The Craig Whyte disaster: who benefits?


Over the months leading up to Craig Whyte’s takeover of Rangers, I was sceptical, to say the least, that anyone would want to take over a club so riven with problems. The options for explaining the motivations of a buyer were:

  • Billionaire ready to lose close to £80 million to cover the cost of repairing the damage left by the Murray legacy
  • Asset stripper intent on liquidating the club and making a quick profit
  • Shrewd strategist who will help Rangers to safety and survival
  • Idiot

The claims that Whyte was a billionaire with “off the radar” wealth were obvious fictions propagated by Hay McKerron (Whyte’s PR firm at the time) and eagerly repeated by a cowed and compliant Scottish media.  It is difficult to believe that any journalist wrote those stories without knowing that they were baseless.  Evidence then and now renders the idea of Billionaire-Whyte as laughable.  The preponderance of evidence seems to indicate that Whyte is just an aspiring entrepreneur with a string of business failures behind him.

Similarly, we can dismiss the notion of Whyte as a cynical asset-stripper, at least he is not one intent on maximising profit.  Had Whyte been interested only on a quick profit he would have been a little more focused on selling players and his club would not have had a net spend during the recent transfer window.

One of the theories which we have speculated upon on in this blog is that Whyte would be protected in the event of a Rangers insolvency.  Rangers’ debt holder is protected by a floating charge security interest on that would give the holder of that floating charge priority in repayment ahead of HMRC and other unsecured creditors.  This idea seemed to make a lot of sense. The Shareholder Circular released by Whyte seemed to confirm this idea.  It seemed like Whyte had bought a no-lose propisition: Rangers continue to qualify for the Champions’ League for the next few years (and all debts including the tax bills would be affordable) or he gets to control the relaunch of a debt-free Rangers following bankruptcy.  Was Whyte really the only “wealthy” man in Scotland with an affection for Rangers who could see this opportunity?  Or do fools rush in where angels fear to tread?

In reviewing some old records related to this situation, I started to wonder about the idea that Whyte will win regardless of what happens.  The MG05s that was filed with Companies House some weeks ago: it listed Lloyds’ subsidiary, the Bank of Scotland, as the beneficiary of this security interest.

With the reported purchase of Rangers’ debt by Whyte’s company, we should have expected that Lloyds would have assigned the mortgage on Rangers assets to The Rangers FC Group Ltd, the holding company Whyte uses to own Rangers. The assignation of the mortgage on Rangers’ assets would usually be the subject of a public filing in the form of an MG01s form filed at Companies House. No such filing has been made: the Bank of Scotland are still listed as the holders of the floating charge on Rangers’ assets. This alone did not give me much pause for thought as such a filing would be voluntary. However, a source has approached me with information that Whyte’s deal to purchase Rangers’ bank debt was something other than what Whyte and his co-conspirators in the Scottish media have made out. I am told that Whyte has indeed signed a contract obliging him to buy Rangers’ debt but that he has not paid for much of that debt, possibly not any of it. This would imply that Whyte does not “own” the security interest on Rangers’ assets. If this proves to be true, it would deny Rangers of their perfect rescue. In the event of an insolvency filing, it would be Lloyds who would control a receiver and it would be for Lloyds benefit that assets would be sold. This would crush the “shrewd strategist” theory.

When we add up the evidence: Whyte’s lack of any track record of legally making significant money since the collapse of his plant hire business and his dash to Monaco; the compliance problems involving corporate records for many shell businesses in which Whyte has been involved; the rank incompetence of Whyte’s leadership of Rangers to date- evidence is building that point to another explanation of Whyte’s takeover of Rangers: he was a useful idiot for the real villain of this piece, Sir David Murray.

