The Impact of The Green Trial on The Blue Pound

The company will pay any reasonable professional (including, without limitation, legal and accounting) costs and expenses properly incurred by the employee after the date of this agreement which arise from his having to defend, or appear in any administrative, regulatory, judicial or quasi-judicial proceedings by a third party as
a result of his having been chief executive of Rangers Football Club or the company.”

There has been no end of speculation, on social media, in regard to Green’s charges. I have consistently pointed out in three previous blogs, that Rangers/RIFC will be liable for the costs of Green’s defence. Rangers will not be able to hedge their costs with an insurer. No insurance policy will indemnify against criminal charges. The writ has been served, RIFC have responded in writing to the clerks at The Court of Session that they will respond to Green’s petition, and in these circumstances I would anticipate no more than a one-day hearing, with a decision on the same day. This hearing will be listed some time next week or the following week (5-9 October or 12-15 October) prior to the preliminary hearing at Glasgow High Court on October 16.

The QC that RIFC will instruct will make the case that Green engaged in an elaborate criminal enterprise, and that the costs of his defence are an annex of this enterprise. This defence will not be compelling. Green’s defence will almost certainly be on Rangers’ dollar.

The charges against Green are now in the public domain. The writ specifies the instruction of junior and senior counsel.

Junior counsel charge circa £1350 per day, plus VAT, to attend court. A fee of £600 + VAT per hour to take meetings with clients and instructing solicitors, is the norm. Over the course of a legal year (ten months) I would expect no less than £390,000 in fees.

I have touched on senior counsel in a previous blog. £3,500 per day would be the minimum, but costs of £10,000 per day are not uncommon. Note that Green’s compromise agreement includes the term ‘without limitation.’ This will be vigorously challenged in the Court of Session as the QC acting for RIFC will do his utmost to cap costs. I do not expect this challenge to be successful. Entry level for a ‘silk’  will be £840,000 inclusive of VAT. Instruction costs of  £106,000 will take the annual total to £946,000. Should Green elect to engage a silk at £10,000 per day, costs including VAT will be £2.4m per annum with instruction costs of a further £106,000 as a minimum.

Then there are the costs of  the instructing solicitors. I would expect a senior partner, junior partner and paralegal as a minimum at a cost £1200 per billable hour (inc VAT). Two thousand billable hours per annum could run to £2.4m

In my considered opinion, Green’s litigation costs, per annum, will be circa £3.74m – £5.3m. This year’s season ticket receipts (after VAT) are £7.3m. Green’ costs represent between 51.2% to 72.6% of our major source of income. Supporting Rangers for the next 3-7 years will  result in 51.2p to 72.6p of our blue pound going directly to Green’s defence team.

For those who believe my costs are excessive, I would advise that they don’t include any expert or other witnesses that may be called by Green’s team. The charges extend to 20 pages of narrative. Whyte’s defence runs to 100,000 pages of narrative. There could be in excess of 250 witnesses, Each defendant will be cross examined by QC acting for the other 5 defendants. The Police Scotland case runs to 1,000 prima facie documents. The proceedings are likely to be the most high-profile criminal trial held in Scotland in recent years. My upper estimate of seven years may be ambitious.

Green/Sevco Scotland is accused of conducting a fraudulent initial pubic offering by which £22m was raised. Green/Sevco Scotland is further accused of fraudulently obtaining assets, from the IPO, and from administrators Duff & Phelps, to his/Sevco Scotland’s pecuniary advantage of many millions of pounds. He/Sevco Scotland is charged with acquiring equity capital in RIFC by fraudulent means. He is also charged with engaging in a conspiracy to commit fraudulent acts and transgressions relating to the Companies Act of 2006. Issuing a prospectus, listing assets that were obtained by fraudulent means, is an offence.

Imran Ahmad will be tried in absentia. If he remains in Pakistan, or chooses to shop in Dubai or lie on a beach in The Dominican Republic, he cannot be extradited. Ahmad could visit the majority of the Gulf states, Russia and China and remain untouched.

It’s important to stress that Green only spent £2m when buying Ibrox/Auchenhowie and the brand names/crests. £3.5m was raised from creditors by Duff & Phelps. Green then sold these assets to RIFC for equity capital. He then sold this equity capital.

If convicted. the custodial sentence will, in my opinion, carry a tariff of up to 30 years (Fraud Act of 2006 permits a maximum of 10 years per offence). If the sentences were concurrent, as opposed to consecutive, a convicted defendant would be sent down for ten years.

There is also the not insignificant matter of court costs. If convicted, these may be apportioned to the defendants.

