Well done!

On first reading of The Sun on Sunday’s article today about Rangers’ player contracts, I wanted to take my customary swipe at the traditional media. On reflection, congratulations are in order.

I am no fan of the Murdoch press, but let us acknowledge a job well done. This story is a quantum leap forward from what has passed as “traditional” reporting in Scotland in recent years. While the Daily Record still seems content to rely upon agenda driven scraps from the table of the Rangers old-guard- the same people who got the club in this mess- The Sun appears to have put in an honest day’s work.

This would have required some genuine investigation and they confirmed their interpretation by consulting with no less than three experts. While sports reporters have vacillated between claiming that tax issues are too complicated to discuss and then spouting comically inaccurate nonsense, The Sun has found a solution that might yet start a revolution: they asked for comments from people who understand the subject! Rather incredibly, I even agree with the article’s general findings. (You could have read much the same here in March of last year, but The Sun has published evidence). It was the absence of reports like this one, about the most important story in Scottish football history, that inspired this blog. So ‘better late than never’ and a sincere chapeau!

The timing of this story is also good. Much of the discussion recently has focused on the issue of whether Rangers’ players had letters saying that loans from the EBT did not need to be repaid. While interesting, and sure to become a topic for discussion once the First Tier Tribunal returns with its findings, it is a bit of a red herring.

The central issue in this case is whether the money received by Rangers’ employees from the EBT were “emoluments”. Cutting through the legalese, this basically means that the key question to be determined at the FTT is: did Rangers’ employees receive wages through the EBT that were not properly taxed? Obviously, evidence that the loans were not real loans would blow any pretence that EBT use was legitimate out of the water. If there was also direct evidence that Rangers’ staff were receiving payments that were promised in an employment contract, then it would be very difficult to make an argument that these payments are not emoluments.

Yet, make an argument that they are not wages is what Andrew Thornhill QC has been very well paid to do. In some uncharacteristically well informed posts on the Follow Follow messageboard, I noticed the appearance of the “substance over form” argument as a way of trying to explain away any damaging documentation. Without getting steeped in a comprehensive legal and accounting discussion, “substance over form” is a concept that tries to look through complicated legal contrivances in financial transactions and look only at the meat of the issue: where were we are the start and at the end. It seeks to just “look-through” any special purpose entities or legal trickery designed to complicate matters. How is this relevant? The poster on Follow Follow, is trying to make the point: it does not matter if Rangers have created this blizzard of paperwork all but admitting that they have perpetrated a scam, the “reality” is that the players currently still owe the trust. Therefore, the withdrawals from the EBTs are not emoluments. 

This argument has a certain superficial charm. However, the issue with “substance over form” is that it is not for Mr Thornhill QC (or Rangers) to determine what the start and end points of the transaction are. Such a line of reasoning would be effectively asking the tribunal to start and stop at mid-points in the process and to ignore the real substance- that Rangers’ employees received payments from their employer that were not taxed.

So I would agree with the Follow Follow poster. The form of how they were paid (through a trust)  should be ignored, especially if there is a mountain of documentary evidence supporting the notion that the substance is that employees’ wages were not taxed. (If there is a lot more evidence like that presented by The Sun, then Rangers’ case would look to be very weak indeed). Of course, if I was a skilled lawyer and one of my instructions was to slow down proceedings to delay an outcome, I would need to find an argument of some sort. An argument that allows me to ask the tribunal to go through the all of the evidence meticulously would be very useful indeed.

Looking to the future, Rangers’ fans need to take a realistic and dry-eyed look at the sort of people who will be running their club in whatever form it takes. The signs are not good that the lessons of the past have been learned.

Arsenal Shares: Previous Board Alerted Whyte

Reports that Craig Whyte has been “asset stripping” and selling off Rangers’ heirlooms have understandably angered many fans.

However, painting Craig Whyte as the devil incarnate on this issue might be a little hasty. It appears that members of the old board actually suggested to Whyte that these shares could be sold for cash.

Rangers’ April 2011 Financial Report (prepared on 18 May for Whyte just after the takeover) contained the following:

It is understandable that every weapon in the armoury is being deployed to get Whyte out, but it is also clear that truth and context might be casualties in this war. From the tone and positioning in the report, these shares were suggested to Whyte as a source of cash. No other “family silver” is listed.

Had Whyte’s takeover of the club not happened would Rangers have sold their Arsenal shares anyway? The issue of concern for Rangers fans should not be the sale of the Arsenal shares themselves, but rather what has happened to the proceeds. However, simply accusing Whyte of misappropriating £188k would carry legal risks and might seem trivial compared with recent accusations. The emotional appeal of the sixteen shares gifted to the club in 1910 is a much more potent weapon.

Public relations at its murky best!