If we stop and ask: “what was Sir David Murray’s worst fear related to Rangers?” The answer must surely be that the extent of the club’s illegal actions while he was in charge would become public knowledge. What would be the perfect outcome for Murray now? That an idiot would emerge who could be persuaded to take on the glory of owning Rangers for the price of a single pound. This perfect idiot should be administratively incompetent and should not have deep enough pockets to help Rangers over any cash flow problems. His real specification for Rangers next custodian might have been very different from the one he discussed in public. Murray benefits most by having a bumbling amateur with little cash in the hot seat. If Rangers can go bankrupt, and even disappear, before the big tax case returns then Murray might hope to duck the blame for his own actions.  Murray’s media poodles would be able to muddy the waters with a debate over whether Rangers would have survived had so many fan groups not pressured The Great Leader to sell. Rangers’ problems could be blamed on Whyte, and Murray’s legacy would remain largely intact in the minds of the newspaper reading public in Scotland.

This hypothesis is very Machiavellian and assumes an extreme degree of advanced planning. However, of all of the stories about David Murray that have been circulated, none have ever claimed that he was stupid. Murray is a man of high intelligence and great cunning. I do not think that setting up Whyte as a patsy is beyond him.  During the takeover, the degree of harmony between buyer and seller was unusual.  The haste with which David Murray shot down the soundings of an alternative proposal from Rangers director Paul Murray was odd.  Lastly, I know of one other attempt to buy Rangers just before the takeover.  Graham Duffy may not have had the benefit of an expensive PR campaign to burnish his image and he might have had credibility problems of his own.  However, he made several desperate efforts to try to talk to Murray to discuss a deal in the weeks before the Whyte deal was announced, but Murray would not respond to his requests for a meeting.  Duffy may not have been any better for Rangers than Craig Whyte, but when you are surrendering your entire interest in a business for £1, you might be expected to explore all options before resigning yourself to your fate.  Murray’s actions certainly give the appearance of someone who was working hard to ensure that Whyte was the only option.  I find that difficult to explain.

As the wheels start to come off the Rangers wagon, we should not lose sight of the fact that the current custodian has inherited a situation not of his own making.  Whyte may just be another victim in a long line of businessmen who has fallen for a David Murray sales-pitch.

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 for what was (updated) one of the largest football clubs in Britain.

1,303 Responses to The Craig Whyte disaster: who benefits?

  1. Mel says:

    RTC cheers for the response.

    I noticed you ended your reply with” If I am correct in this post, Murray will be praying for them going under before November”. Am I correct in saying that this relates to your hypothesis. “If Rangers can go bankrupt, and even disappear, before the big tax case returns then Murray might hope to duck the blame for his own actions.

    Would be interesting to know if this is just pure speculation on your part or if you’ve reached this opinion from first hand information?

  2. tomtom says:

    Stop taking the piss – I’m a computer moron. I have come to terms with this and as much as I try to get the gist of how to do things I still get it wrong. My 5yr old daughter leaves me behind.

    Note to brain: Never try to get into the modern world again! (smiley)

    Now I need to put another sheet of carbon paper into my typewriter so I may be away for some time (smiley/sad face/man jumping up and down – delete as required)

  3. Chalmers says:

    Good stuff again, RTC.

    You focus mainly on the floating charge, but there is also the fixed charge over Ibrox/Murray Park, which takes priority over everything in the event of Rangers going belly-up. There is no indication (as you suggest) that this security has changed hands either at Companies House or Plus Markets.

    I also notice that the circular to shareholders of early June has many ‘promises’, i.e. future intentions rather that past facts, one of which is that “the Club’s indebtedness
    with LBG is to be assigned to Wavetower”. There have been rumours on your site and on Phil’s that the debt still lies at Lloyds banking Group, and the lack of documentation to advise change of chargee would tend to support that theory.

    There are other promises in that circular, many of which don’t have timescales, and there is no detail on exactly how the promised funds would be handed over or how the finance will be procured. For example, will they be a loan due to Rangers Group Ltd? Will there be leasing arrangements such as the Close Leasing assignment of catering monies?

    Could it be that Whyte actually DID buy Rangers for just £1?

  4. sam says:

    I wasn’t suggesting anything BK, I may be a lowly maintenance worker, but I overheard several high heid yins, while I was doing some maintence on the exec floor. The rank and file seem to be talking about it that way now also, seem to think it would have also been not went this length of time, if it was nailed on. Strange that the owner dismisses ant view, his own apart as comedic.