I cannot over-emphasise the impact on Rangers finances. The fate of RIFC as a going concern is predicated on the decision of a law Lord at The Court of Session.


Tom Winnifrith on Rangers ISDX Listing

As much as I welcomed Mr Winnifrith’s podcast, I must take issue with any suggestion that Dave King has received any approval or endorsement from The Financial Conduct Authority (FCA). The facts of the matter are that a series of complaints on King’s manipulation of the share price of RIFC, that were submitted in October 2014, were not upheld for further review. However there are other complaints made in January to the FCA. These complaints were made when the share price was at an all time low of 18p on 31/12/14 which led to their acquisition by King’s concert party soon after.

There are therefore two complaints that have yet to be determined by the FCA:

1.Did King and his concert party breach the 30% ownership threshold?

2. Did King manipulate the share price prior to their acquisition?

King has ‘previous’ in share manipulation and in surreptitiously breaching the 30% threshold so as to renege on his obligations to make an offer for all remaining shares, as per the regulations of The Johannesburg Stock Exchange (and The London Stock Exchange Alternative Investment Market). Shares held in his daughter’s name suddenly breached the 30% threshold and proceeded to a 76% holding as a consequence of an acquisition by an ‘anonymous’ third party. Everyone knew that this was the handiwork of Dave King. Ian Gregory Morris, in his capacity as MMI chairman, failed to answer questions on this obvious breach of the JSE rules and regulations. Morris bluffed and blustered on King’s artifice, then quickly reverted to type with a slew of fanciful bullet points about growth and profits, accompanied by a one line statement that no dividends would be paid.

Those who have paid attention to Paul Murray’s statements would have noted his intention to raise capital via ISDX. I agree with Winnifrith’s analysis that a figure north of £15m was the target. I also concur that there is no possibility of any listing when the ownership of assets is in dispute.

I disagree with Winnifrith’s assertion that ownership issues will be resolved by the end of 2016. I have no problem with his assertion that the assets could revert to BDO.

Which leads me to the obvious question. What is the Plan B of the shyster board? Winnifrith calculated that they would require at least £15m to balance the books, maintain Ibrox and provide £1m for players for next season in the Scottish Premiership. King has referred to soft loans, but no-one in his concert party has access to this kind of funding.

Mr Winnifrith reviewed austerity measures such as selling players and closing down our training facilities/academy at Auchenhowie.

The former would be a problem as 10 members in our squad can agree a pre-contract with other clubs in January, with no fee. As for the £665,000 in four acquisitions, only Tavernier and possibly Waghorn would have resale value, but not enough to make any appreciable difference. In my opinion Mr Warburton would vigorously oppose any attempt to sell either player in January or the 2016 close season.

The latter makes fiscal sense, but with this prized asset in dispute would it not be better to use it now as we may not be able to do so in the future?

In a matter of months the ramifications of King’s lies will hit home. A decision will have to be made on the £4.5m in loans that are due in December. There is no possibility of repaying them. The improved match day income, ST and ticket sales should sustain operations until January. Getting by from one match day to the next in 2016 will not be tenable.

The AGM in December should be instructive. King will fly in at great expense to candy-coat the austerity.

Meanwhile Level 5 will issue positive spin to soften the media impact.

In the final analysis, austerity measures will continue for as long as Green remains on trial. Murray had a seven year plan of organic growth and CL participation in 2022. Will he now review his plan and increase the timeline to a minimum of the next decade?

Level 5 and The 4th Estate

In a previous blog ( I highlighted the insidious influence of Traynor & Kerr in the underfunded hostile putsch at Rangers. The club I have supported since I was four when I was more smitten by the theatre and sense of occasion than the action on the park. One notable absentee from Ibrox when he was a child was David Cunnigham King. His police officer father did not take his son to Ibrox and did not allow him to attend on his own. I would argue that the first time King ever set foot in Ibrox, if at all, would have been after he left school with no academic qualifications to serve his apprenticeship with Weir pumps. For King to launch the ‘Generations’ pitch was the height of hypocrisy.

Tuesday evening’s reverse to St Johnstone came as a surprise to many fans. I refer you to Ninjaman’s excellent blog on Bill’s Merlin site for his level-headed analysis that served as our touchstone at the RSL for three years:

Under the much abused previous regime, we managed to prevail against a couple of Scottish Premiership teams, so hopes were high that our new unbeaten team would dispose of St Jonstone. I agree with Ninjaman that we are not good enough to challenge the top six teams in the top tier.

