Reflections on Craig Whyte’s Obsessive Secrecy


Let me just say thank you to the contributors to this board.

The work by readers of this blog on the previous thread (New Rangers Mystery) has been fantastic.  A complex problem involving contradictory data was posed and I am increasingly confident that through our discussions, we have gone a long way towards figuring out what is happening regarding Rangers’ financial structure. (See below).

In particular, Don Dionisio & JohnBhoy deserve special mentions for their finds and their contributions to the analysis.  [Great work is also being done on some messageboards as well.  We all stand on the shoulders of giants when trying to tackle a problem like this.]  As always, our resident Rangers supporters keep us grounded by challenging every assumption and providing alternative hypotheses that fit the data.  Their patience in dealing with what can be a pretty overt desire to see their club fall into a quagmire is commendable.  Their reward in co-operating on here is that we all get a clearer picture of what is happening than if this board was an exclusively Celtic fan operation.  What might be mere schadenfreude for Celtic fans will be a source of considerable discomfort to those who want the best for Rangers.  To be able to acknowledge that there are real concerns and questions takes no small measure of character- even on a blog. Lest our friends in Edinburgh accuse us of Glaswegian myopia, easyJambo is also providing high quality informed opinion and analysis.  Thank you to every one.  There are so many others who deserve mentions, but I will spread my gratitude over a number of posts.  This blog is certainly exceeding my wildest hopes for what might be achieved.  The ‘wisdom of a crowd’ is certainly at work in this case.  Our collective output is of a higher standard than any one person can produce working in isolation.

In the information vacuum, I see a role for this blog in uncovering the facts.  It does not matter if the truth is favourable or damning for Rangers (or Celtic for that matter).  We should not be afraid to follow the data to its logical conclusion.  Given the heavy media manipulation operation of recent months and the spineless, brainless reporting of the Scottish media, it is left to interested hobbyists to uncover what is being deliberately obscured.

Follow up to the MG05s Document released:

Despite a poorly (or deceptively) written MG05s document that disclosed the release of assets from a floating-charge, it looks like Rangers are preparing the ground for a credit facility worth about £30-35m .  Such a credit line would be secured by a large percentage of Rangers’ season ticket revenues over the next four seasons.  My personal suspicion is that the credit line would be in place to cover an adverse finding in the current First Tier Tribunal process (with the possibility of using some of it for squad enhancements).  While such an approach would saddle Rangers with a very large debt burden, and would drain much of the blood supply that sustains any football club, such a strategy at least allows Rangers to live and to fight another day.  At a club that would likely have gone bankrupt had it not managed to play in the Champions’ League group stages three years in a row, who is to say that they cannot continue this streak?  Few would have given short odds on Rangers winning the SPL thrice in succession three years ago.  Yet, no discussion of Rangers just now would be complete without mentioning probability and gambling.  Unless one of Craig Whyte’s backers antes up cash to make borrowing unnecessary, the club’s viability depends upon many random variables.  Two more Champions’ League group rounds in a row and the club will have traded itself into a safe position pretty much regardless of what else happens.  However, if Rangers lose their appeal against the tax bills in their possession, and if Rangers fail to qualify for the Champions’ League in the next two seasons, it is hard to see how the club can operate at its current scale if it has surrendered close to 70% of the revenue from its season ticket sales for the next four years.  Of course, if the club wins its tax appeal, then there would be no need to draw so heavily on debt.

It is hard to understand Craig Whyte’s motivations for obsessive secrecy and determination to avoid admitting to the serious risks facing Rangers.  This story could be spun in his favour easily.  OK- so some ‘whyte lies’ were leaked during the takeover to the media.  Even an admission that some tough decisions had to be made to ensure that the ownership transfer took place would be understood by most.  By playing the role of “Honest Craig” now and levelling with the fans, a store of goodwill and trust could be built up.  This would be essential in the event that a public share offering is part of the plan to deal with such a debt burden.  Every day that goes by where Whyte fails to make good on apparent promises and continues to prefer nuanced wordplay over plain speaking, he undermines the trust that will be required if fans are to be asked to dig deep in the future.  The failure of Sir David Murray’s last share issue can be largely attributed to the suspicion of Murray that had developed among the club’s better heeled supporters in the years following Y2K.  The flim-flam and absurd PR placements might temporarily assuage the ordinary FollowFollower, but real confidence in the club’s ownership will be built on the opinions of the accountants, lawyers, and other professionals within the fan base.  Until those who are able to understand a credible business plan are convinced that Whyte is being open, word of mouth will ensure that a cloud will remain over his stewardship.