  5. Chris Barrie says:

    Another intriguingly interesting post, although I do feel there’s more than a trace of speculation involved!!

    Personally speaking, I am a bit sceptical of the admin/liquidation route, I find it hard to believe it will ever be allowed to happen, however ,once the doors are closed and there’s a big sign at Ibrox Stadium saying Coming Soon – Morrisons, I will eat humble pie!!!!

  6. Mel says:

    05/09/2011 at 9:56 am(Edit)
    ______________________________________________________________
    As per the post, I have some first hand information that makes me question some of our assumptions about the degree to which Whyte might be protected.

    The Murray connection is “informed speculation”. I do know that he refused to return calls to another bidder. It was late in the day when received information on the other proposal, but to never have spoken with the bidder? Plus Whyte’s apparent lack of capital. Murray certainly was not living up to his promises to only sell to someone who can help Rangers.

    Murray’s reason for getting off stage are pretty obvious, but selling to someone who would likely drive Rangers out of business before a tax result came in would certainly have appeal to him.

  7. Jean says:

    awww@tomtom 😦

    here’s a big cuddle my friend {{{{{ 🙂 }}}}}

  8. Chalmers says:

    05/09/2011 at 9:57 am(Edit)
    _______________________________________________________________
    Great comments.

    Of course, Whyte has promised that Rangers FC will only lend money to the parent company if it is in the best interests of Rangers FC that they do so! 😉

  9. Lennon says:

    Tomtom

    PAYE and NIC is payable monthly and, given the level of scrutiny they will be subject too, I’m sure HMRC will be actively enforcing payment at least by arrestment of bank monies ala ‘wee tax bill’

    For this reason I would include these amounts and would expect £300k per week minimum outgoings possibly as much as 50% more

  10. Jean says:

    Tomtom

    ” I’m a computer moron. I have come to terms with this and as much as I try to get the gist of how to do things I still get it wrong. My 5yr old daughter leaves me behind”.

    I really wasn’t you know………..thought I was being helpful seen as I’m pretty useless within the financial debate 😦

  11. sam says:

    05/09/2011 at 9:58 am(Edit)
    _________________________________________________________________
    Sam,
    Accepting your posts as being sincere, I can only say that I disagree. Aside from several issues that I had best not discuss, the case is dragging on because Rangers dragged out their questioning and their evidence submittal. It is easy to do in a case involving so many players, each pay cheque, etc. All of this could be questioned in detail.

  12. sam says:

    Confused as I am, if rangers were to be found guilty of a tax fraud, criminal, wouldn’t that void the £1 sale, as proceeds of crime ?

  13. Lennon says:

    05/09/2011 at 10:07 am(Edit)
    ________________________________________________________
    I do know that Rangers are regularly behind in their remittances.

  14. sam says:

    05/09/2011 at 10:10 am(Edit)
    ____________________________________________________________________
    No. The sale will stand unless there is evidence of an effort to defraud anyone in the sale. The club is only worth a quid.

    Rangers are not being prosecuted in a criminal court. HMRC is taking this- as they almost always do- through a civil court.

  15. sam says:

    Sorry, isn’t it obvious that responsibilities have been shuffled about, to prevent the taxman getting at them, a rather lovely long legged young lady inspector, tells me that the tax has powers of recall that people would not believe, I will check that out again tonight, when I meet her.

  16. Charlie says:

    RTC @10.12

    HMRC is taking this- as they almost always do- through a civil court.

    Is this an actual civil case in a court of law a la Tommy Sheridan case against NOTW? If so, would perjury laws apply if necessary. I thought ‘tribunal’ was a panel of high-up HMRC people.

  17. Mark Dickson says:

    Just in case the sportsdesk staffers at the Record, Sun & Herald can’t find theirs I found them a copy 🙂 …….

  18. Charlie says:

    05/09/2011 at 10:21 am(Edit)
    __________________________________________________
    Technically an FTT is not a court (but the Upper Tier Tribunal is). I was just generalising. HMRC is using a civil process to recover monies from Rangers rather than the criminal system.