However, Level 5, who are flat out in their promotion of 3/4 Season Tickets, are not prepared to accept that the wheels have come off their expensive campaign at The Herald. Having spent  a small fortune via Chris Union Jack, Matt Lindsay’s puff piece evidently had one eye on keeping the RIFC/Level 5 gravy train well greased.  The Daily Record, who were provided with the Sports Direct termination scoop, are happy to trade puff pieces for Kerr’s insights. Traynor and Kerr set the sports agenda at five of the leading print media, namely The Record, The Sunday Mail, The Herald, The Herald on Sunday and The Evening Times. They also place articles via a select bunch of former executives/players at The Sunday Post and other titles.Barry Ferguson’s contributions are so pro King that many speculate that they are written by Traynor or Kerr.

In a strange Level 5/SMSM parallel universe, the reverse on Tuesday is now a good thing. Apparently we are now closer to CFC than we were prior to Tuesday. The latter statement warrants some scrutiny. If you read between the lines, the clear message is that CFC should start looking over their shoulders as our new team are a force to be reckoned with. The better the team are portrayed, the more likely the fans are to buy 3/4 season tickets.

There is a liquidity crisis at Ibrox. Soft loans will be required to keep the lights on. The shyster board knew this as soon as they took over. Paul Murray, sparing no expense, presented positive bullet points to the well-heeled NARSA convention in California. Forty-five thousand season tickets, with commensurate income of £12/£13m, was central to the Vice Chairman’s pitch. He was hoping for a pledge of at least £5m. He and his wife returned to Glasgow with a tan and little else.

Richard Gough will now be pressed into action in the hope that a real club legend might do better in raising soft loans from NARSA. At this time, only 32,500 season tickets have been sold, which is significantly less than the Paul Murray pitch. Therefore 3/4, 1/2, and end of season bundles will be promoted with a view to putting at least 40,000 in position by season end. It would be much easier to ask NARSA to give generously with 40,000 at Ibrox and a bounce expected due to promotion. Spending £500,000 on Level 5 to gain a £5m soft loan is the current business model. Given that there will be no investment in the team in January, which might undermine 1/2 season card sales, the majority of the promotional spend will be front-loaded.

Ten of the current squad will be free agents and can negotiate pre-contracts in January. The three loan players will return to their clubs. Mr Warburton has done an excellent job in replacing twelve players. He now has to do it all over again with a budget eked out from the money saved from the player payroll.

If you bought in to the Level 5 spin, we have never had it so good.

Hey Jude

I have no idea whether Dave King is a religious man. If he is  I would posit that he has an affinity with St Jude, the patron saint of lost causes.I have dealt with King’s litigious misadventures in other blogs on this site. Green’s legal action is so compelling that many have questioned why King would attempt any defence.

There are three reasons for this. The first is that counsel acting for Green will indubitably seek immediate payment for work done to date by solicitors acting for Green. This will include attending Livingston Police Station, and briefing another solicitor who is qualified in Scots Law. Retaining a QC and his costs for the preliminary hearing will also have to be accommodated.

The second is that counsel acting for Green will seek to ring-fence an amount that would exceed any anticipated costs so as to include contingencies. Two hundred days per annum of any competent QC’s time will run to a minimum of £700,000. When adding fees from the instructing solicitors, the annual costs will be a minimum of £1m and possibly much more. Chris McLaughlin’s estimate of £500,000 was not even close.

The third reason is that the current perilous state of the finances will be exposed should any ring-fencing be permitted. At this point, King would be expected to pony up as it would be a crisis. He could not just dismiss it and file it under ‘holistic’ review.

The sting in the tail is that King was lying all along. He does not have any money, even for a crisis payment.

King will be exposed as a charlatan.

Green’s litigation cover could include defending an investors’ class action suit re IPO

