West Ham United will contest vigorously any accusation that they acted improperly after the FA and Premier League ordered a fresh inquiry into the Carlos Tévez affair. The club face the possibility of a points deduction or another fine if they are found guilty of any charges that are subsequently brought.

The saga has already proved to be a costly and contentious issue to West Ham. They were fined £5.5 million in April 2007 for an admitted breach of Premier League rules in the transfer of the Argentina forward, but many observers thought they were fortunate to escape having league points deducted. They are also liable to pay compensation of about £30 million to Sheffield United, who claimed that Tévez was instrumental in the London club’s top-flight survival and their relegation in the 2006-07 season. Tévez scored the goal that gave West Ham victory away to Manchester United on the final day of the campaign.

In September an FA-appointed panel ruled that Tévez had not been eligible to play in the final three matches of that season. Both parties are scheduled to meet in March to judge how close they are to agreeing a compensation figure, but the process could linger on until the summer.

The new investigation will focus on assurances made by West Ham to the Premier League that allowed Tévez, who is now with Manchester United, to play in the final three matches of the 2006-07 season. The inquiry has been prompted by evidence given by Graham Shear, a solicitor, during Sheffield United’s pursuit of compensation, heard by an arbitration tribunal last year.

West Ham legal issue sets perilous precedent

Ruling of Lord Griffiths on Carlos Tevez could lead to all kinds of recriminations, with opinions becoming hard facts

• Forget Tevez - loan system leaves game open to abuse

• It was Tevez's third party so cry if you want to, but a solution would be better

Multimedia

• West Ham Fanzone: let's look at the evidence

• Is ruling rough justice on West Ham?

Related Links

• Sheffield United win case over Tevez affair

• Tevez denies rejecting United deal

• Timeline: Carlos Tevez affair

Shear, who acted for Kia Joorabchian, Tévez’s representative, told the tribunal that West Ham continued to hold an agreement with third-party companies that owned the player’s economic rights. This was despite an assurance to the Premier League that the club had cancelled the contracts in accordance with a request made by the League on the same day that they had fined the club.

West Ham were required by the League to terminate the agreement in order to allow the forward, who moved from Corinthians in August 2006, to play for the rest of the season.

The arbitration tribunal, which was chaired by Lord Griffiths, said in its findings: “If the Premier League had known what Mr [Scott] Duxbury [the West Ham chief executive] for West Ham was saying to Mr Joorabchian’s solicitor following the commission decision, we are confident that the Premier League would have suspended Mr Tévez’s registration as a West Ham player.

“We have no doubt that those [Tevez's] services were worth at least three points to West Ham over the season and were what made the difference between West Ham remaining in the Premiership and being relegated at the end of the season.”

West Ham say that they have “nothing to hide”. They believe that they are caught between a political battle between the FA and Premier League. The League are understood to have told the club that they would face no further charges.

“West Ham United will co-operate fully with the joint inquiry convened by the FA and Premier League,” West Ham said in a statement. “We have acted in good faith throughout the various inquiries and investigations into this matter and fulfilled the undertakings given to the Premier League following the initial penalty. We have nothing to hide and will ensure that this is once again reflected in our evidence to the FA and Premier League.”

The inquiry is more bad news for Björgólfur Gudmundsson, West Ham’s Icelandic owner, who has put the club up for sale. Gudmundsson, who paid about £107 million for West Ham a little more than two years ago, lost hundreds of millions of pounds after the collapse of Landsbanki, the Icelandic bank of which he was chairman and a leading shareholder, in October.

West Ham were already a questionable purchase in the short term, but the chances of concluding a takeover now appear dead.