THE biggest scandal in Australian sporting history is threatening to wipe out Melbourne Storm, rugby league's most successful team of the past decade, after it emerged the club had won two titles while massively cheating on salary cap rules.
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The explosive revelations have left the club stripped of its last two premierships, barred from accruing points for the rest of this year, owing $1.6 million in penalties - and battling for survival.
Senior club executives could also potentially face up to five years' jail and fines of $200,000 under companies law if they are charged and convicted over their roles in the scandal, according to legal experts.
And senior players and their managers may face investigation for possible breaches of criminal provisions or taxation laws if they conspired to hide the true nature of their salary deals.
National Rugby League chief David Gallop, revealing the scandal, said investigators had discovered a dual bookkeeping system to enable salary cap cheating. Secret records hid extra player payments that were kept apart from information disclosed to NRL auditors.
It is believed the league investigation began following a tip-off from a Storm insider who is no longer with the club. The probe uncovered over-payments totalling $1.7 million over five years. Club officials confessed to the NRL yesterday.
It also emerged that an innocuous marquee used for corporate entertainment at Storm's home ground played a key role in the scam.
For five years the club made double payments for the marquee, booking a superfluous $20,000 payment for each game for something they already received under their ground hire contract. The money, amounting to $1.7 million, was channelled to star players who helped Storm win its 2007 and 2009 NRL titles.
Former Storm chief executive Brian Waldron has been accused of being the architect of the rorts. Waldron quit the Storm in January to head the new rugby union club, the Melbourne Rebels.
He is expected to step down today after stinging criticisms from the owner of Melbourne Storm and part-owner of the NRL, Rupert Murdoch's News Ltd, which publishes the Herald Sun and The Australian.
News chairman and chief executive John Hartigan said Storm ''has had a couple of rats in the ranks'' and news of the rorts left him feeling sick. ''I don't think there will be a league fan anywhere who is not outraged by what appears to be a highly organised, deeply deceptive fraud in which there was systematic and deliberate concealment of unlawful payments to certain players over an extended period,'' he said.
He said Waldron was ''the centre'' of the deception. News Ltd intended referring the issue to police, although it was not clear whether it was a civil or criminal matter.
The NRL insisted that neither Storm chairman Rob Moodie, his fellow directors nor News Ltd were aware of the two sets of accounts until the audit.
The AFL responded by saying it would probe player payments at St Kilda from 2002 to 2004, when Waldron was the club's chief executive. Storm's acting chief executive Matt Hanson, who was also stood down yesterday, worked with Waldron at St Kilda as chief financial officer.
Moodie said Storm's board learned of the cheating on April 13. He apologised to NRL supporters. ''We are appalled and we're angry,'' he said.
''We do accept the referee's decision. The rules are clear, we've broken them and we offer no excuses whatsoever,'' Moodie said. ''We're devastated by the penalties. It is an unbelievable blow and obviously the lowest day for the club.''
Asked what Waldron had said the last time they spoke, Moodie said: ''He apologised.''
Legal experts said that the keeping of dual sets of accounts meant there may be breaches of company law or the Crimes Act and secret payments would likely draw attention from the Australian Taxation Office.
In further repercussions, a major club sponsor, the national superannuation fund Hostplus, called a media conference for today, raising the prospect that backers may withdraw from the disgraced club.
With two premierships, three minor premierships and four successive grand final appearances, Storm had been regarded as the team of the decade, but there have long been suspicions of salary cap rorting because of its success in retaining a star-studded playing list, including Greg Inglis, Cameron Smith, Billy Slater and Cooper Cronk.
Gallop said the 2007 and 2009 titles won by Storm would not be reassigned to the losing grand finalists Manly and Parramatta, but would stand in the records as ''stripped''.
The penalties are severe when compared with those imposed by the AFL on Carlton and other clubs for salary cap breaches. They were hit with withdrawal of player draft picks.
However, Storm's breaches were seen as worse for being contrived and systematic.
Gallop said the lengths to which the club went to hide the payments was extraordinary. ''The breakthrough in the investigation was the discovery by the salary cap auditor of a file in a separate room at the Storm to the room that contained the file with the player's contracts, outlining the payments to the players not declared to us,'' he said.
''These payments have allowed them to recruit and retain some of the best players in the game.''
The first hint of the penalties to be imposed came yesterday when a betting plunge on Melbourne to finish on the bottom of the NRL ladder caused bookmakers to suspend the market.
As well as the roles of Waldron and Hanson, the investigation is believed to encompass former Storm recruitment manager Peter O'Sullivan, chief financial officer Paul Gregory, and one of his predecessors, Cameron Vale, who is now with AFL club North Melbourne.
Deputy Prime Minister Julia Gillard, Storm's No. 1 female ticket holder, said that supporters would be shocked and saddened, but she hoped they would stand by the club as it rebuilt.
