Read the Birmingham City statement in full

David Sullivan and Karren Brady have denied that they have done anything wrong after they were arrested yesterday by police investigating alleged corruption in English football. Sullivan, the Birmingham City co-owner, and Brady, the club’s managing director, were questioned by City of London Police on suspicion of conspiracy to defraud and false accounting. They were released on bail and the club have released a statement “to clarify the situation”.

The corruption probe is focused on payments to a football agent and two players, according to the club. Shares in Birmingham City plc were suspended on the London Stock Exchange this morning after it emerged that Sullivan and Brady had been interviewed by the police.

"The City of London Police investigation is focusing on payments to a football agent and two players dating back to 2002-03,” the club statement said. "There is absolutely no allegation that any director of the company or the club itself has benefited financially from any of this activity. For the avoidance of doubt we wish to make it plain that David, Karren and Birmingham City FC deny absolutely any wrongdoing.”

Sullivan later said he was “shocked” and branded the police statement “very unfair”.

Speaking from his office at home in Theydon Bois in Essex, he said: “I’m shocked by the whole thing. The police statement was very unfair. It is to do with two foreign players and the PAYE on those players. 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 we think in due course this will be proven.”

Last November, officers arrested seven high-profile figures in the game in a series of raids. Among them were Harry Redknapp, the Portsmouth manager, Peter Storrie, the Portsmouth chief executive, Milan Mandaric, the Leicester City chairman, Amdy Faye, the former Portsmouth player, and McKay. Last month, detectives raided Birmingham’s offices as part of the inquiry. Officials at St Andrew’s insisted that they were assisting officers in their pursuit of parties with no direct association to the club.

Sullivan has a fortune of about £600 million, a property empire and the largest chain of sex shops in the UK. After making his fortune in the adult entertainment industry and owning the Daily Sport and Sunday Sport newspapers, Sullivan invested in Birmingham 15 years ago, when he saw the club advertised for sale in the Financial Times.

Birmingham had fallen on hard times and were bottom of the second tier in English football when Sullivan arrived, but after being frustrated in his attempts to buy West Ham United and turning his nose up at Cardiff City, Watford, Bradford City, Leeds United and Tottenham Hotspur — “I could have had Spurs for £3 million, but they were £25 million in debt,” he said — he and his partners, David and Ralph Gold, handed over £1.2 million and transformed the club’s fortunes.

His love affair with the club looked as if it was over last year when he agreed to sell to Carson Yeung, the Hong Kong businessman, but he stayed at the club, with David Gold, the chairman, when Yeung failed to go through with the deal before Christmas.

Brady hit the headlines when she became the managing director of Birmingham at the age of 23, in 1993. She is married to Paul Peschisolido, the former Birmingham forward, is a non-executive director of Channel 4 and Mothercare and has a seat on the board of Sport England. She became the youngest managing director of a UK plc when the club were floated on the Stock Exchange in 1997.

McKay, who represents several Birmingham players and is believed to have close links with Sullivan, was arrested in November — he was not charged — as part of Lord Stevens of Kirkwhelpington’s Quest inquiry into alleged “bungs” in the game.

“I don’t need to clear my name,” McKay told The Times. “The Quest investigation has followed all the paperwork through and cleared me of any wrongdoings on transfers.”