About rangerstaxcase
I have information on Rangers' tax case, and I will use this blog to provide the details of what Rangers FC have done, why it was illegal, and what the implications are for one of the largest football clubs in Britain.

39 Responses to Reflections on Craig Whyte’s Obsessive Secrecy

  1. TLPOG says:

    You sure do know how to cheer me up on a Monday afternoon RTC…

    Thanks, as always, for your sterling efforts.

    And thanks too must go to the other contributors you mention.

    Best wishes.

  2. Darkfish says:

    The shareholder circular has so far not made it into the mainstream.

    To refresh everyones memory, here are the original and deferred statements.

    6th May
    “In agreeing that no offer should be made to all shareholders the IBC (Independent Board Committee of The Rangers Football Club P.L.C) has insisted that the acquirer issues a document to all shareholders setting out the full terms of the transaction, comprehensive details on the acquirer and the sources of its funding and giving firm commitments to agreed future investment in the Club.”

    13th May
    “Further to the announcement made on 6 May 2011, the Company announces that, with the agreement of the Independent Board Committee of The Rangers Football Club P.L.C. and the Takeover Panel, it has extended the timetable within which a circular will be posted by the Company to all of the shareholders of The Rangers Football Club P.L.C. to a date on or before 6 June 2011.”

    Given that its 17:30 on the 6th of June, and there is still no visibility of this circular, what is the prognosis?

    I note the word “insist” in the 6th may announcement and wonder if it carries any legal challenge, or can Whyte just ignore the IBC request and continue the silence?

    Any thoughts?

  3. The Black Knight says:

    RTC (obviously) we all thanks you of that I am sure, “Dom & JohnBhoy”…………………. excellent work!!

    The saga continues………….

    Footnote: I understand Rangers have a ‘qualifier’ prior to the group stages of the CL. Should they not make it through that, it is , how would one put it? a big fall!!!!! (noting your comments above)

  4. the Don Dionisio says:

    No,on the contrary, RTC, we are all indebted to you for a superb piece of investigatory “journalism”-although I suspect you may be an accountant. Bernstein and Woodward could not have done better, but then they were not paid -up members of the laptop loyal.Just a small point of information-it’s “the Don”. Apologies but it’s an Italian “cosa nostra” sort of thing!

  5. The Black Knight says:

    Darkfish says:
    06/06/2011 at 4:35 pm

    I recall something about the takeover and that The Whyte Knight need not notify the IBC as he now controls the company (we think) and the IBC is no longer!

    He, (or who ever owns/ controls Rangers Football Club Group Plc Ltd 2011…. etc etc….) does however after a takeover have to notify the shareholders within a certain timeframe. I understood that to be by the year end (being 30th June)

    I have been wrong before though!

  6. Henry Clarson says:

    It seems to me that the IBC can insist all it wants; it’s in no position to enforce any of its demands.
    Much as I don’t like to say it in this case, I see nothing unreasonable in a businessman not wishing to disclose the “full terms” of any transaction to the general public unless there is some legal imperative to do so.
    Is it not – literally – Whyte’s own business that they’re “insisting” on publicising? Why should any business man accede to that kind of demand?

  7. Darkfish says:

    Henry Clarson says:
    06/06/2011 at 4:47 pm

    Just seeking clarification of the situation. I have no clue how this works, and with the depth and breadth of knowledge on here I was hoping someone could answer this.

    The “insist” word was a warning to me. If there was a legal requirement then this word needent be included as it would taken for granted.

    However, I think the IBC (now severely depleted) simplly wanted an assurance for the shareholders that Whyte could match his verbal promises with a legally binding document.

    After all, why delay the statement for 24 days if you have no intention of comitting to one. This isn’t about exposing personal weath or business funding, its about keeping your promises.

  8. Casual Observer says:

    Henry

    ‘Cos that’s what the Takeover Panel insisted upon when it approved the transaction.

  9. Darkfish says:

    06/06/2011 at 4:35 pm:

    The importance of grandstanding while making exits was important to both Murray & the old board members. Murray wanted to be seen as having tried to leave Rangers in a safe pair of hands- along with a vague statement about Wavetower writing off Rangers’ debt at some unspecified future time and under unspecified conditions. (i.e. if you win the tax case, and you sell the club for >£Xm).