When I wrote my article yesterday, I started from the assumption that King was lying. This is always the best foundation when positing any position. Within 24 hours the truth emerges, and as is the custom with our mendacious chairman, when caught out in a lie or an illegal leak of confidential information, he attempts to conceal his lies by engaging in vigorous legal action. King threw away £50m of his ill-gotten gains on fighting an unwinnable war against The South African Revenue Service. In his short tenure as our chairman, RIFC have had to pay costs to Sports Direct for his corporate malfeasance. This cost the club £400,000. He now plans to throw more of our season card good money after bad. Perhaps someone should draw his attention to the IPO prospectus. I refer him to the following: Directors’ liabilities
Subject to companies legislation, every director and former director shall be
indemnified by the Company against any liability attaching to him in
connection with:
(a) civil or criminal proceedings in relation to the Company or an associated
company (other than a liability incurred in defending proceedings brought
by the Company or an associated company in which final judgment is given
against the directors);
(b) criminal proceedings in relation to the Company or an associated company
(other than a fine imposed in such proceedings, or a liability incurred in
defending proceedings in which the director is convicted and the conviction
is final);
(c) regulatory action taken by or a regulatory investigation by a regulatory authority
in relation to the Company or an associated company (unless a sum is payable
to a regulatory authority by way of a penalty in respect of non-compliance with
any requirement of a regulatory nature (however arising));
(d) any application for relief:
(i) under sections 144(3) or (4) of the 1985 Act or 661(3) or (4) of the
2006 Act (power of court to grant relief in case of acquisition of shares
by innocent nominee), or
(i) sections 727 of the 1985 Act or 1157 of the 2006 Act (general power
of court to grant relief in case of honest and reasonable conduct),
unless the court refuses to grant the director relief, and the refusal of relief
is final; or
(e) civil proceedings in relation to an occupational pension scheme of which
the Company is a trustee in respect of liability incurred in connection with
the Company’s activities as a trustee of the scheme (other than a fine
imposed in criminal proceedings, a sum payable to a regulatory authority by
way of a penalty in respect of non-compliance with any requirement of a
regulatory nature (however arising) or a liability incurred in defending
proceedings in which the director is convicted and the conviction is final). Insurance
The directors may purchase and maintain insurance for a person who is, or was at
any time, a director, officer or employee of the Company, any company within the
Group or, any other body in which the Company is or has been interested of the
Company against any liability incurred by such persons in respect of any act or
omission in the actual or purported execution or discharge of their duties or in the
exercise or purported exercise of their powers or otherwise in relation to their
duties, powers or offices in relation to the Company or any such other company,
subsidiary undertaking or pension fund.


It is unequivocally stated in in clauses A&B that RIFC must pay for Green’s legal expenses. Furthermore, should Sheikh Imran Ahmad be compelled to face trial, his expenses will also be met by the company.As for insurance, this evidently was not purchased or maintained, and as I pointed out yesterday,any policy would have caveats that clearly stated that serious criminal charges were outwith its purview. Some commentators have inaccurately interpreted (b). This precludes paying the costs of an appeal.

No matter how much money King throws at it, RIFC will have to pay Green’s litigation costs.

However there is another legal action that few have had the foresight to recognize. There is the distinct possibility that the IPO was predicated on misappropriated assets. If this is the case, the legal costs of defending Green from an investors’ class action suit would render RIFC insolvent.

The clear and present danger of Green’s litigation costs.

Former Rangers chief executive Charles Green is taking the club to court in a bid to get them to pay his legal fees after he was charged with serious organised crime offences.BBC Scotland has learned that Mr Green claims his contract with the Ibrox club entitled him to legal cover during and after his spell in charge.His lawyers have written to Rangers and want a court ruling on the claim.It is understood the fees involved could be in excess of £500,000.The court ruling could happen as early as next week.

The responsibility to cover a director’s legal costs would always revert to the company.This is why companies indemnify against this exposure via insurance. This insurance provides cover during a director’s tenure and, significantly, after tenure.

If the alleged corporate malfeasance occurred during his tenure at Sevco Scotland, then one might reasonably conclude that Rangers had no case to answer.

However, we know that Sevco Scotland was listed as a subsidiary of The Rangers Football Club plc  So in this instance, responsibility would revert to TRFC and to its holding company RIFC.

Director liability insurance would not cover the criminal charges against Green, but it would cover his alleged infractions of The Companies Act of 2006.

The argument of the respondent, Rangers, would be that as Mr Green was instrumental in setting up both RIFC and TRFC then it behoved him to arrange insurance. I don’t see this argument holding up.

In my opinion Rangers (RIFC) will be responsible for his litigation costs. If insurance was in place it would not indemnify RIFC against Mr Green’s criminal charges. Therefore whether insurance was in place or not is a moot point

This could not have come at a worse time. Cash flow is so tight that Rangers are attempting to sell 3/4 ST tickets, courtesy of a promotional package with The Herald and Chris ‘Union’ Jack. I have never come across a 3/4 ST initiative.

As for the costs of Mr Green’s defence, £500,000 is conservative. According to Whyte’s counsel, he has 100,000 A4 pages as part of his bundle. Whyte’s counsel takes the view that the trial could last as long as the Lockerbie proceedings. If this were the case, you could multiply this amount by ten and still come up short.