    However, prosecuting Rangers, and individuals working for Rangers, criminally WAS an option in this case.

  19. easyJambo says:

    From the 2010 Accounts – figures in £ks
    Wages and salaries 23,667
    Contributions to employee trusts 1,358
    Social security costs 2,818
    Defined contribution pension costs 290
    Total wage bill 28,133

    I think that there will be a a small reduction in this season’s numbers as improved contracts for a few will balance out the loss of some high earners to some extent. The means that the wage bill will be in the range of £2M -£2.3M a month.

    With the introduction of the 50% tax rate for those earing £3k a week, I’d anticipate the PAYE and NIC bill would be around half the total.

    How long will the ST funds last with little additional income from Europe or Bradcasting? If he is hoarding cash by not paying creditors, VAT or his monthly PAYE/NIC then perhaps he could last to the turn of the year, but I suspect that it will be sooner.

  20. timtim says:

    I think its a plausible theory rtc
    Murrays real puppets (the ex board) were quick to
    point fingers at the Whyte deal while the press were busy
    talking the new man up.This allows them to say we told you so

    Minty however will still be the man who handed him the reins so its
    difficult to see him escaping blame for initiating the situation unless he
    is going to claim Whyte misled him over his true wealth and intent.

    If the club go under due to Whytes inability to deal with a small bill
    then he will take a lot of the flack and if because of that the ftt is abandoned
    it will certainly be to Mintys advantage as he could then claim
    “we were going to win it anyway”

    From an almost impossible situation the Mint may have found the
    perfect scapegoat .
    The involvement of Ellis ? -possible recruiting Sgt to find someone who could be spun as
    a rich rangers fan and reimburse his costs for his own due dilligence .
    Whytes greed may have blinded him to the reality ,he got to raise his profile as “billionaire”
    aided and abetted by the laptop loyal but when it began to turn sour so the press began to
    turn on him .
    Has Murray been mentioned or discredited by them yet -not from what I can see
    🙂

    🙂 (print these 3 symbols then delete the hyphen by backspacing)
    you can do it come on 🙂 🙂 🙂
    tomtom tomtom gie us a smile

  21. Silver City Tim says:

    Following Mr Lennon’s assault fiasco, prosecuting Rangers, and individuals working for Rangers, is never going to be an option in any case… unless it was done outside Scotland.

  22. sam says:

    I still don’t get it, if rangers and their bosses have committed a criminal offence, evasion, they would face criminal charges, if they have committed no offence, avoidance, why is taxpayers money being wasted, it is one or the other, criminal or not.

  23. ramsay smith says:

    My post from last night……

    ‘Does anyone know for sure what fixed and floating charges there are and who holds them?’

    This information must be in the public domain for the securities to be effective.

    Once that information is known you can narrow down the possibilities for what has been going on, who is planning what, and what the potential outcomes are.

    It’s may not be as much fun as some of the dafter speculation (‘what would happen if no Celtic fans turn up at Ibrox’) being indulged in by some contributors, but it would be a lot more productive.

    Follow the money. Always follow the money.

    And remember ‘When you eliminate all other possibilities, what remains, no matter how improbable, is the answer.’

  24. Robert Bell says:

    RTC what I really meant is do you think Rangers will fold at the end of the process

  25. The Black Knight says:

    Hmmmmmm, I think ‘the accountant’ is back……….Sam??????? 😉

    PS Sam. Anyone with any authority in the case is in Edinburgh. Not East Kilbride. Centre one deals with in the main PAYE

    Perhaps if your maintenance role is not a fabrication, nor is your overhearing of very privileged information between HMRC executives, I would suggest it may have been a couple of hopeful Rangers supporters expressing their opinion/ hopes.

    Yours TBK
    ‘We Are Tax Payers’ 😉

  26. easyJambo says:

    Lloyds must now be completely out the picture, otherwise they would still have someone on the board pulling the strings

  27. sam says:

    I wasn’t aware that anyone at Centre 1 wasn’t allowed an opinion, or to discuss the matter BK, I will let them know tomorrow, they will be grateful for your guidance, paye fancy that, I thought it was a bookies.