    The old board members will be suffering from a bad case of incontenance just now fearing that their complicity in the tax fraud will be revealed. While having sat back and watch Murray drive the club to the cliff edge, the decide to speak out only days before his exit. They might have good reason to fear Whyte’s involvement, but they did nothing for years while the problems that lead to Murray’s need to sell to anyone built.

  10. the Don Dionisio says:

    Forgive me, Don Dionisio. Getting your name wrong could be a fatal mistake I suspect.

  11. bhuel bhuel says:

    Henry Clarsonson says:

    Was holding my breath waiting for “circular”
    having read your post I agree with you. There won’t be one.
    thanks to RTC and the posters who have chipped away at the “mystery” I now see how the takeover might pan out.
    i now wonder why I buy a daily paper.

  12. JohnBhoy says:

    Thanks RTC, although I confess I was lucky in finding that Clarke Wilmott link.
    It was a case of imagining the result, and then checking back to find evidence of it.
    There are other tantalising clues as regards the company Whyte has kept down the years and his modus operandi. None of it suggests he is in the slightest bit interested in slaving away in the background to selflessly build a new and profitable Rangers.
    He is here to make cash out of the corpse. Betts and Grier are his fellow undertakers.
    If he has only made about £35m out of the season tickets, then around £18m has immediately gone to Lloyds.
    He will have paid hefty fees to all the companies involved in his “due diligence”.
    Plus his PR team of Laurel and Hay-rdy.
    That doesn’t leave much for the taxman. Hence Bain’s warning from earlier this year.
    A leopard doesn’t change its spots.
    Let me put it this way:
    If I was a cold-blooded asset-stripper, I would “buy” a failing company on a string of promises, set up a fog of inter-linked companies (some located offshore), then get as much cash and redeemable assets up front as possible and await the inevitable winding-up order.
    Then, amid the hysteria, I’d high-tail it to a far-off beach while liquidators and lawyers scweamed and scweamed.
    Thankfully, though, Rangers are in the hands of a man who can clearly be trusted. No?

  13. Casual Observer says:

    Circular now published on the RFC website. Should be called a “Round in Circular”…

  14. Darkfish says:

    rangerstaxcase says:
    06/06/2011 at 4:59 pm

    Yep, understood that completely and saw the IBC parting shot as a amalgam of sour grapes and a last dictch attempt to get any answers from Whyte.

    “Further to the announcement made on 6 May 2011, the Company announces that, with the agreement of the Independent Board Committee of The Rangers Football Club P.L.C. and the Takeover Panel, it has extended the timetable within which a circular will be posted by the Company to all of the shareholders of The Rangers Football Club P.L.C. to a date on or before 6 June 2011.”

    The key line in the above statement is : “the company announces that” – not a request from the IBC!!

    I dont get it?
    Why say not just say nothing instead of creating false deadlines and raising expectations.
    Why not just say, “at this juncture there will be no circular”?

    Am I just being ridiculously naive? ;)

  15. JohnBhoy says:

    06/06/2011 at 5:03 pm

    it certainly begs that question- will the cash be used to cover life-or-death bills for Rangers, or will it be syphoned off into offshore accounts and then someone hops on a flight to anywhere without an extradition treaty with the UK?

    I don’t know enough to really have an opinion, but it would be tempting for anyone with experience of living as an exile to take the money and run.

  16. Auldheid says:

    If they are to be dependent on CL money for another two years I would be very worried that Celtic would have to win every league game in those two sesaons to win the title.

  17. jimbomilligan says:

    It seems to me that the IBC can insist all it wants; it’s in no position to enforce any of its demands.

    As far as i can see this is the case – I honestly dont think whyte has any intention of producing a circular – some sop will be thrown to the shareholders at the end of the month maybe along with a free transfer signing or two and everything will be rosy in the garden .

    But come on until the outcome of the tax case is confirmed just HOW could and WHY would whyte provide what alistair johnston demanded ?

  18. OnandOnandOnand says:

    The circular is supposed to be posted on the Rangers website, I can’t find it. Come on sleuths, what does it say. An announcement was made through the Plus market at 18.00 but just refers you to the Rangers website

  19. Darkfish says:

    06/06/2011 at 5:11 pm

    Not naive at all. I think that if Whyte is serious about running Rangers for the longhaul and doing the painful and difficult work of any turnaround, he is making a mess of the communications. It is boneheaded in the extreme to be evasive with people whose trust you will need in the long run.

