A senior executive at West Bromwich Albion attempted to negotiate a £25 million transfer deal that would have broken Fifa regulations, avoided tax in China and possibly the UK, and enabled the English club’s Chinese majority shareholder and owner to keep some of the proceeds of the sale.

Luke Dowling, who until two weeks ago was West Brom’s technical and sporting director, initiated discussions with an agent with links to a club in China about the possible sale of the Brazilian attacking midfielder Matheus Pereira.

The Chinese authorities have introduced new regulations to limit the spending of Super League clubs, which were paying vast sums of money to secure the services of foreign players and managers.

As well as a salary cap, the Chinese Football Association (CFA) brought in a transfer tax in June 2017 to restrict spending. The CFA announced that any club that pays more than 45 million yuan (about £5 million) for a foreign player, or 20 million yuan for a Chinese player, must give the same amount to a CFA youth development fund.

In what the agent understood to be West Brom’s solution to overcome the issue, and to increase the chances of a deal happening, the man whose website profile said that he oversaw player recruitment at West Brom detailed how Pereira, 25, could still be transferred to China, to the satisfaction of all parties involved.

He suggested that only a fraction of the fee be declared on Fifa’s transfer filing system, with the majority paid in a separate transaction between the owner of the Chinese club and West Brom’s Chinese owner.

Dowling, 42, is an experienced football administrator, having played the game semi-professionally before taking scouting roles at a number of clubs. He then served as a sporting director at Watford and Nottingham Forest before joining West Brom in September 2018.

In his conversations with the agent, Dowling said it was his understanding that the club, then in the Premier League, had completed a similar transaction to secure an international transfer in the past. Dowling said it would suit Lai Guochuan, the billionaire West Brom owner, who would get to decide what amount to keep and what to put into the club.

Dowling claimed that the proposal had been made to him by the present West Brom chief executive, Xu Ke (who is known as Ken). Lai bought the club from the British businessman Jeremy Peace in 2016.

Fifa and the Football Association have strict rules on international transfers, with both the buying and selling clubs required, via their national associations, to register the full details of every deal on Fifa’s Transfer Matching System (TMS). The online platform was introduced in October 2010 to improve transparency, efficiency and governance between clubs.

In international transfers the details submitted by each club have to match and be approved before an international transfer certificate can be issued. Failure to abide by these rules can lead to sanctions from Fifa and the FA. Any profit on the sale of a player from an English club has to be declared to HM Revenue and Customs because it would fall under UK tax law.

A Times investigation can reveal that three conversations between Dowling and the agent took place in January this year, during the transfer window.

Sam Allardyce had just replaced Slaven Bilic as the club’s head coach, and Dowling told the agent that the former England manager was looking to raise funds by selling players. Dowling said that Pereira, signed from Sporting Lisbon the previous summer on a permanent deal believed to be worth in the region of £8 million, was someone Allardyce would be prepared to offload.

During the first conversation, on January 11, Dowling suggested that a move to China could appeal to Pereira, before discussing the potential issues with the Chinese transfer system. He explained to the agent how a proposal had been made in a conversation with his chief executive.

“Ken said the issue is obviously anything over £6 million, they then have to pay double in tax, don’t they, or into the government?” Dowling asked. “That’s correct,” the agent replied.

“So, erm, I said, ‘Well, we can’t sell him for £6 million, Ken.’ If you want, for example, £25 million, that’s £19 million more. There’s not many teams now that will spend an extra £19 million on top just to put that back into the government. So, erm, then Ken mentioned . . . well . . . what they can do, our owner is in Guangdong, he can have an agreement with their owner, if that’s how they want to do it.”

The agent asked, “But how would they do it? What?”

“So, I think [this is] the easy way to explain,” Dowling said. “Say it’s £26 million — use that as an easy number, or £25 million, so £6 million would come to the club as a transfer fee, which is allowed, and the remaining £19 [million] would be an agreement between [the Chinese club’s] owner and our owner.

“You know, so whether they do it through their businesses or whatever it may be, I don’t know. That I don’t know enough of. I’m sure you don’t know. That would be for them to have a discussion about. That was all they previously mentioned. Now obviously the only small little thing is that we’ve got an owner who is Chinese.

“If it was still Jeremy Peace that was the owner of West Brom it wouldn’t be able to happen. It would be very, very . . . extremely difficult. But because our owner is Chinese and he is in China, whether that would make it more realistic, or easier, I suppose.” The agent then asked for more detail about the previous transaction. “There was a deal between the clubs, with the owners, and things like that,” Dowling said. “So I do believe it’s something that, erm . . . the fact that Ken has brought it up tells me he must think that something can be worked.”

