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. timtim says:

    http://www.bbc.co.uk/iplayer/episode/b01640yh/Reporting_Scotland_17_10_2011/

    “There’s a big financial cloud hovering over Rangers now. A forty-nine million pound tax bill is being disputed. But this upheaval in the boardroom suggests not just big changes in the way the club is beig run under new ownership but also a real risk that Rangers could run out of money within weeks.”

  2. Mark

    Got the basics of a new blog post, just need to find the time to polish it. Apologies for being a lazy host!

  3. EasyJambo

    Good observations. Does the central premise of that story still hold water in that if cumulative and convertible are both convertible then Lloyds effective control MIH?

    (more out of academic interest. Murray’s role in this tale will only be in whether shareholders or HMRC go after him for the money lost at Rangers.

  4. Hugh McEwan says:

    Looking forward to reading it Mr Greig.

    D’oh.

  5. easyJambo says:

    Paulsatim – I was simply remarking on the inaccuracy within the original blog and highlight the misapprehension that Lloyds could convert their shares and leave SDM with no control over MIH.

    SDM still controls 70% of the MIH shares. Lloyds hold just over 23%. Of course, Lloyds continue to be exposed to MIH’s net debt of £713M and will thus be able to exert influence over SDM’s decision making.

  6. EasyJambo

    I looked that up and they are redeemable cumulative preference shares. So you are quite right. These can be convertible, but the AR01 referenced does not mention convertibility.

    This is good for HMRC I would think. The more assets that are obviously controlled by Murray, the easier it will be to poke holes in the idea that these assets are in trust. This could be seen as a sham for the express purpose of alienating assets.

    It would no longer affect Rangers, but would not cry to see justice being meted out.

  7. easyJambo says:

    RTC – My understanding is that they are completely different categories of share types. It may be possible to have “Cumulative Convertible Preference shares” but I haven’t come across them before.

    The blog is accurate about the offshore holdings, but inaccurate when it comes to Lloyds being able to take complete ownership, albeit that will have influence because of the debt situation.

    Extracts from the MIH Accounts

    Lloyds Banking Group increased it’s equity interests in the Group , subscribing for £150m of additional share capital and share premium in Murray International Holdings Limited (“MIH”) while reducing debt levels by a similar quantum.

    There was a debt for equity conversion which gave rise to 5,263,389 of ordinary “B” shares of 1p each and 150,000,000 cumulative redeemable preference shares of 0.1p each that gave rise to a share premium of £149.767M

  8. thegreenbhoy says:

    That pesky lazy RTC keeping everyone hanging!

    I don’t mind the wait it is all rather much fun watching everything fall apart, ho hum

    Also any chance of anyone organizing a hearse outside Ibrox circa 1994 outside parkhead

    apologies for this post however it has been a long time coming

  9. EasyJambo

    This is why I love this blog!

  10. Interesting article by Douglas Fraser on BBC website – ends as follows:-

    “But after five months, and with the break with the past ever clearer, there have to be questions asked about the promises made when Craig Whyte came in: £5m in working capital, £5m extra funds to build up the player squad, £1.7m for upgrading facilities?

    And while we’re at it: who is on the board these days? On the exchange on which Rangers shares are traded, which has seen the share price fall by a third since Craig Whyte took over, the club has registered the resignations of directors, but not the appointment of new ones.

    Apart from Whyte, as chairman, and Dave King, who remains a director while battling immense tax difficulties of his own in South Africa, is there actually a Rangers board left?”

    Read it all – it is posing in the mainstream questions which have been asked here for some time.

    http://www.bbc.co.uk/news/uk-scotland-scotland-business-15344643

  11. easyJambo says:

    Interesting tweet from FF 🙂

    Follow_Follow_Follow Follow
    BBC prime-time doc on RFC (Thur) doesn’t appear to appeal to Whyte. Co-operation thereafter in doubt, says rumour mill.

  12. TheBlackKnight says:
    17/10/2011 at 1:00 pm
    ———————————————————-

    Thank you for the kind words!

  13. MidlothianCelt says:

    Tonight’s Newsnight Scotland apparently carrying a piece about what’s going on at Ibrox.

    Will probably forsake Paxo for Brewer on this occasion.

    MC

  14. Mark says:

    my life is complete, RTC quoted me, he responded to me, I feel like I would if henrik after chipping Klos looked at the crowd pointed directly at me ran and hugged me……whooosh!

    as for

    Hugh McEwan says:
    17/10/2011 at 9:39 pm

    Looking forward to reading it Mr Greig.

