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.

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18 thoughts on “The Impact of The Green Trial on The Blue Pound”

  1. Frightening stuff JJ, most of my fellow Bears have been revelling in the fact that this is coming to court, whilst I have been telling them it is bad news. Still, the glib one has deep pockets LOL

    1. So evidently this is the wording of the agreement between Green and the old board regarding payment of his legal fees;

      “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.”

      Notice the bit that states “as a result of his having been chief executive of Rangers Football Club or the company”.
      Now I might have this completely wrong but I’m pretty sure that Green could not have been Chief Executive of a company until it was acquired from those handling the sale post administration/liquidation.
      Prior to acquiring Rangers, was not an holding company (Sevco) set up?
      And was not the club transferred to said holding company set up for this sole purpose (sevco) and then once the sale went through then was not the company in is present form set up and the club transferred from the holding company (sevco) to the newco?

      If I am correct in the sequence of events then obviously this would mean that The company in its present form was only ever set up after the actual sale of the club. So obviously no one could have been Chief Executive of the club until after the club was actually bought and handed over by those handling admin/liquidation and if the company in its present form was never set up until after the sale then we need to look at the relation of the charges, see the statement below;

      “FORMER Rangers owner Craig Whyte and ex-chief executive Charles Green have been charged with serious organised crime offences in relation to the acquisition of the club in 2012.”

      Green is charged in relation to the acquisition of the club in 2012, not in running the club, or at a time when he was actually chief executive, but in his involvement in buying the club, this is before and up to the point of sale if I’m not mistaken?!

      Obviously I am hoping for confirmation that I am correct on this but I would welcome any expert opinion on this, and correction if I’m totally on the wrong track.

      1. “Now I might have this completely wrong but I’m pretty sure that Green could not have been Chief Executive of a company until it was acquired from those handling the sale post administration/liquidation.”

        Surely James, CG was Chief Executive of the company from the day it was set up in March 2012? No company was ever acquired from the administrators. He subsequently set up RIFC Plc to transfer the first company to and became CEO of that too.

  2. What the SFA decide to do will be even more interesting based on their finances and being able to complete fixtures and pay bills.

    Mike Ashley will surely rear his head at some point.

  3. BMcG-Language!! FFS

    JJ is correct in all he says regarding these costs and the timescales

    However with the current finances at Ibrox in an awful state without this–Green might be left with no one to pay his costs

    JJ is doing us all good in clarifying points that needed telling—plus the sums outwith the Court costs just don’t add up

    The current day to day running costs cant be met from current income and then there are the costs required to be spent on the facilities at Ibrox and Auchenhowie–the finances are in a terrible state and I believe we shall run out of working Capital/Credit before Xmas

    We also have the ifs/buts/maybes about EBTs and who owns what

    I have no idea where we go from here and wish someone had the answers

    Note the silence from the “Transparent” boardroom

  4. I am not sure how the new auditors can issue a “Going Concern” on the statements when the assets are in doubt as a result of this lawsuit. If Green does win his legal fee case against the club, then the auditors will have to recognize the liability as soon as it can be reasonably estimated which will create an expense on the P&L as well as a liability on the BS statements. This could have an impact on the clubs ability to create a new share offer on the ISDX and in the end, this mess would put the financial health of the club in the hands of Dave King.

  5. If your cost projections are correct to even +/- 50% (or maybe more!) surely the only option in the event of the CoS upholding Green’s claim is immediate voluntary Liquidation?

  6. JJ

    I am sure your figures are correct and they do make sombre reading for those who can actually absorb the enormity of the situation we currently find ourselves in…. costs to defend Green could and probably will cripple us in the future… we are a very cash strapped club and ANY additional cost could tip us over the edge into the abyss.

    I listened to Tom Winnfrith’s blog and while I can understand and agree with several aspects of it…. there were parts where I thought …hmmm, for someone in the know, there were several glaring omissions from his transcripts. Like you, I have no idea where he got the fit and proper go ahead… and naming everyone that has had dealings in the club as … villains… while not even mentioning the real villain of the piece and the only one so far convicted of such…. led me to believe he was treading very carefully and not telling things as they really are….I am no AIM whiz… but ffs I know a stink when I smell one ….and Glib & Shameless are fuckin reeking.
    I can in no way agree that Glib & Shameless are hedging their bets around the Green case…. if that’s true they should be in court themselves for being privy to something before it was even announced by the courts…. or is this just the excuse being peddled to make up for the severe lack of investment……. hmmm.