A brief discussion about Pereira’s value then followed. Dowling said his club wanted “£25 million”. The agent requested confirmation from the chief executive that such a deal could be done before even consideringraising it with the club in China.

Dowling called back the next day, January 12, and after a quick exchange of pleasantries provided that confirmation. “Ken just said as long as both parties are happy with the agreement between them, which would be owner to owner, he said anything can be done,” Dowling said.

The agent then asked Dowling to fully explain the process before raising concern about the TMS system. Dowling replied: “So I think the amount that would have to go on the TMS would be whatever amount our owner decides to put into the club. So, erm, he might say for example, yes, £20 million is fine, I’m going to take £18 million directly from the owner [of the Chinese club], the other £2 million [from the Chinese club] you make as a transfer direct to West Brom. And that would have to go on TMS. It might be £4 million. But one thing it cannot be is more than six.”

The agent corrected him, stating it actually cannot exceed £5 million. “Is it more than five?” Dowling said. “Well it can’t be more than five then. So it won’t be down as more than five, because you are not getting around the issue that currently is there. That would be the amount that would go on TMS. [Then there is] the amount that our owner decides to keep for himself, or what to put in the club. We all know it certainly won’t be more than £5 million. Listening to Ken speak, and what the owner has said to Ken before, it wouldn’t surprise me if it’s less than £5 million, because he gets to keep it.”

The agent then expressed his misgivings about suggesting a “dodgy deal” to his client. “Because that’s what it is, in effect,” he said. “Yeah, yeah,” Dowling responded, with a chuckle.

The agent called back eight days later, on January 20. Again, they quickly exchanged pleasantries before the agent got straight to the point.

“Listen, I just wanted to give you a call,” he said. “I’ve given the matter some thought, what you proposed, of how to structure, erm . . . You’ve known me for quite a bit of time now, I’m totally uncomfortable in proposing [the deal] to [his client]. I’m not even going to pitch it.”

“Yeah, yeah, of course,” Dowling replied.

“But this, the way that either you, Ken or the club have conducted this before and proposed to do this again, I’m just not comfortable,” the agent said.

Dowling again referenced the previous international transfer as evidence that such a deal had been done in the past. He said he had “just been told how a certain transfer can work and did work”, adding that he had simply “passed on a message”.

“If it’s something that’s not right, no problem, it’s not right, erm, you know, and people move on. No problem, no problem,” Dowling said.

The conversation ended soon after that.

It is understood that Lai denies Dowling’s claims, including that he had any involvement in the negotiations involving the transfer of Pereira or the other international transfer referred to by Dowling, and that Lai had no knowledge of the discussions concerning the transfer of Pereira in January.

In a statement, West Brom said: “The club abides by all applicable laws and regulations concerning the transfer of the registrations of players and would not sanction a transfer that was not in accordance with such laws and regulations. Discussions about prospective transfers, that may or may not occur for many reasons, are commonplace and are confidential. Matheus Pereira was an important member of the club throughout last season and he remains registered with the club.”

Dowling said: “This story relates to a transfer that never happened. The conversation was exploratory and, based on the information I had at the time, I believed that the proposal outlined was a legitimate one. As soon as this was called into question, I reported this to the club and had no further dealings. I categorically deny any wrongdoing.”

The key figures

Matheus Pereira
West Brom’s top scorer last season with 11 goals. It is not clear whether he was aware that a move to China in January had been discussed.

Luke Dowling
Former semi-professional player who was sporting and technical director until this month. He held similar roles at Nottingham Forest and Watford.

Xu Ke
Chief executive who was born in Shanghai and educated at University College London and in Hong Kong. Appointed to the board in October 2018.

Lai Guochuan
Majority shareholder of the Yunyi Investment Group which completed a takeover of West Brom in 2016 from English businessman Jeremy Peace.

Q&A: What are the transfer rules in China?
Since 2017, any club that pays more than 45 million yuan (£5 million) for a foreign player must give the same amount to the Chinese Football Association’s youth development fund. The transfer tax was introduced after a spate of high spending by clubs such as Shanghai SIPG, who paid an Asian record of £60 million to sign the Brazilian midfielder Oscar from Chelsea in December 2016.

What is Fifa’s Transfer Matching System?
Since 2010, it has been mandatory for both clubs involved in a transfer to enter details such as the fees into Fifa’s online TMS platform. The information from each club has to be identical for the transfer to be approved. Fifa’s transfer rules state: “TMS is designed to clearly distinguish between the different payments in relation to international player transfers. All such payments must be entered in the system as this is the only way to be transparent about tracking the money being moved around.”