    D’oh.

    really? of all the possibilities?….nah didn’t think so…

  15. Tommy says:

    easyJambo says:
    17/10/2011 at 10:17 pm
    Interesting tweet from FF – BBC prime-time doc on RFC (Thur) doesn’t appear to appeal to Whyte. Co-operation thereafter in doubt, says rumour mill.
    _________________________________________________

    What is noticeable of late is the apparent lack of spin coming out of Ibrox. Has CW dispensed with the services of Media House? I assume he has otherwise Jack Irvine is taking the p*sh.

    With McLelland and Greig resigning today, this week’s court appearance of McIntyre and the BBC Scotland exposes on Newsnight Scotland and BBC1 on Thursday, surely it is time for the propaganda minister to be brought in? Even the Laptop Loyal are now pouring scorn on the two glamour friendlies against Liverpool and Hamburg. How long can CW go without Comical Ali?

  16. Mark says:

    well excuse me all, but after watching newsnight Scotland I appear to have wood.

  17. Paulsatim says:

    Mark says:
    17/10/2011 at 11:14 pm

    I did have too! But I lanced that boil!!

  18. Lord Wobbly says:

    Mark says:
    17/10/2011 at 11:14 pm
    ~~~~~~~~~~~~~~~
    Genuinely laughed out loud 😀

  19. Paulsatim says:

    easyJambo says:
    17/10/2011 at 9:45 pm

    no worries mate!

  20. TheBlackKnight says:

    Loved the lay persons guide on Newsnight. The graphics reminded me of Peter Snow and the ‘swingometer’ 🙂

    Glad to see the ‘mainstream’ taking note, however slightly disappointed no credit to RTC given that most, if not all of the subject matter (99%crap) appears to have been lifted from this blog.

    Looking forward to the next installment 😉

  21. timtim says:

    I wood like to know what was said
    cannae get bbc here

  22. Hugh McEwan says:

    The financial expert was frightened to actually say what he believed.

    Or possibly was told not to because they intend saying it in a couple of days.

  23. Mark says:

    well timtim all I can say is that I was saying “oh god oh god OHHHHHHHH!”

  24. duggie73 says:

    The situation at the time of the big tax bill hitting was described as likely to be “messy”.
    That’s as in-depth as that bit of the analysis got.
    Cannae blame him, tbh.

  25. Mark says:

    Hugh McEwan says:
    17/10/2011 at 11:19 pm

    The financial expert was frightened to actually say what he believed.

    Or possibly was told not to because they intend saying it in a couple of days

    totally agree, I think Thursday maybe a doozy

  26. timtim says:

    I luv a happy ending Mark

  27. Mark says:

    ah timtim! 🙂

  28. TheBlackKnight says:

    Hugh McEwan says:
    17/10/2011 at 11:19 pm
    “The financial expert was frightened to actually say what he believed.

    Or possibly was told not to because they intend saying it in a couple of days.”

    Perhaps so!
    Or
    Is RTC able to issue a writ for plagiarism?

  29. Mark says:

    TBK, aye exactly, Scottish journalism should stand the f*ck up and clap.

  30. Lord Wobbly says:

    TheBlackKnight says:
    17/10/2011 at 11:25 pm
    ~~~~~~~~~~~~~~~~~~~
    I’d like to think that RTC’s polishing (somewhat different to Mark’s) has been delayed due to filming commitments, but that would mean admitting that they should have picked up on this long ago.

  31. Mark says:

    and to finish for the night, but rest assured my work day (hah) will be halved due to my time on this blog, but for tonight I say sweet dreams!

  32. TheBlackKnight says:

    I hear you LW! I hear you! (ps not the echo)

  33. Lord Wobbly says:

    TheBlackKnight says:
    17/10/2011 at 11:35 pm
    ~~~~~~~~~~~~~~
    Shhhhh! It might hear you.

  34. Hugh McEwan says:

    TheBlackKnight says:
    17/10/2011 at 11:25 pm

    Hugh McEwan says:
    17/10/2011 at 11:19 pm
    “The financial expert was frightened to actually say what he believed.

    Or possibly was told not to because they intend saying it in a couple of days.”

    Perhaps so!
    Or
    Is RTC able to issue a writ for plagiarism?
    =======================================

    LOL

    Good point.

  35. longtimelurker says:

    Scottish journalism, still p ! sh!

    ‘rangers are at the top of the league where they were during most of john greig’s illustrious career as a rangers player’

    Naw they wurnie ya clowns.

    The only captain of winning European club trophy presented with said trophy in a toilet:-)

  36. rab says:

    I love this blog, i feel like a wean at christmas waiting on rtc to come doon the chimney with a new post.

    You can feel the tensions rising, the tax case resumes soon, the sinking ship is being desserted, the moneys running out, still months away from january window, court case after court case, and now 2 mentions in the same week on bbc.

    Gathering pace,

    And still ra bears are facing the other way.

    Superb.

