Craig Whyte’s Confessions: A Critical Analysis

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?

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.

2,410 Responses to Craig Whyte’s Confessions: A Critical Analysis

  1. duggie73 says:

    yeah man, I nicked your argument- if I’d remembered if you were Auldheid or Auldboy I might have remembered to give you the credit for it.
    *thums-up smilie*

  2. Auldheid says:

    duggie73 says:

    18/10/2011 at 1:08 am

    They could have asked Jim Duffy to say what happened to him at Dundee when they went into adminstration as one of the possible outcomes.

    Devasting was how I think Jim described it on Clyde. ” The guy comes in sits you down and tells you who has to go” No questions.”

    The differences or factors that might make this avoidable for Rangers could have been quoted but given how much the media depends on the continuation of the illusion I am not in the least bit surprised no one is mentioning possible outcomes.

  3. Auldheid says:

    duggie73 says:

    18/10/2011 at 1:10 am

    God duggie I cannae remember my own arguments, who cares? As long as they get an airing? 😉

  4. duggie73 says:

    It’s all turning a bit media studies, but anyhoo…
    I think the football aspect of it has in the main to be done in the football part of the Beeb.
    It is more of a drip, drip of info than one could hope for- D.Fraser for instance didn’t actually burst out laughing when talking about Whyte’s business empire in the Newsnight piece- there’s bits of his blog pieces that have a rather more appropriate tone on this.
    Despite all reservations about the laptop loyal and what have you, sooner rather than later Whyte is going to get ripped a new one. imho.
    It really does look like all Rangers-minded people are leaving him to sink or swim on his own.

  5. Jonnybhoy says:

    Are there any non executive directors left at iPox? If so should they not be concerned by “corporate governance” also?

    How exposed legally are non executive directors?

  6. Lord Wobbly says:

    Auldheid says:
    18/10/2011 at 12:50 am
    rangerstaxcase says:
    17/10/2011 at 9:35 pm
    Got the basics of a new blog post, just need to find the time to
    polish it. Apologies for being a lazy host!
    Was that a pledge?
    And I thought some of my jokes were bad…

  7. Casual Observer says:

    I see Douglas Fraser on the BBC continues to look dispassionately at Rangers’ troubles.

    Would be refreshing if his colleagues in the Sports Department followed suit.

    As Auldheid has pointed out repeatedly, Rangers’ ability to compete is a function of their ‘unorthodox’ approach to fiscal responsibility and corporate governance.

    A more sanguine commentary from the Sports department would assist Scottish Football in preparing for life after the HMRC Cup Final.

  8. TheBlackKnight says:

    I believe thats the trouble CO, the sports hacks (outside of the quality print) are of limited understanding of the goings on

    I include myself in that bracket 😉

  9. Lord Wobbly says:

    McIntyre has £300k of RFC cash frozen

  10. DAVE says:

    The BBC have some devastating stuff for Thursday night , thats why RFC have banned them , and if it wasnt true then there would be a super injunction to stop it.

    I do believe rangers fans are starting to wake up now and believe what IS REALLY happening

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