Eriksson's future hangs in balance as FA says Palios is in the clear

Sven Goran Eriksson's future as England coach was hanging in the balance last night after the Football Association cleared its chief executive Mark Palios of lying over the Swede's affair with a secretary who works for the FA.

Sven Goran Eriksson's future as England coach was hanging in the balance last night after the Football Association cleared its chief executive Mark Palios of lying over the Swede's affair with a secretary who works for the FA.

In a devastating statement the FA's chairman, Geoff Thompson, announced that he was conducting "an urgent enquiry" and that an extraordinary meeting of the 12-man FA board would be held on Thursday 5 August to discuss its findings. The board has the power to fire the coach.

At the same time Thompson completely exonerated Palios - who had - confusingly - also had an affair with the secretary, Faria Alam - but pointedly did not mention Eriksson. Sources within the FA did not dispute claims that Eriksson's position was coming under increased pressure. "You could say that," one said.

The FA is also fully aware of the pressure it has now put Eriksson under.

Several board members are furious that the FA had formally denied Eriksson's affair and threatened newspapers with legal action, before being forced a few days later to confirm that the affair had taken place. Thompson's statement clearly implies that the fault for the débâcle did not lie with the FA chief. The clear inference is that it was Eriksson's responsibility.

Thompson says he received "categorical assurances" from Palios "that he did not mislead or attempt to mislead the FA or its officials. I am satisfied by the chief executive's reassurances". The inquiry, which began yesterday, is described as ongoing.

Privately, the Swede is said to be happy about the inquiry, because he is confident that it will clear him. If so, it poses the question as to who did the misleading.

It is thought that Eriksson, currently on holiday, had intended to release his own statement yesterday afternoon, but changed his mind once he had read Thompson's words.

If Eriksson is also exonerated, the focus would switch back to the FA, which has itself grown increasingly tense over the past few months with suspicions of a power struggle emerging between its key executives.

It is understood that Eriksson had two conversations with FA staff last week. Eriksson may become the unwitting victim of the internal FA battle, partly through the growing and increasingly vocal unhappiness over his £4m-a-year salary, although other heads may roll.

In any case, Thompson feels the FA has been hugely embarrassed by the incident,

Initially, a statement was released by the organisation denying there had been any relationship between Eriksson and Alam. Significantly - in terms of the implications - this was followed by legal threats. The statement was, however, retracted seven days later when the FA was confronted with e-mail evidence proving there had been an affair. The FA also revealed that Palios had also had a relationship with Alam. If it is proven that someone lied over the incident the question would then be whether it constituted "gross misconduct" and that would therefore be a sackable offence.

That is likely to be a crucial issue, because it would determine whether Eriksson - or anyone else found guilty of such conduct - would not receive any compensation. Eriksson is thought to be entitled to around £14m in compensation if sacked without good reason.

Alam is already facing dismissal if it transpires that shefailed to tell the truth to lawyers about the affair.

Eriksson, who is due to be in Amsterdam this weekend to check on England's Arsenal players, has not commented throughout the unfolding scandal, which cost him his relationship with his partner, Nancy Dell'Olio. He was said to be angry after the FA withdrew its initial denial and will have to prove that he was not properly questioned over the affair by FA officials, despite being in his office in Soho Square when the statement was released.

At present it appears that the coach is in the most vulnerable position. There must be some doubt whether he will be in charge for England's friendly against the Ukraine on 18 August, which is quickly followed by a tricky, and potentially hazardous, away double-header for the start of the World Cup qualifying campaign, with England travelling to Poland and Austria.

Support for Eriksson, who is now England's third longest serving manager, has eroded in recent months with England's ultimately disappointing campaign in Euro 2004. That followed his exposure for negotiating to join Chelsea, which embarrassed the FA into awarding him a huge pay rise.

Palios, meanwhile, ducked out of a planned press conference yesterday to discuss the new wide-ranging disciplinary measures invoked by the FA. Although he has been cleared by Thompson, his credibility has taken a severe blow.