    On the other hand, if you just see an opportunity for a smash and grab, you just need to throw up enough smoke and mirrors to get to your exit point and then you can go. The smash and grab artist knows the approbrium that will follow his actions, but he does not care. He just needs enough people to believe his lies long enough for him to execute his plan. Is it possible that this entire takeover has been engineered to fleece Ticketus?

    Time will tell.

  20. OnandOnandOnand says:

    This is the Plus link

    http://www.plus-sx.com/newsItem.html?newsId=1215695

  21. jimbomilligan says:

    WOW – ill be very interested to read this – when it can be found !!!

  22. Auldheid says:

    06/06/2011 at 5:11 pm

    I don’t want to really get into the implications of all that. However, if the SOS continues to sound, your intimation is not without foundation. How many of us are capable of being impartial in any matter involving either Celtic or Rangers? Even if I tried, there would always be an element of bias in a split second decision: either over compensation or in seeing what I want to see.

  23. Darkfish says:

    ” jimbomilligan says:
    06/06/2011 at 5:20 pm

    WOW – ill be very interested to read this – when it can be found !!! ”

    It cant.

    No doubt will appear at 1min to midnight and say nothing.

  24. JohnBhoy says:

    It’s here!

    http://www.rangers.co.uk/staticFiles/4d/76/0,,5~161357,00.pdf

    This is the main bit:

    Part III
    Summary of material terms of the Acquisition
    1. The Agreement, together with a separate side letter between The Rangers FC Group and the
    Club, contains a number of undertakings in relation to The Rangers FC Group’s commitment
    to the Club and these are expressed to be enforceable by both the Club and the Vendor. The
    principal undertakings may be summarised as follows:
    (a) if the Club has not suffered an insolvency event within 90 days of the Club’s appeal in relation
    to the tax claim brought against the Club by HM Revenue & Customs (the “Tax Case”) being
    finally determined, then The Rangers FC Group will either waive the debt that it has acquired
    or convert it into equity by way of an issue of new voting ordinary shares in the Club. The
    acquisition of the debt by The Rangers FC Group is described further at paragraph 2 below.
    However, The Rangers FC Group has separately undertaken to the Club that it will waive the
    debt that it has acquired and not exercise its option to convert it into equity as provided for in
    the Agreement;
    (b) The Rangers FC Group has undertaken to provide £5,000,000 for investment in the playing
    squad;
    (c) The Rangers FC Group has stated its intention to invest, or procure an investment of, £20
    million by 2016 for investment in the playing squad. If, as part of any player acquisition, the
    Club agrees to make a transfer payment in a future year before 2016, The Rangers FC Group
    will be obliged to invest cash to cover such transfer payment, up to £5 million per year; such
    amounts coming out of the £20 million investment that The Rangers FC Group has stated its
    intention to invest;
    (d) The Rangers FC Group has undertaken to provide or procure the provision of up to
    £5,000,000 of additional working capital facilities to the Club;
    (e) The Rangers FC Group is to contribute to the Club the amount required to meet a liability
    owed by the Club to HM Revenue & Customs in relation to a discounted option scheme tax;
    (f) The Rangers FC Group is to provide £1.7 million to the Club to fund capital expenditure in
    relation to improving kitchen and public address equipment at the stadium and meeting other
    necessary or reasonable capital expenditure required in the ordinary course;
    (g) The Rangers FC Group undertakes that, until the debt has been waived, the Club will not be
    required to lend money to The Rangers FC Group or grant security in respect of The Rangers
    FC Group’s borrowings unless the borrowing (and the granting of the security in relation to it)
    is principally for the Club’s benefit; and
    (h) a breach of any of the undertakings given by The Rangers FC Group in the Agreement will
    result in the debt acquired being automatically extinguished. The terms on which the debt
    would be extinguished are to be agreed by the parties at the relevant time.
    2. Until such time as the debt acquired by The Rangers FC Group is either waived or converted
    into equity, if the Club suffers an insolvency event or is unable to pay its debts as they fall, the
    debt acquired by The Rangers FC Group shall be deemed to be increased by an amount
    equal to the amounts contributed by The Rangers FC Group as set out in paragraphs 1 (b),
    (e) and (f) above.

  25. campsiejoe says:

    Got the website
    Click on club then annual report
    You will find it there

  26. jimbomilligan says:

    if the Club has not suffered an insolvency event within 90 days of the Club’s appeal in relation
    to the tax claim brought against the Club by HM Revenue & Customs (the “Tax Case”) being
    finally determined, then The Rangers FC Group will either waive the debt that it has acquired
    or convert it into equity by way of an issue of new voting ordinary shares in the Club. The
    acquisition of the debt by The Rangers FC Group is described further at paragraph 2 below.
    However, The Rangers FC Group has separately undertaken to the Club that it will waive the
    debt that it has acquired and not exercise its option to convert it into equity as provided for in
    the Agreement;

    ==============================

    Hmmmmmmmmmm.

