Never A Penalty!

The Scotsman today is carrying a remarkable interview with former Rangers and Scotland coach Walter Smith. It is worth noting in a couple of respects.

This is the first interview (of which I am aware) that Walter Smith has given since withdrawing his short-lived bid to purchase Rangers. Since that time, Alex Thompson of Channel 4 News has been trying to get Smith to answer a few simple questions:

– Did you receive payment from any of the EBTs Rangers / Murray Group established to make tax-free payments to employees?

– If so, when did you receive these payments?

– If you received such payments, were they significantly after your employment with the club ended?

– If you received payments long after your employment ended, for what purpose were they made?

Of course, I have no way of knowing if the journalist, Alex Gordon, has ever heard of Alex Thompson or follows my twitter feed. Scottish journalist doing research? After recent reports that 83 Rangers employees had received tax-free payments through the EBT, it would be a fairly obvious line of questioning. That another former manager, Graeme Souness, received a series of payments through the EBT scheme ten years after he resigned also raises some awkward questions. If Mr. Smith did not receive any payments, or if such payments are easily explained, I am sure that he would have welcomed the opportunity to clear any misunderstandings. Oh well. back to you Mr. Thompson.

Walter Smith’s interview can be seen as part of the PR deluge of terrifying stories about the great disaster that will befall Scottish football if Sevco 5088 Ltd is not allowed to enter a team in the Scottish Football League system with instant promotion to the first rather than the third division. This past weekend has seen many such articles and we should get used to more shrieking hysterics as we approach some kind of decision point. (Such is the bureaucratic incompetence within the organisations that run Scottish football, no one is exactly sure when a final vote might take place).

Mr. Smith might be a genius at constructing anti-futbol defences (I do admire his pragmatic approach to coaching), but he is either being disingenuous in this article or is struggling to grasp the administrative details. Smith is reported as saying: “Ten years ago Motherwell went in to administration. Four years ago Gretna went defunct. So, surely the SFA should have put sanctions in place then? That’s why I am saying they have been negligent. Now we’ve got a free-for-all around Rangers and everyone is having a kick at them”

This is a great example of the type of factually incorrect statements that the Scottish media is fond of regurgitating. As the old cliche says- an untruth repeated often enough is eventually accepted as fact. So let us refresh Mr. Smith’s memory.

The SPL introduced the 10-point penalty for going into administration during a season, or being in administration at the start of season, for the beginning of the 2004/05 campaign. Motherwell (and Dundee) were already in administration when the new rule came into effect. Both clubs were able to conclude CVAs fast enough to avoid the 10-point penalties and  to continue the life of the existing legal entities. The same rules that were introduced then have been applied to Rangers. The SFA are a bumbling shambles, but let us assail them for their actual mistakes. It is not the SFA or SPL’s fault that HMRC want to pursue investigations of what happened at Ibrox in the last 11 years and would not agree to a CVA.

The case of Gretna is actually similar to what happened to Rangers FC. Gretna owed its creditors (including HMRC) more than it could pay and the club went into administration in 2008. Unable to fund a CVA that was acceptable, Gretna FC was liquidated. That was the end of the Gretna story. Supporters formed a new club, Gretna 2008 FC and were admitted to the East of Scotland Football League. (Those of us who would accept a Sevco 5088 Ltd team entering the third division are actually still offering this club a huge advantage over every other newly formed team). If only Gretna had Duff & Phelps on the case to promote fictions such as the one that says that a liquidated company lives on so long as its assets are sold as a job-lot rather than individually.

Mr. Smith appears to be deliberately trying to confuse us and drum up sympathy for the new club. The only punishment that has been administered in the Rangers saga was to the old Rangers FC for experiencing an insolvency event. The rule that applied this penalty has been on the SPL books for eight years! (The SFA does not need to have a separate punishment).

As yet, there have been no penalties applied for the oldco Rangers FC pocketing the millions of pounds that were deducted from players’ wages to be paid in tax while other clubs paid their dues.

As yet, there have been no penalties applied for oldco Rangers paying the majority of their players through a mechanism that is, at best, in violation of SFA and SPL rules. I expect that when the First Tier Tribunal (Tax) returns with its findings in Rangers’ appeal of the Big Tax Case, that use of an illegal tax strategy will be added to the list of offences. If found to be using the EBT scheme illegally, it will prove that Rangers obtained the benefit of paying its players with money it did not have. How can Smith complain about penalties that have not been levied yet?

