29/03/2011 116 Comments
Being privy to many of the facts related to Rangers’ tax ordeal, the last year has been a revelation to me. I find it hard to believe that every journalist in Scotland is naive enough to believe the nonsense being fed to them. In their hurry to publish, they shamelessly rush from fax machine (or whatever PR firms use these days) to the press without editing or critical thought. In short, readers are paying to read PR-fluff written and produced by people with agendas.
Then there are a number of hacks who surely cannot claim, after all of these years, to have simply been hoodwinked by purveyors of succulent lamb? Some Scottish journalists’ track record of doing the bidding of the country’s more media savvy businessmen goes back to a time where a simple loyalty to their favourite football team cannot explain everything. This has the odour of “bought and paid for” reporting. A passionate and diehard Rangers fan could not go along with this fakery. Only the most naive or corrupt of journalists could continue to do the bidding of people whose interests are diametrically opposed to Scottish football as a whole, and most specifically, Rangers FC. Yet Rangers fans are fed this diet of regurgitated lamb and foolishly lap it up like it is a kebab at closing time. It seems that any bearers of bad news, regardless of allegiance, are dismissed as troublemakers (and worse).
That brings us to today’s topic. We will take a quick look some of the myths and lies that our national media have helped weave into the popular debate on the subject of Rangers’ financial and legal woes.
We can see in the link below as fine of an example of journalistic creativity as you will ever find. It is clear that even Graham Speirs- Scotland’s most erudite sports journalist- can resort to just filling his pages with a collection of random ‘facts’ with no relevance to the actual story:
Let’s put a few of these myths to rest:
Image Rights: Absolutely nothing in the case against Rangers has anything to do with image rights. The hacks must have just picked up some detritus from stories about English clubs. This is completely irrelevant to the matter at hand.
“The tax bill is a matter for MIH”: Rangers’ Chariman, Alistair Johnston, started this myth with some artfully worded statements. It is pretty obvious that he was trying to be “economical with the truth”. However, the Laptop Loyal took his inferences and fed them to the masses. Today, a large number of Rangers fans still believe that the tax bill will be paid by the parent company, MIH. Let me state without fear of contradiction, the tax assessments (bills) are addressed to: “The Rangers Football Club plc”. Rangers FC are responsible for these bills. If they cannot pay them, no one else is obligated to contribute: not MIH; not Lloyds Banking Group; and not Sir David Murray (more on this later).
“No one has been accused of doing anything illegal”: Yes they have. Rangers FC have been accused of breaking UK tax law. The First Tier Tribunal process is a civil matter, and there is no current criminal case against anyone. However, that is at the discretion of HMRC and it will remain at the discretion of HMRC whether to bring criminal charges in the future. In cases not involving lawyers or financial professionals, it is unusual to go down the criminal path as the burden of proof is much higher. Depending on how things turn out, and how much of the bill is actually extracted from Rangers, it is mot impossible that individuals could be pursued. However, that would be quite some way down the road- if it ever happens at all.
“Murray / Lloyds will guarantee the tax bill to facilitate the sale of Rangers”: Let me also give my opinion on the notion that someone will underwrite a tax bill which could be up to £60m. It is absurd in the extreme and just laughably stupid. As things stand, no one else has to pay this bill. If Rangers cannot pay it, they will end up filing for insolvency. The creditors, which would include Lloyds, HMRC, and holders of The Rangers Bond, would carve up the proceeds of a sale of the club. If it does not cover all of the bills, then tough. No one else pays. (I will discuss some potential risks to the personal wealth of Sir David Murray and other directors in a future post).
By what financial alchemy can someone create a logical argument for Lloyds, MIH, or Murray accepting this liability? Even if the numbers being touted for a Rangers sale were true (which I don’t believe for a second), £33m would be divided between bank debt (about £20m just now) and money for Murray (£13m). I am laughing as I type because the idea of anyone paying this price is hilarious! It is not unusual in corporate transactions for sellers to provide guarantees of accounts receivable and tax liabilities. However, these are made when there are no known issues or where the risk represents a tiny fraction of the total deal. In Rangers’ case, the tax bill is almost the entire deal.
We are supposed to believe that Lloyds, who would probably recover the full value of their loans to Rangers through the administration process, would accept this risk and have nothing to gain? We are supposed to swallow the idea that Murray would, even if he received the fabulous sum of £13m, run the risk of having to pay £60m?
Murray might want to give away ‘his’ shares just now, but they are not his to give away. 85% of Rangers’ shares are held by MIH. MIH is a vassal company for Murray. Lloyds own MIH in everything but name.
So where are the members of the Fourth Estate to bring sanity to this madness? Why has every Scottish media outlet: print; radio; and TV, lined up to give this story credibility?
No story about Rangers’ financial position is credible without a discussion of the tax case. Until the tax case is resolved, the equity in Rangers FC is worth nothing. Without the tax case, Rangers’ current financial position would be quite healthy. All of the problems being blamed on bankers (with foreign sounding names) and “enemies within” really just begin and end with Rangers’ attempts to gain a financial advantage through a tax dodge. Rangers’ fans could put their energies to better use planning for the worst case scenarios. It would do all of Scottish football some good if they ensure that the individuals who brought their club to the brink do not duck the blame for their own incompetence and maladministration.