It was being paid for indirectly form the football club (and the council loan)."
Mr Cardoza replied: "People knew I was doing works to my house. When you say indirectly by the football club, that sounds a lot worse than it was.
"Repaying the loan that I had put into the business and using that to put into my house is not indirectly taking anything from anybody."
Mr Morgan QC put to Mr Cardoza that this put him in a "conflict of interest" with the football club, which he said could have also benefitted from the £750,000 at the time due to its financial predicament.
Mr Cardoza admitted to the court that he was aware a £23,400 invoice for planning work by Stuart Loxton Architects was paid for directly by 1st Land - the County Group-owned company set up for the purpose of the development into which at least £7 million of the loan money had been poured.
"I must have known," he told the court. "I can't recall exactly why."
The decision to agree a £750,000 renovation of the house did not appear in any board meeting minutes of the football club, but Mr Cardoza insisted he did tell his fellow directors.
"The directors of the club were in the football club every single day. We were lunching all the time, we were friends outside the club," he said.
The borough council barrister put to Mr Cardoza that he was dishonest when, in 2014, he approached then council leader David Mackintosh for an extra £1.5 million to get the stalling stadium works back in track.
Mr Morgan said the extra tranche of the loan was agreed on the basis Mr Cardoza had told David Mackintosh the money would be used “to pay interest on the existing loans” and “for immediate cost flows” as well as a fighting fund to launch legal proceedings against County Group, which he said was not delivering on the stadium.
“You never said to Mr Mackintosh you want to use this money to repay directors loans did you?” asked Mr Morgan.
“No” he replied. “Money came in and out if the club all the time.”
“He would have told you to push off wouldn’t he?” asked the barrister.
“At the time we didn’t think for a second this money was being misappropriated,” Mr Cardoza replied.
The court also heard that by September 2015 the football club was “in serious trouble”, Mr Morgan QC said.
The club and the council were, at the time, at loggerheads over the planning permission for the mixed-use development around the stadium. A bid to buy the club by businessman Ravi Rach had fallen through, which Mr Cardoza would have received a fee of £300,000.
The club had failed to pay around £29,000 of interest in repayments in the borough council loan. On September 24, the council demanded the whole £10.25 million back.
But Mr Cardoza said that the demands came as a surprise.
“You recall the club was not paying interest into the council?” asked Mr Morgan
“We had no intention to pay on time at this stage,” he said. “Not after how they had treated us.”
“You knew there was a serious risk?” asked Mr Morgan.
“No, I didn’t,” he replied. “A £10 million loan for £29,000 of late fees - no, I didn’t think that was a risk.”
The trial continues.