We all know this stuff already, as I am sure, Mr. Smith does too. There is a studied ignorance that has become fashionable in certain circles of late. They pretend to not understand the facts. In this case, Smith is trying to drum up support for the notion that people have been “kicking Rangers while they are down” and “haven’t we been punished enough”?

Let us be fully aware of the truth: The Rangers Football Club plc has not yet been punished AT ALL for its actions of the last eleven years.

There is a simple way for Sevco 5088 Ltd to avoid all talk of sanctions and punishment. Apply for entry to the Scottish Football League third division without claiming that a transfer of the oldco’s SPL membership has taken place. By not forming any ties to the old club, Sevco 5088 Ltd can avoid any historical liabilities. My guess is that all concerned- the SFA, the SPL, and the clubs would breathe a sigh of relief and would be delighted to draw a line under this disaster. However, time is not on their side. If Sevco 5088 Ltd is to field a team of any description next season, an acceptable solution must be found quickly.

What Now For Rangers?

The announcement that HMRC would oppose the CVA proposal for rescuing Rangers FC is just a few hours old, and I thought that a quick post was due. However, I do not have any new information. I just wanted to move this blog-page along.

As it starts to sink in that The Rangers Football Club plc is now destined to end in corporate failure and liquidation, the questions are coming thick and fast as to what happens next.

The simplest answer is that there are too many permutations to provide a certain path forward. HMRC had previously indicated that they would want Duff & Phelps replaced by BDO as liquidators. I expect that they will want ‘clean hands’ from this point on and that there will be fresh faces atop the marble staircase within a few days. However, it is possible that the liquidators will want to proceed with an asset sale to Green. Other bidders may emerge (or reemerge).

Given the tiny amounts that would be raised in a public fire-sale, it does appear that an asset sale to a newco is almost certain. So a new organisation purporting to represent the legacy of The Rangers Football Club plc will emerge.  However, if they are to be playing in any league next season the asset sale will have to be unopposed. If there are legal challenges to a sale, we could see at least one season without any Rangers-type team.

The focus will soon turn to the SFA and the SPL. The ruling bodies of professional football in Scotland have the responsibility to determine whether a newco attempting to transfer Rangers’ league ‘share’ and SFA membership will be allowed to join the top flight of the Scottish game- and if so- when. What must be clear is that any organisation that has bought another club’s share / membership must also face the punishments that awaited the old club. To allow a newco-Rangers to ditch its legacy responsibilities will be to set an expectation that others can do likewise. The battleground is now going to shift and we can expect a massive effort to convince us that an SPL without Rangers would be unbearable.

A Permanent Embarrassment And An Occasional Disgrace

The late, great Ian Archer wrote the famous words in the title above for an article in The Glasgow Herald in October 1976. Rangers supporters had just rioted in Birmingham following a friendly with Aston Villa. Back then, football clubs generally were shamed by the actions of fans. I doubt that Archer could ever have imagined the scale of boardroom malfeasance that now surrounds Rangers. The revelations of how the club funded its success in recent years make a mockery of our game as a fair sport. The damage done goes far beyond mere trophies. Almost every other club tried to keep pace with Rangers by throwing fortunes at often second-rate foreign players while ignoring the need to develop domestic talent.

When making claims about the damage created by Rangers previously, some accused me of exaggeration. Yet after yesterday’s events- including the court drama that overturned the club’s 12-month signing ban- few observers could avoid drawing the conclusion that Rangers are now simply a disaster for the Scottish game.

Sporting integrity has been shredded. Speaking of which- have Rangers complied with the SPL’s demands for access to the commercial documents regarding the ‘unofficial payments’ issue yet? If not- why not? There comes a point where you have to start wondering what documents were destroyed by those “Shred It” machines for which the club has not yet paid.

Scottish football creditors will get almost nothing in the proposed CVA. In the choice of paying football creditors to limit punishment from the SFA & SPL versus the certainty of HMRC refusing to sign off on the deal, Duff & Phelps have chosen to screw the clubs who sold players to Rangers the past year or so.  They will never get the money they were promised. (More on the HMRC’s conditions for a CVA later).

All manner of underhand methods appear to have been a routine part of putting in a shift at the top of the marble staircase for at least a decade.

And now, just when things seemed as if they could not get much worse, Rangers have invoked the threat of mutually assured destruction for the SFA & SPL. As has been well documented elsewhere, going to court to get the SFA’s 12-month registration ban thrown-out places all of Scottish football in jeopardy.  FIFA and UEFA will not take this lying down.

