Craig Whyte’s Confessions: A Critical Analysis
30/09/2011 2,410 Comments
I might be giving Mr. Whyte and his media advisors too much credit for advanced planning, but it seems obvious that the recent spate of Whyte interviews had two objectives:
– a) Admit the truth, for it has become pointless trying to deny it any further
– b) Immediately distract from that truth before its full implications can be analysed
Whyte raising the possibility of Rangers entering the English Premier League (EPL) seems like a transparent attempt to “lay down smoke”. No one who is thinking rationally can believe that there is any serious chance of any Scottish club moving to the EPL. There simply would not be a large enough increase in SKY revenues to pay off all of the current EPL chairmen, the SFA, SPL, and then leave any profit to be divided between Rangers, (presumably Celtic too), and SKY. Too many Scottish football fans already pay for EPL coverage, so the number of new subscriptions would be quite small. A calamity would have to befall English football before any significant restructuring occurs. While that is not impossible over the next decade, it is not something that outsiders can accelerate or plan upon.
I do not believe that Whyte is so detached from reality to believe any of this nonsense, but rather I am sure that he was advised by his media team to raise this subject knowing that it would quickly become the talking point. It draws attention away from the real implications of what Whyte has now admitted:
When the tax bill hits, Whyte will stiff everyone else who has dealings with the club!
The tax man, Rangers’ players, Rangers’ season ticket holders, and suppliers: anyone, other than Whyte himself, who is owed anything by Rangers at that time is going to get screwed.
This is the awkward truth that Whyte has been trying to hide. Behind all of his “billionaire” and “front-loaded investment” disinformation, he has to now try to run Rangers for 12-18 months with all of these parties knowing that trading with Rangers is a high risk venture.
Players who signed 5-year contracts with RFC have given Whyte a free one-way option. If (when!) Rangers become insolvent, it will be at the discretion of the receiver appointed by Whyte as to which players are retained. So long as the players continue to receive their salaries, their contracts will survive i.e. they will remain under contract to Whyte. However, if someone is no longer a valuable asset- e.g. carrying an injury or simply off-form- Whyte can simply stop paying him and he will join the long list of unsecured creditors who will ultimately receive next to nothing. Let me put this more directly, once Rangers experience an insolvency event, players under contract can be freed without penalty by Whyte, but Whyte (acting through a receiver acting solely for his personal best interest) can decide to retain or to sell them. If Craig Whyte wants rid of a goalkeeper who develops butter-fingers in the second year of his contract, that five year deal would suddenly become, for all practical purposes, worthless and easily torn up.
If I was one of Rangers’ trading partners, I would be demanding cash on delivery. If I was a Rangers player, I would not sign any long term deals, at least not without a promise of contractual release upon an insolvency event. This would allow players who still have value to get a new signing bonus, either from The Rangers FC (2012) Ltd or whomever is willing to pay them most. If their value to clubs has dropped to zero? Unemployment, with only the statutory minimum payment, will be their fate regardless. They inadvertently gave Whyte a free option under the misguided belief that they had ensured their own financial futures.
Players screwed by Craig Whyte may find some comfort in the knowledge that they signed contracts with a high-risk employer voluntarily. The UK government did not sign up for being cheated out of a large amount of tax revenue. Her Majesty’s government has expended significant costs over several years to investigate this scam. Rangers’ evasiveness and duplicity have increased the government’s costs significantly. Yet, Whyte has now effectively admitted that he believes that HMRC will get nothing regardless of the findings of the tribunal process.
Will HMRC will take this situation lying down? I would hope not. I expect that they will be digging very deeply into their legal toolkit to avoid a humiliating and very public loss of face. Following the Vodaphone and Goldman Sachs debacles, a failure to collect from Rangers would solidify the public impression that ‘taxes are for little people’: smart, rich people do not have to pay. The widespread belief that you can cheat on your taxes and then negotiate a deal to pay pennies on the pound or simply duck the bill altogether would solidify. If I was the taxman, I would be thinking laterally. I would not confine myself to the narrow issue of Rangers FC.
If I was Craig Whyte, I would not sleep easily at at night if I thought that I had any unresolved legal issues with any UK government departments.
Whyte has thrown down a public gauntlet: even if you prove that Rangers have illegally underpaid taxes for a decade and gone to great lengths to disguise its illegal behaviour, you are getting nothing. Craig Whyte has publicly declared that he is the sole beneficiary (owner) of The Rangers FC Group Limited. Whatever assets Whyte has managed to accumulate “under the radar” – (his words, and a strange way for a businessman to describe his past. What do you think he means?) – his public professions of ownership of Rangers would enable the sequestration of Rangers FC should it be discovered that he has been as economical with the facts of his other business dealings as he has about Rangers.
Upon the tribunal process finally reaching a conclusion, the only certainty is that this situation will be decided in courts by people with vastly more legal experience than I have. In fact, I have spoken with a number of leading lights of the Scottish legal profession in recent weeks and it is clear that this situation is going to make many of them quite a bit wealthier. It will be a messy and expensive case that will be dragged through the courts for a long time.
This sudden change in media strategy by Whyte and his team might yet prove to be another in a long line of mistakes. It will be interesting to see what other tactical changes they will make.
As a measure of unmitigated gall, and as November approaches, it will be interesting to see if Whyte will indulge in the patriotic fervour of his predecessors during the Remembrance Day period. Perhaps under-equipped infantrymen returning from Afghanistan will be given free body armour this year rather than a free ticket to a minor game?