David Sullivan, the co-owner of Birmingham City, has denied any wrongdoing by himself or Karren Brady, the club’s managing director, after their arrest on Wednesday by City of London police investigating alleged corruption in English football.

They were arrested on suspicion of conspiracy to defraud and false accounting but later released on bail.

“I’m shocked by the whole thing,” Sullivan said. “This is a complicated tax matter. We answered every single question they put to us. We have absolutely nothing to hide. We have done nothing wrong and, in due course, this will be proven.”

In a statement, the club said: “The investigation is focusing on payments to a football agent and two players dating back to 2002-03. In so far as there may be any implications for the company, these are not considered material to its financial affairs and they are in relation to the payment, or possible non-payment, of PAYE and National Insurance contributions. David, Karren and Birmingham City deny absolutely any wrongdoing.”

The players involved are Aliou Cissé, the Senegal midfield player, who was sold to Portsmouth for a fee of £300,000 in August 2004, and Ferdinand Coly, also of Senegal, who had a brief spell on loan at St Andrew’s from Lens, the French club, in 2003. At the time, they were advised by Willie McKay, the agent.

McKay has also helped to bring Olivier Kapo, David Murphy and James McFadden to the club. “Willie is just keeping his head down,” a source close to McKay said yesterday. “It’s business as usual with him.”