Melbourne Storm owners News Limited admit they are powerless to stop four rogue directors on the Storm board taking legal action against the NRL over salary cap penalties.
While the media giant said it would not fund the proposed legal action, News Limited's director of corporate affairs, Greg Baxter, said there was nothing to stop chairman Rob Moodie and three of his fellow directors fighting the sanctions.
The NRL stripped the Storm of two premierships and all competition points they accrue this season after the club owned up to salary cap breaches totalling $1.7 million over five seasons.
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While not disputing the breaches, it is believed the group wants to challenge manner in which the NRL determined the penalties.
With the four directors having the majority vote over the two New Limited-appointed representatives on the board, Baxter said legal action could have disastrous effects on the club's ability to move on from the scandal.
"Clearly if they were to proceed it would create instability at a time when frankly we don't need instability," Baxter said.
But asked if News could block the legal action, Baxter said: "No."
Livid at the proposed challenge, the NRL on Thursday issued their own threat with chief executive David Gallop saying legal proceedings could weed outany accomplices to the covert salary cap breaches.
"The club's practices could not be any more under the spotlight and if the threat of legal proceedings is an attempt to divert attention away from that issue then it may have the opposite effect," Gallop said.
"There is no doubt that any proceedings that take place could well help to identify if any Storm directors were aware of the club's salary cap deception.
"It may also explain how that deception could have taken place without the knowledge of directors and in a way that led the Board's chairman, Dr Rob Moodie, lodging statutory declarations that proved to be false.
"These are the same directors who were part of a Storm board meeting that openly discussed and accepted the penalty on April 22."
News Limited chairman and chief executive John Hartigan said his company, who also have a 50 per cent stake in the NRL, could not support the legal challenge.
"We acknowledge their views and we disagree with them," Hartigan said in a lengthy statement.
"News recognises that the penalties are unprecedented. We know how devastating this has been for the fans, players, staff and sponsors of the Storm.
"We have said we will consider any idea from players, fans or anyone else that would help minimise the impact of the penalties on the Storm.
"But, we don't believe a legal challenge to the NRL's procedures is the answer. On the contrary, it could further damage the Storm.
Hartigan said the focus should instead be on investigating the systematic breaches that occurred and who was responsible.
"It is important to remember that certain people at the Storm orchestrated complex fraud and deception to conceal huge extra payments to some of the club's players that put the Storm well over the salary cap for five years," he said.
"However justified or well intentioned a legal challenge might be in the minds of the independent directors or others, it won't change what's already happened and it won't absolve those that have done the wrong thing."
Hartigan said the forensic audit of the club's financial affairs by the accounting firm Deloitte was well underway and a full report was expected in June.