  27. Bobby says:

    Can someone explain point 2 of the summary (on page 6) in layman’s terms please?

    Am I right in reading it as if there is an ‘insolvency event’, the club will then also owe the group (I.e. Whyte) what is referred to in paragraphs 1b, e and f.

    So on top of the debt the club already owe the group (£18 million), they will owe them an extra £5 million (1B), £1.7 million (1F) and whatever figure 1E refers to.

  28. TLPOG says:

    RTC,

    for me the most informative paragraph was:

    2. Until such time as the debt acquired by The Rangers FC Group is either waived or converted
    into equity, if the Club suffers an insolvency event or is unable to pay its debts as they fall, the
    debt acquired by The Rangers FC Group shall be deemed to be increased by an amount
    equal to the amounts contributed by The Rangers FC Group as set out in paragraphs 1 (b),
    (e) and (f) above.

    So should things go belly-up, the 18m debt that Whyte is owed will be added to by 5m in transfer fees from this summer, 1.7m for stadium maintenance, and whatever Whyte pays in ANY tax issues.

    Can’t wait for your next article my friend.

  29. In the style of Paul67, “New article posted”

    Very interesting.

  30. OnandOnandOnand says:

    So the jobs of Mr Bain et al are safe for 12 months? (Second stated intention on page 2 of Chairman’s letter)

  31. ranchofranco says:

    So, Rangers the ‘Club’ are to be provided the promised warchest by TRFCG only if they outlive the 90 day
    appeal window and then emerge unburdened by the HMRC tax demand.
    Otherwise the overall debt shall increase pro-rata any interm investment,
    Suffice to say their already indentured status will ratchet up a notch the new Whyte slaver.
    It’s beyond parody.

  32. TheBlackKnight says:

    P6 part iii, item e

    Is this the £2.7m? or the potential tax liability for the non payment of PAYE & NI as recently heard in the FTT?

  33. timtim says:

    that is one scary wake up call for all rangers fans
    It says to me if they lose the tax case they are liquidated
    unless the fans hand over their season book money
    if they win they convert the debt originally held by Lloyds by

    “convert it into equity by way of an issue of new voting ordinary shares in the Club”
    or make the punter pay the debt
    Whyte has stumped up £1 and will collect all the real estate if the fan
    doesnt put his hand in his pocket
    the noose has been prepared for the punter and Whyte will unbolt
    the trap door if the bill isnt paid

    and on a highly technical note
    Craig Whyte is an anagram of “Get way Rich”
    with other peoples money of course

    you cant fool all the people all of the time Craigy x

  34. ranchofranco says:

    “When I hear your new ideas, I’m reminded of that ad, ‘Where’s the beef?'”
    (Walter Mondale’s reproach of democratic presidential joker Gary Hart)
    Today’s Circus minimus couched within big tented obfuscation, can only allow them more
    dullish bears their continued honey quest upon tree level heights where big-shot game hunters
    their long sighted arsenals of bullited profit are mostly trained.
    Oh the carnage !

  35. campsiejoe says:

    TBK @ 6.23

    Sounds like it’s the £2.7
    No way would he make such a statement about the EBT

  36. TheBlackKnight says:

    Thanks Campsiejoe!

  37. Weefatboy says:

    The Black Knight says:
    06/06/2011 at 4:40 pm

    I understand Rangers have a ‘qualifier’ prior to the group stages of the CL. Should they not make it through that, it is , how would one put it? a big fall!!!!!
    —————

    Rangers FC have TWO “Qualifiers” to overcome b4 they can get in to the group stage m8………………..

    3rd round qualifier
    (Win = Entry in to the play off round)
    (Lose = Entry in to the Europa Qualifying round 4)

    Play off round
    (Win = Entry in to the group stage)
    (Lose = Entry in to the Europa group stage)

  38. ranchofranco says:

    The long archived and now proved but muted village idiot status of them dullard
    respondants their too hasty afore thunk onair/nextday voxpop is thrillingly still
    apropos the more cropped nature of wildly whooped circular hoaxmanship.
    A Holden position them Catchers in the rye.

  39. Duggie73 says:

    RTC- really, really good top post. Clears up all the confusion from last thread.

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