In all of this pandemonium, there has not been anything vaguely like an apology from the club or the individuals responsible for leading our game to the precipice. There has been nothing except snarling arrogance plus a stream of veiled threats and intimidation from people who should really know better.

Throughout this entire saga, I have not wanted Rangers expelled from Scottish football. I did not think that it was even remotely possible and I would have questioned whether it would have been in the best interests of the game. I did want an acknowledgement of what happened. I did want meaningful punishment. However, there comes a point where enough is enough.

Is the SPL such a roaring financial success that its current formula must be preserved at all costs? No. Is it possible that with the dead-weight of Rangers’ boots lifted from the Scottish game that attendances at many other clubs will rise along with their fans’ hopes of actually winning something? Absolutely.

Those who argue that Scottish football cannot succeed without Rangers have failed to quantify this fear-mongering. Yet posters on blogs like this one have demonstrated- in numerical detail- just how few additional home fans need to start attending at most clubs to wipe out the benefit of Rangers’ away support. The TV deal? It is not as if it delivers fabulous riches to any club as it stands.  Clubs can trim costs (as they should) and would survive fine in the short-term.  In the medium and long-run, there is every reason to believe that Scottish football would be revitalised. The last time Rangers were in “crisis”, Scottish football thrived- with Aberdeen and Dundee United regularly sharing the spoils, financial as well as sporting, with Celtic during the early and mid-1980s.

There comes a time when Scottish football must act to prevent further damage. In doing so, it has a chance of making the stain of embarrassment less permanent. Of the options available, a one year ban from all competitions would seem to be a starting point for considering apt punishment. The next penalty down the list of official sanctions- exclusion from the Scottish Cup- would be far too lenient for a club that appears to have completed the entire 2011/12 season without paying any PAYE or NIC. Other clubs had to cut costs and make tough decisions to get through the year. Other clubs had to take roughly half of their staff budget and hand it over to HMRC. Even in administration, Rangers got to avoid cutting their playing squad by screwing the British taxpayer over yet again. Allow them off with a wrist-slap and many fans will just see Scottish football as a form of professional wrestling with Rangers FC as the scripted winner.

Thank you- all of you!

If last night was presented in a script, I would have thrown it back at the writers as being too contrived and corny for words.  Just minutes before the BBC broadcast “Rangers- The Men Who Sold The Jerseys” the @rangerstaxcase twitter feed exploded with activity: this blog had won the 2012 Orwell Blog Prize.

I had been asked to prepare a statement in the event of winning and the following was read out by the writer Sean Dodson:

Winning the Orwell Blog Prize is both a tremendous surprise and a great honour. The quality of writing from the other short-listed candidates was just so high that I did not really think that my blog stood much of a chance.That rangerstaxcase would win a prize named for George Orwell is particularly apt. Orwell created the lexicon for fighting back against the interests of powerful individuals and a co-opted media. Over the last decade, prominence and wealth were able to silence the story of what was really happening within Rangers FC. The story of how a single businessman could bend the banking, football, and newspaper businesses in a small country to his will is a microcosm of the dangers lurking within all free societies.
The blog answered a need for the facts when it was obvious that the Scottish media had no interest in taking on the vested interests who wanted this story kept under wraps. I would like to thank all of those people who have contributed to the debates on the blog and I am especially grateful to those brave individuals who have made it possible for me to tell the truth about this story.

Tonight is important for the Rangers tax case in two major respects. In addition to the Orwell Blog Prize, BBC Scotland will broadcast a documentary tonight entitled: “Rangers- The Men Who Sold The Jerseys”.


A project that was born out of frustration at the Scottish media’s refusal to investigate this story comes to an end with the finest investigative journalist in the country, Mark Daly, laying out the facts on television for the whole country to see. To watch this project achieve its primary goal and to receive this award on the same night is truly something special.

Thank you to the judges, to the other entrants and shortlisters, to Alex Thompson at Channel 4 News, and to my long-suffering family who have provided tremendous support while working on this project.
Speak up: individuals can make a difference.
I want to start naming names and thanking the best contributors to this site. However, there are just too many of you and I dread the idea that I would leave someone out. As most of you write on here under pseudonyms anyway, it is best to avoid a long Oscar-style list of names. You all know who you are.  This blog would not have had any impact without the debates and discussion that you all contributed so much towards. Thank you.