    On the player front, I really can’t understand why people can’t see that loanee’s will disappear when their period of loan is up, that certain players are free to talk and move on when their contracts are up for renewal and that we will lose our best players come Jan/Jul windows….. the sooner we have the League won the better I fear. There is nothing very good when you look at the whole situation without blinkers…. next season will be even harder and even tougher than any previous I fear….. the austerity will continue for the foreseeable future…… this is it and how we are, no matter what the Glib & Shameless followers may say.

    GSTQ

  7. Highly informative as always. Question for the Rangers supporters, what is your view of the SMSM and their ‘everything’s fine’ narrative in the Record, ET, Herald? Is it not in your interests to get them onside in order to explain the dire straits you are in.

    I have explained your predicament over the last few years to my 17/18 year old Business/Economics students in England who have little interest in football let alone Scottish football and without exception their response is ‘why don’t the fans start up a new club’?

    Does anyone have a plausible alternative?

    Given the deals stuck with Ashley et al how will you ever be solvent?

  8. Why does any of this matter one jot?

    It is said that Rangers exists, history intact, having already survived one liquidation event so surely it will survive another…wont it?

    1. The majority of living human beings do not recognise it as the same Rangers with an uninterrupted history.

      Your assertion appears to conflict with law in Scotland and UK.

      Anyone who quotes LNS is fooling themselves.

  9. This is in response to Bob:

    Simply because of the precedents set out by other Football Associations such as the English Football Association in the case of Darlington Football Club, I am one of those who say this is an entirely new club; albeit one that is called Rangers and plays in Ibrox.

    The way I see it, is this club is the spiritual successor to the old one and that this fact should actually be embraced and I have made peace with it. I do not see the point in clinging to former glories when I pay to see new glories and to experience the excitement of that.

    I will probably take a lot of flak for that opinion but it is what I believe and I am entitle to my own opinions.

    Ultimately the organisation that will decide on the continuation of history is UEFA, however they have explicitly stated that they cannot rule nor comment on this until such time as Rangers apply for a license in a UEFA competition. However, since they used the word “authentic” to describe the other teams in Scotland included in FIFA 16, it would appear there may be some further controversy ahead.

    1. JJ
      In common speech a Club is treated as a recognisable entity which is capable of being owned and operated, and which continues in existence despite its transfer to another owner and operator. In legal terms, it appears to us to be no different from any other undertaking which is capable of being carried on, bought and sold.”
      What part of the concept is it that’s hard to understand?
      Do followers of the green and gray not understand the implications they’re facetious ill thought opinions have on they’re own clubs ” history” if they were indeed considered to have merit in the real world.
      I’m sure Lord Nimmo Smith must chuckle when he hears the various interpretations of his judgement by our obsessed followers.

      I fail to understand though why ANY Rangers fan would be tempted into agreeing with this “new club” fantasy?
      perhaps you can enlighten me somewhat?

  10. Starting a new club is no small thing – especially when it would be condemned and undermined by the current regime, fan groups, MSM etc.

    However, it does surprise me that genuine fans do not demand more from the MSM and especially the BBC. After all they a trained and paid to investigate. Instead they produce the most ridiculous, fawning pap for every chancer that arrives at Ibrox. Any self-respecting fanzine would be embarrassed to print such childish nonsense.

    If I was a Rangers fan I’d be organising and picketing the BBC, SKY, STV for serious reportage of what the hell is happening at my club. King, Murray etc would not get away with prepared statements, broken promises and frequent contradictions. Let’s remember that this is a public company – not some backwater golf club.

  11. CC the fans have been boycotting and protesting like when the beeb aired the men who sold the jerseys, or when some of the press picked up on the bampots questioning claims of “wealth off the radar”. Or again when one or two of the press questioned Charles Green’s motives. If they don’t like what they see/hear/read then its Rangers Hating propaganda even when the evidence can be found with a little independent digging.

  12. Hi John,

    Your blog is incredibly informative and quickly becoming essential reading.

    I’d just like yo pick out one thing that possibly muddies the waters a little.

    You state that Sevco (Scotland) are alleged to have fraudulently acquired the assets of Rangers FC.

    Unless I’m mistaken, Sevco (Scotland) is now known as The Rangers Football Club Ltd, so I’d say in the interests of clarity, it was The Rangers Football Club Ltd, the current SFA member club, who allegedly obtained Rangers FC’s assets fraudulently.

    I’m open to correction if that’s wrong.

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