Rangers’ PR Still Peddling Disinformation

Keeping up fan morale has never been more important at Ibrox. If Rangers simply run out of cash to keep the lights on, the administrators will have no choice but to liquidate the club. While the administration process means that Rangers have great leeway with regards which bills they pay, it is vital for the club that cash continues to come in. Therefore, we need to view all statements emanating from Edmiston Drive as being designed to achieve that goal.

We have heard some strange-sounding statements from the administrators, but it is the story circulating that the tax case has not gone well for HMRC that I found interesting. Scotland on Sunday reported this week that this blog “claimed the ‘smoking gun’ for HMRC was a number of letters indemnifying players from any future tax liabilities on money placed in their EBTs”. I have said no such thing. I did say: “I can only hope for Rangers’ sake that they were not so stupid as to provide written guarantees for players saying that they did not need to repay these loans”.

It was in fact Darrell King on Clyde Superscore Board who told us that Rangers players had two contracts and were given side letters telling them that loans did not need to be repaid. Darrell went further on 10 November, 2011 stating: “I saw the letters the players have got to state that they are not liable for any payments which were part of their contract“.  (More recently, Darrell denied actually seeing the letters).

Regardless, a “key witness” at the tribunal reports that no such side letters existed. That would be fantastic news for Rangers if it was true.

I can only assume that the story from this “key witness” is being pushed to keep fan morale up during these difficult days. It may also be a last-ditch effort to try to get anyone in possession of the facts to make a mistake and disclose evidence presented to the First Tier Tribunal (FTT).

Let us look objectively at this “source”.  The Scotland on Sunday report stated: “The source, who is not connected to Rangers but had clients who benefited from EBTs“. This is a key witness?  Someone who did not participate in the EBT personally? Someone who is not connected to Rangers? Given the long list of players and executives who participated in the EBT scheme, this is the best witness available to refute Darrell King’s claims?

If this person was indeed a witness at the tribunal, he will have been called as a witness by Rangers. He will have been initially examined by Rangers’ counsel, cross-examined by HMRC’s lawyer, and then possibly re-examined by Rangers’ counsel again. Then he will have been made to leave the hearing. He would not know anything about what evidence was presented other than his own.

Of course, nothing in life is absolute. This blog never said that defeat for Rangers in the tax case is 100% guaranteed, but I believe that the evidence is overwhelmingly against the club. We are close to the end of this process and it is probably best that those with an interest in learning the facts remain patient and simply wait for the FTT result.  The significance of this case is no longer in dispute, and there is little need to bang the drum for more publicity for Rangers’ difficulties. After all this time, we can wait a little while longer for the final outcome.


Just in case some of you do not follow my Twitter account (imaginatively named: @rangerstaxcase), I realised yesterday that I had made a mistake. A few days ago, I tweeted, and posted, that two (2) additional directors of Rangers FC had benefited from the Employee Benefit Trust (EBT) scam that so gravely imperils one of Scotland’s great institutions. This statement followed Craig Whyte’s interview with The Sun newspaper where he named ex-Chairman John McClelland and ex-Chief Executive Martin Bain as having participated in the scheme.

My statement  was issued in error. A more accurate statement would be to say: “At least two (2) additional directors of Rangers FC used the EBT scam that makes insolvency virtually inevitable“. (I hope that my statement did not cause any inconvenience to anyone).

This is important because as company directors they had a responsibility to check that the correct amount of tax, VAT, and National Insurance contributions were paid- and on time. Company directors are required to act in good faith– in the interests of the company as a whole. This includes not having (or declaring) conflicts of interest. Rangers’ accounts for the periods covering EBT use do not mention any directors declaring a conflict of interest. (It is possible that they have declared this in non-public board meeting minutes, but shareholders would not have been aware of this). Their obligation to avoid, where possible, conflicts of interest would have been best served by simply not having any personal benefit from Rangers’ tax strategy. Sticking their own snouts in the trough rendered them “conflicted”. How can you assess the suitability of a high risk tax strategy for a company, when you have a personal incentive (and believed at the time, no personal liability)? Not a single Rangers director is known to have resigned over the issue of tax strategy.

Sir David Murray is beloved by many former employees and associates. He is renowned for his personal generosity to those who do right by him. The question that must be asked: Did David Murray effectively buy off Rangers’ directors opposition by allowing them to participate in the scam?

On other matters, I have been deluged for weeks with questions about “the wee tax case”- has the bill for £2.8m been cleared?, the status of Rangers’ failure to keep up with PAYE & NIC remittances, and the nature of my claim that the club had fallen behind on VAT payments. All that I can safely say just now is that all of these matters are intertwined. To explain more on the complexities of the situation just now would be to get too deeply involved in some delicate issues. It is best that I just leave this subject alone for now. However, rest assured that these topics have not been forgotten by any of the interested parties.

