This week has seen strident denials from David Murray that Rangers have done anything wrong in paying 83 employees through the Murray Group Management Remuneration Trust (MGMRT). According to Murray: “No rules were breached or circumvented, and I reject and resent any suggestion that anything was done which amounted to cheating.” This blog-post will provide an illustrative example that demonstrates just how absurdly untrue Murray’s claim really is.
First a quick recap of the rules. For the MGMRT, an Employee Benefit Trust (EBT), to be operated legally for tax purposes, money is deposited in the trust by the employer. Thereafter, the employer must have no control or involvement in the disbursement of funds. Employees can then apply to the trust for loans. The loans must be discretionary i.e. contractual obligations or wages (of any kind) cannot be paid tax-free through an EBT. Any payment through an EBT for wages or other contractual obligations would be liable to tax. Paying wages or other obligations through an EBT without deducting PAYE & National Insurance is a breach of UK tax law and is illegal. HMRC has investigated Rangers’ use of the MGMRT EBT and found it to be a sham designed to avoid due PAYE & NIC. The Rangers FC plc (In Administration) appealed this determination and this appeal was heard by the now infamous First Tier Tribunal (Tax). Rangers FC (the oldco) was able to pay higher wages to sign and retain better quality players during the decade in which the scheme operated. In fact, had Rangers paid staff the same take home wage, the club would have had to find an extra £49m to pay tax on these wages legally. This much we have discussed many times.
The next rule in question is that of the Scottish Premier League (SPL). The SPL requires that all payments to registered players are declared in the contractual documents submitted to the league (and to the SFA). The combination of illegally using an EBT scheme to obtain a £49m advantage in paying for players and violating SPL rules on declaring payments to players is premeditated financial doping. The reason for not declaring the EBT payments in player contracts is that doing so would have caused the EBT scheme to fail immediately. Players and their agents are no fools and wisely would not trust the nods and winks of the shifty wide-boy types attracted to football club ownership. They insisted that promised payments were documented. These additional documents- side-letters, second-contracts… call them what you will- blow Rangers’ and Murray’s claims of innocence out of the water.
In a previous post, this blog attempted to help the SPL’s investigation team to establish a prima facie case against Rangers. Obviously, we have no way of knowing if this was helpful in moving this case along, but it might help the media and anyone investigating the case against Rangers if we provide a road-map to just one example of what really happened. Please note that this example has been selected for its clarity rather than the importance of the player. Many of the cases, especially the earlier ones when Rangers tended to be more concerned with obscuring their actions, are quite complex. The SPL’s investigators should ensure that they see the documentation referenced below.
Gavin Rae signed a three and a half-year contract with Rangers on 1 January 2004. This contract- the official one filed with the SFA & SPL- lists an annual wage of £260,000. Curiously, the contract does not mention appearance money or bonuses. On the very same day, 1 January 2004, Rangers provided Gavin Rae with a letter that said that money would be deposited in a sub-trust of the Murray Group Management Remuneration Trust on his behalf. These amounts total £336,000. The letter also said that Rae would receive £1,000 as an appearance fee for every competitive first-team game played. From February 2004 to July 2007, Rae received five payments totalling £336,000. He also received the following amounts through the EBT for appearances: £11,000 (2003/04); £8,000 (2005/06); £20,000 (2006/07). The appearance money matches his first team appearances for Rangers.
This side letter torpedoes the argument that these payments were not contractual. (A simple guide to contract formation under Scots Law can be found here. Short version: these letters constitute a contract under Scots Law). This letter, and the others like it, demonstrate that Rangers used the EBT scheme to pay wages (appearance money) and contractual obligations related to employment. This is just one fragment of the masses of evidence that demonstrate that Rangers were “at it”.
The task for the SPL’s investigators is simple in this case. Obtain Gavin Rae’s contract as submitted to the SFA & SPL. Next, they should demand to see Gavin Rae’s side letter. After that, the task is to review the actual payments. There will be a match between promises and payments. Repeat for each of the 82 other employees of Rangers FC (now In Administration) who used the trust scheme.
The current PR campaign from Murray, and other senior Rangers’ personnel who were beneficiaries of the EBT scheme, is designed to reverse any sense of inevitability regarding amending the sporting record to reflect the cheating that took place between 2001-2011. All Scottish football fans- Rangers fans included- were cheated during these years. Do not believe the spin and dissembling from those who did most to damage Rangers FC and Scottish football.
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