  37. Lord Wobbly says:

    here’s the content for any who missed it. Apologies for the location.

    http://forum.rangersmedia.co.uk/index.php?showtopic=201979&pid=1059474897&st=0&#entry1059474897

  38. Lord Wobbly says:

    When I say content, I mean the gist…it’s getting late

  39. TheBlackKnight says:

    timtim says:
    17/10/2011 at 11:17 pm
    “I wood like to know what was said
    cannae get bbc here”

    Basically pretty much the timeline and possible(and actual) consequences from the Whyte Knight’s takeover.

    As follows:
    1. Whyte Knight buys club for £1 in May.
    2. Takeover panel express concerns.
    3. No board meetings have been held since the takeover.
    4. Potential tax bill highlighted
    5. EBT’ missuse over apx 10 years explained in overview
    6. Ringfencing of funds by court order highlighted in regard to HMRC and MB court cases.
    7. A total of 8 Directors/ Board Members, either stepped down/ resigned or sacked since the takeover. Leaving the question of who is running the day to day business.

    Apologies if I missed anything.

    The Whyte Knight’s ‘Ivory Tower’ must be getting lonely and empty (hmmmmm, ideal for an echo……..)

  40. TheBlackKnight says:

    Lord Wobbly says:
    17/10/2011 at 11:37 pm
    ~~~~~~~~~~~~~~
    Shhhhh! It might hear you…. Hear you….. Here you!
    🙂

  41. duggie73 says:

    See the thing that’s a problem with the news is that it reports things which have happened, it’s really, really weak on saying what could happen next.
    It seems quite likely that Whyte to some extent will use receivership to pocket cash from selling players, though HMRC’s unpayable bill would mean that in any deal done prior to the inevitable free agency any player who moves, any agent who advises them to and any buying club would be losing some of the benefit of the transfer fee paid- which goes direct to CW’s pocket. So rationally CW shouldn’t be able to make a profit at all if everyone directly involved is fully aware of what’s going on.
    It won’t be easy for any journo to exactly campaign on this as an issue though- CW’s actions aren’t going to be in defiance of any law. So getting that info out where it actually makes a difference in the world ain’t going to be simple.
    And tbh, the fact that the club’ll be screwed in any case does kinda sap motivation.
    On the other hand, **** ’em.
    Long way to go still….

  42. andycol says:

    rab says:
    17/10/2011 at 11:42 pm
    I love this blog, i feel like a wean at christmas waiting on rtc to come doon the chimney with a new post.
    You can feel the tensions rising, the tax case resumes soon, the sinking ship is being desserted, the moneys running out, still months away from january window, court case after court case, and now 2 mentions in the same week on bbc.
    Gathering pace,
    And still ra bears are facing the other way.
    Superb.

    It’s a trifling matter!

  43. Johnboy says:

    No Board meetings for Five months? Incredible.
    Yer wee man Whitey doesn’t even put up a good pretence of being able to run a successful business.
    How to make cash out of its demise is all he and his pal Betts and Withey are interested in.
    Greig and McLelland clearly know that the end is nigh, and have taken legal advice (and phraseology) to distance themselves from the consequences.
    This may well be THE week!

  44. Auldheid says:

    duggie73 says:

    18/10/2011 at 12:06 am

    On the 11pm programme,when asked what insolvency would mean, the business reporter avoided mentioning the consequences on players and how quickly any impact might be felt..

    I think it is an attempt to keep the illusion of current competition, as it has become to be recognised, alive as long as possible.

  45. Tommy says:

    Here is the BBC Scotland Newsnight programme, courtesy of Amac on Celtic Minded

  46. Auldheid says:

    rangerstaxcase says:

    17/10/2011 at 9:35 pm

    Mark

    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?

  47. duggie73 says:

    Auldheid
    thought personally it was cos of time pressure, and the fact that it is extremely complicated.
    There’s not anything like an overwhelming consensus on here.
    “Messy” is an accurate description, it’d be some going to do better. Whether you’re a pro or an amateur.

  48. duggie73 says:

    Auldheid
    on a 2nd look-
    “Very messy” is better. 🙂
    Point taken though- there was much more emphasis on what it all means for the business as opposed to for (excuse the jargon) a continued football playing entity. Which is of far more interest to far more people. It’s gotta be helluva tough to report on something that hasn’t happened though.

  49. Auldheid says:

    duggie73 says:

    17/10/2011 at 3:00 pm

    Bored of this myth.
    The RFC team are not currently handicapped in terms of the value of the player that appears on the pitch.
    Even were RFC to end up owing £0 over the big tax bill, RFC would have to cut back the squad, or go out of business.
    So let’s drop the ” Celtic can’t even beat a disadvantaged Rangers team talk”.
    It’s the exact opposite of the truth.
    ============================

    This myth keeps getting peddled. They are at the top of the table BECAUSE they are bankrupt, not in spite of it.

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