  28. JJ says:

    Wow, tweeted by Phil McG! Wonder if we’ll get to see any papers on this!

    Pmacgiollabhain Phil MacGiollaBhain
    Interesting revelations about Season Ticket money in the “Bain papers”.
    2 minutes ago Favorite Retweet Reply » Pmacgiollabhain Phil MacGiollaBhain
    Bain’s application to court states that RFC not paying debts on time. Describes RFC as “verging on insolvency.”
    Pmacgiollabhain Phil MacGiollaBhain
    Martin Bain’s real fear is not that he loses the case, but that there won’t be a company to sue.
    Pmacgiollabhain Phil MacGiollaBhain
    I can’t imagine that the current custodian of RFC will want the Martin Bain compensation case to get to court.

  29. chico says:

    does anyone know the liley time scale of martin bains case against rangers ? i ask because whyte doesnt want to part with cash (see cash flow problems) for a pay off, and Martin bain most probably doesnt want the case to go all the way ( if he does, it should be interesting 😉 )

    so, could martin bains case be the true tipping point if rangers are forced to deal with him, to stop the case proceeding ?

  30. The Black Knight says:

    sam says:
    05/09/2011 at 10:38 am
    “I wasn’t aware that anyone at Centre 1 wasn’t allowed an opinion, or to discuss the matter BK, I will let them know tomorrow, they will be grateful for your guidance, paye fancy that, I thought it was a bookies.”

    are they taking Betts 🙂

  31. JJ says:

    Hey Sam, is what’s the weather like over Westminister Bridge. I’m down there later today and don’t know if I need a coat.

  32. Robert Bell says:

    RTC what I really meant is, do you think Rangers will fold at the end of the process

  33. Sam …….does this information come from a reliable source or are you just saying it in hope? It is in the tax paying public’s interest that this case goes ahead. they dodge, they get caught …..they pay eventually.

  34. Chalmers says:

    sam says:
    05/09/2011 at 10:29 am
    I still don’t get it, if rangers and their bosses have committed a criminal offence, evasion, they would face criminal charges, if they have committed no offence, avoidance, why is taxpayers money being wasted, it is one or the other, criminal or not.
    _________________________________________

    Sam, firstly it has to be resolved that evasion did take place, therefore the need for the tribunal. Secondly, it may be that Rangers directors can claim to have acted on professional advice (Baxendale-Walker?) and in those circumstances HMRC may not wish to press charges on the basis that any verdict would be uncertain and potentially costly.

  35. Kaiser says:

    If the Bain case is the tipping point the permatan will be setting himself up for a world of hurt personally, from outraged Rangers Fans.

    I can’t imagine that’s something which he hasn’t considered and which appeals to him, unless he’s likely to walk away with oodles of cash and move abroad…..

  36. Slimshady says:

    The Black Knight says:
    05/09/2011 at 10:33 am
    Hmmmmmm, I think ‘the accountant’ is back……….Sam???????

    PS Sam. Anyone with any authority in the case is in Edinburgh. Not East Kilbride. Centre one deals with in the main PAYE
    ——–
    Not so, Black Knight. There is a high-level Special Civil Investigations team based in East Kilbride, looking at all taxes direct and indirect.

  37. sam says:

    Chalmers like I said I don’t get it, if avoidance is legal and evasion is criminal, what are the charges, if found for evasion, which I am assured by my soon to be wife, is the only possible adverse verdict against RFC, any profits would be proceeds of crime, and could and would find Whyte at the back of the que rather than the front

  38. chico says:

    Kaiser says:
    05/09/2011 at 11:05 am
    If the Bain case is the tipping point the permatan will be setting himself up for a world of hurt personally, from outraged Rangers Fans.

    I can’t imagine that’s something which he hasn’t considered and which appeals to him, unless he’s likely to walk away with oodles of cash and move abroad…..