Doncaster Dooms SPL

Neil Doncaster’s intelligence-insulting interview on SSN this week places another few pieces of the jigsaw together as to how plans are shaping up to deal with Rangers’ corporate failure. Other blogs have already dissected this interview very well, so I will not dwell on the details. Instead, we will look at what is shaping up as the plan “to fix” Scottish football.

As we have discussed for several weeks, Doncaster wants Rangers in the SPL regardless of how much they owe HMRC or other football clubs. He wants them in the SPL regardless of whether cheating on a massive scale has occurred or not. Doncaster’s attempt to bluster his way to getting acceptance for the idea that a CVA and a newco-Rangers are the same thing is just stunning in its gall.

Doncaster is a key player in this dance. Therefore, I assume that he has been made aware of the Duff & Phelps plan. His interview this week was simply a crude attempt to blunt the impact of any accusations that might be contained within the BBC Scotland documentary to be aired on Wednesday night at 8pm. Either through an incredible degree of cynicism or playing the role of useful idiot, Doncaster’s cheer leading is key to a plan that will do more to destroy the Scottish Premier League than any loss of income from the temporary absence of a Rangers-type club could ever do.

One must assume that Doncaster is actively delaying the report on the dual contracts. It would take less than twenty minutes for any lawyer to see that there is a prima facie case against Rangers FC. Demonstrating a prima facie does not require looking at every piece of evidence or even getting close to providing proof. It is literally a check that “on the face of it” there appears to be something behind the allegations. Doncaster denies that there is a “go slow” instruction on this investigation. In the fullness of time, it will become clear that something is amiss.

The law firm of Harper McLeod have been hired by the SPL to investigate if a prima facie case against Rangers on the dual contract issue exists. Let me help Harper McLeod out a little.

On 28 July 2001, Rangers played Aberdeen at Pittodrie. Rangers won the game 3-0. Making his league debut that day was a German who would later go on to become General Manager of Bayern Munich, Christian Nerlinger. He also scored one of the goals. That game against Aberdeen marked the first game where the EBT scheme that is the subject of the ‘Big Tax Case’ interfered with the Scottish Premier League.

Harper McLeod should take a look at Nerlinger’s contract filed with the SFA. Next they should obtain Nerlinger’s contract documents and payment history from Rangers FC (IA)’s administrators. Comparing the contract to the payment history alone will expose payments of well in excess of £1 million that are not listed on his SFA-registered contract. There is your prima facie case, Mr. Doncaster. There is no need to investigate any further to demonstrate that Rangers have a case to answer and that an independent inquiry is required.

It seems clear that Doncaster just does not care about the rules. He just wants a Rangers in the SPL next season. My thoughts on how this will most likely end are laid out below.

Talk of a CVA is just window dressing to appease the less realistic element of the Rangers support. Whyte can pledge his shares in the club for £2 safe in the knowledge that a CVA is not going to happen. (Strictly speaking, Whyte himself can always scupper a CVA).

We are heading for a newco of some description. The key point, Mr. Doncaster, is whether Craig Whyte’s floating charge is still meaningful. If it is (and people with more advanced legal training than me cannot find a consensus on whether it will be) Whyte will be content to let this drama unfold. His friends at Duff & Phelps will continue to potter about while reality continues to sink in with the wider Rangers support. In the end, Whyte will play his trump card and call in a receiver who will sell all of Rangers’ assets to a newco for a sum that will go entirely to Whyte- stuffing all of the other creditors. A plan to achieve this outcome would explain a lot of Duff & Phelps’ actions over the last few months.

If Whyte’s floating charge does not support a legitimate debt (and I expect some court drama over this point), then Rangers’ assets will be sold to a newco and the proceeds divided among the creditors. They will be lucky to receive 5p/£ even in this path, but they would not get more in a CVA anyway.

A newco of some form is inevitable. The liquidation of The Rangers Football Club plc is also inevitable. The debate is not over whether the newco will enter Scottish football, but over how. If Doncaster’s dream comes true, and newco-RFC just start playing in the SPL next season without any penalties, then Scottish football is dead.

There are many other possible formulae for a fair outcome. Many Rangers fans want the newco to start in SFL division 3 and play their way to their place in the SPL like anyone else. It is also possible to have the newco pay an “entry fee” over a number of years that would serve as a deterrent to others. It would also serve, to a degree, as compensation for the carnage wrought on the Scottish game by Rangers during the years of Murray’s excesses. There are lots of ways to arrive at a fair outcome. However, the money-men who might own newco-Rangers will not want that and Neil Doncaster has their interests at heart. Sport? Fans? Mere irritations.