A victim of our own success

In the last week, we have seen the final stage of the mainstreaming of the Rangerstaxcase story. With factional in-fighting among current and former executives of Rangers FC spilling onto the front pages of our tabloid press, even the most sceptical football fan will now understand that Rangers face a crisis that threatens their very existence. That much is a cause for some satisfaction. After ignoring this story for the best part of a year and a half, the mainstream media appear to be roused from their stupor. It would be difficult for anyone to deny with a straight face the role this blog has had in forcing the uncomfortable truth into the open.

However, the comments section of this blog has simply become unmanageable. With over 2,500 replies posted in a matter of five days, I do not have time to read them all. I have been struggling for a few months to contain potentially defamatory posts, but the numbers are simply overwhelming now. While I have had many kind offers to help share the burden, there are practical reasons for not taking them up.

I will try to provide a way to allow those who have built this site into something wonderful to continue posting their views, but I do not see the utility in this site becoming a general Celtic-based messageboard.  There are many excellent sites catering to this need already. It has never been my goal to ever be in competition with any of them.

It was perhaps inevitable that with the explosion of interest in this subject that the nature and quality of comments would change. At the risk of being seen to be elitist, it was the group of people who contributed content and analysis in the early months who made this site special. So I plan on providing a means to allow them to continue posting.  (Bear with me as I experiment with settings).

This would appear to be the best way to avoid the repetition and dilution of content. With fewer contributors, the ‘Old Guard’ and approved posters will find it easier to maintain a running theme. There will be a chance for the analysis and fact-finding that made this site popular can be retained.

Additionally, it would be important to provide a place for fans of all other Scottish clubs, especially Rangers supporters, who wish to engage in factual and/or informed speculation about events that are unfolding. Thus far, Rangers-based sites have blindly chosen positions without much analysis. Anyone wishing to engage in reasoned and informed discussion would be welcome to provide input, regardless of opinion.

I mean no criticism of those who see Rangers’ troubles as a source of amusement. There are simply lots of other places more suited to that type of comment. I am sure that keeping this blog as a staid and ‘rooted-in-fact’ environment will reduce its popularity. However, if we can revive the original spirit of the blog this will be a price worth paying.

Edit:  I am going to allow the old comment rules to continue for a while.

As for the most recent wave of insolvency rumours, I can confirm that Rangers had instructed their legal advisors to prepare for a possible filing at the end of the transfer window. However, I chose to sit on this story as it was likely to be misinterpreted. There are many tactical reasons why a company might want the option of filing on a given date, but might later choose to not go ahead. There are many factors that would affect Whyte’s decision to file- and the simple truth is that we do not have access to enough information to make any statement about a date when receivership or administration would become his best option.  Whyte could file tomorrow or several months from now. The exact date does not matter too much. All sides will have had ample time to prepare their positions and refine their strategies. The only certain outcome is that the country’s top law firms are going to be busy.

What we do know is that Scotland’s biggest football club is facing the biggest crisis in its 140-year history.  We have also seen the opening salvos in the battle to pick up the pieces of a post-liquidation Rangers. Most significantly, we have helped launch and shape the debate on how Scottish football would deal with a post-liquidation Rangers. We have called out the ‘presumptive close’ being attempted by those who have a vested in interest in a newco-Rangers recovering rapidly.

The case for thwarting all notion of sporting integrity and parachuting a newco-RFC back into the Scottish Premier League has not been made. Despite what Hugh Keevins might say, as observed by a couple of our regular posters, it seems that the only surviving SPL club that would face a significant reduction in revenue related to the loss of Rangers from the SPL would be Celtic. For every other club, there is a chance that the thousands who migrate towards Ibrox from towns across Scotland every other Saturday might show an interest in their local team. There would be a realistic hope of winning trophies. Those who do not wish to discuss a newco-Rangers earning its place in the top flight fairly, do not want to investigate the opportunities that may exist in re-ordering the game either.

This would all be easier to understand if we were watching top quality football being played by young Scotsmen in an atmosphere of optimism.  However, Scottish football has fallen progressively further and further behind the top-flight standards in the last 25 years. The idea that it is worth taking a chance on remaking our game is one worth at least some discussion.

Time-horizon is also a factor being ignored by the radio talking heads. While Celtic would undoubtedly face a dip in revenues in the short-run, a more competitive league in the future could see stands filled once again across this football mad nation. Even Celtic could see increased ticket sales and TV revenues in ten years time if 3-4 clubs were in a tight battle for the SPL title. If the men running the SFA lack the imagination to see the chance presented, then they need to be replaced. We should not forget about the risk of cynicism. If it is clear that a newco-Rangers will be nursed back to health by hook or by crook for short-term financial reasons, there will be little point in watching Scottish football thereafter. Why bother? There would not even be a pretence of fair competition. Is the financial risk of helping a newco-Rangers being considered?

A newco-Rangers that earns its place in the Scottish Premier League by promotion through the lower leagues will spare its fans the permanent ‘mark of Cain’ that would accompany not winning its place. A club that works its way up through the lower divisions could rebuild its record with pride and know that it deserves respect.