    ————————————————————————————————————————

    was thinking the same. Bain knows rangers are tethering on the brink. knows that to get his slice, it will have to bee soon ( hence the request to freeze (sorry for the layman terms) rangers account)

    but it looks like rangers can’t afford to pay the tanned one, and the tanned one looks like he difinatley wants paid (or at least his reputation restored)

    i

  39. greengrass says:

    how much blame can whyte load onto bain if he cant clear his name…is bain the scape-goat…

  40. Chalmers says:

    sam says:
    05/09/2011 at 11:14 am
    Chalmers like I said I don’t get it, if avoidance is legal and evasion is criminal, what are the charges, if found for evasion, which I am assured by my soon to be wife, is the only possible adverse verdict against RFC, any profits would be proceeds of crime, and could and would find Whyte at the back of the que rather than the front
    _______________________

    IMO, (though I’m not a lawyer) it would be impossible to differentiate the ‘ill-gotten’ assets from those derived from normal business activity. So going down the ‘proceeds of crime route’ would be pointless and unnecessary, as there are (as you say) laws against tax evasion in any case. It will remain HMRC’s prerogative whether they’ll find it worthwhile to pursue criminal charges or not.

    But, first, they need to have a favourable outcome from the FTT to strengthen any potential criminal case that they may wish to pursue..

  41. Chris Barrie says:

    sam says:

    any profits would be proceeds of crime

    It’s not being tried through a criminal court so no criminal conviction would be appropriate at this time!!

    However, I’d imagine that if actual tax evasion was found to be the case then you may very well find that a criminal case would be likely in due course!!

  42. greengrass says:

    there is going to be a very angry mob outside ibrox when this kicks off…it will be very ugly i fear…

  43. timtim says:

    Bain , a loyal Minty accolyte helps to bring about the end game
    while firmly pointing the finger of blame at Whyte
    restores his business reputation and possibly picks up some £££s
    As for the fans hatred – they already despise him for incompetence
    revealing Whyte as the bogeyman takes some heat of him
    Whyte would be labelled as a scam artist whose false wealth and promises
    tipped them over the edge.The billionaire who wouldnt pay less than 0.3% of
    his wealth to save them . some fan eh!

  44. The Black Knight says:

    Thanks Slimshady, I was hoping Sam could tell me that.

    I did say that “in the main” they deal with PAYE.

    I am not fully aware of the Special Civil Investigations or their remit. I do not think however they are linked to the FTT. My understanding it is being dealt with from the Edinburgh based Legal Team

  45. Kaiser says:

    greengrass says:
    05/09/2011 at 11:25 am

    how much blame can whyte load onto bain if he cant clear his name…is bain the scape-goat…
    ___________________________________________________

    Funny! Remember the interview with Jim White where CW was claiming he had to get rid of the old board as they were actively working against him(it’s on youtube)??

    He just says, he took on Rangers in good faith attempting to turn around the club he loves and those ‘Pesky kids’ on the old board prevented him doing it from minute 0, with the difficulty created and the money now owed to them unfortunately a great opportunity to save Rangers has been missed!

    A cunning stunt!

  46. The Black Knight says:

    Chris Barrie says:
    05/09/2011 at 11:30 am
    “……..However, I’d imagine that if actual tax evasion was found to be the case then you may very well find that a criminal case would be likely in due course!!”

    most appropriately by the Scottish Football Association/ Members?

  47. JJ says:

    Hands up all those who think taking a criminal fraud charge against Rangers staff would succed in a Scottish court with a Scottish (probably Edinburgh) jury!!!!!!!!!!!!!!!!

  48. Chris says:

    sam, to say avoidance is legal is disingenuous. They’re both (avoidance and evasion) illegal in that they break statute, the main difference though is in the process used to determine the veracity of the statute break and punitive measures.

    Evasion goes through criminal courts and avoidance normally goes through civil courts (rtc has mentioned this more than once before – the burden of proof in the civil courts is lower)

  49. The Black Knight says:

    Slim, did the NTSCI unit not relocate to Portcullis House? Just asking.

  50. greengrass says:

    Kaiser says:
    05/09/2011 at 11:34 am

    very cuning…

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