“The Board of the SPFL notes today’s judgement of the Supreme Court. We will now take time to examine the judgement in detail and to consider any implications for the SPFL.”
A clear statement of intent by the SPFL? A measured response? Should one take this statement at face value one could envisage countless hours of cross-referencing the Supreme Court’s ruling with the findings of Bill Nimmo Smith’s kangaroo commission. One could weigh up the merits of defending the indefensible. One could take pause to look at any exposure that might result if a truly independent review was established, such as the underhand decision to exclude the illegal DOS/VSS scheme from Nimmo Smith’s deliberations.
Can one see in one’s mind’s eye Neil Doncaster burning the midnight oil, with all his neurons to the pump, as the scandal at Rangers erupts around him? Well allow me to disabuse you of that notion. The day after the shit hit the proverbial fan Neil Doncaster was on the Virgin Atlantic VS71 from Glasgow to Orlando.
One might reasonably conclude that he could not give a flying fuck apropos the implications of BDO’s appeal being dismissed.
Or perhaps I am being unkind. Was he on a mission to solicit the wise counsel of Mickey Mouse?
As Doncaster sips screwdrivers on his sunlounger trying to fend off a revealing semi in his budgie smugglers, someone with a screw loose has entered the fray. To use the Glasgow vernacular, is King the full shilling? He is a sandwich short of a packed lunch at Subway. His statement, in his self-imposed carpetbaggimg concert-party capacity as chairman of Rangers Lite’s holding company, seems to have been written by a drunk who has just landed on his head after an ill-judged ride on a mechanical bull. The Glib and Shameless liar knows no peer in the art of sophistry:
” Personal statement by Dave King to Rangers supporters on the “Big Tax Case”
THIS statement is made in my capacity as a former director and shareholder of Oldco to provide supporters with the true position following the final tax ruling and to correct any false impression created by David Murray’s conflicting evidence in the Craig Whyte trial. It is unfortunate that we have already witnessed typical bouts of hysterical reporting from certain sections of the media and we should continue to ignore those responsible by boycotting their publications and outlets.
The Celtic board issued a statement agitating for a re-opening and reversal of the decisions previously made when, in fact, nothing has changed. It is disappointing that they have attempted to influence the footballing authorities to alter its historic football honours by calling on administrators and lawyers to achieve off the pitch what its teams failed to do on the pitch.
As an investor and board member during the period of the so-called benefit I can categorically assure all supporters that the Club received no benefit whatsoever. The opposite is true as the effect on the Club was wholly negative. It was charged huge sums for advice from other Murray Group entities and it bore the consequences when that advice proved inadequate. Every single player that was signed during that period would have been signed whether the Murray Group tax scheme was in place or not. The real beneficiary was the Murray Group.
All board members were aware during that period that we were often deliberately spending more than we earned and this was reported in the annual financial statements. The cash needed to fund any shortfall came from share placements, shareholder loans, and third-party bank finance. As David Murray was personally dealing with transfer expenditure, I sought assurances in a board meeting each year that he would stand behind any deficit that could not be immediately funded if he over extended in the transfer market. He gave these assurances and he honoured them until the Murray Group got into financial difficulty.
Put simply, the Murray Group tax scheme helped David Murray reduce his overall investment into Oldco while simultaneously reducing any reliance on increased third-party bank finance. The benefit went exclusively to David Murray and the Murray Group. Whether the scheme was in place or not, or whether it survived tax scrutiny or not, made no difference whatsoever to the playing squad of the Club during that period and hence had no impact on the performance on the pitch. We won all of our titles fair and square.
A good analogy of what happened at the time is the present position following regime change. As we rebuild the squad we are deliberately and transparently spending beyond our income. Once we commit to expenditure it is my job to secure the required funding. If I create a scheme (as David Murray thought he had) that reduced the amount of cash needed to support the Club then I would save on my required investment – but the Club and the player squad would be exactly the same.
For the avoidance of doubt, I am not looking at such a scheme. Given the negative consequences for the Club of such financial engineering in the past, I cannot conceive of any circumstances in which that might change. While I am Chairman, Rangers’ overspending will always be on a sustainable and robust basis and one that safeguards the future of our Club.
It is reassuring to note that the SFA promptly and correctly put out a statement confirming, against Celtic’s attempt to influence, that the final tax ruling has no impact whatsoever on the practical and legal findings already made. This is now another matter that we can finally put behind us.”
If there are occasions when the resolve of those agitating for change is less than robust, just remember that this career criminal thinks he can get away with this. His claims that Rangers would have fielded the same team is palpable nonsense. Is King congenitally stupid or mentally ill? He really needs to lie down on a sun lounger with Neil Doncaster, and for good measure Stewart Regan who seems to have been bullied into submission by King. The rumours that surfaced of the meeting between King and Regan are worth revisiting. Did King really threaten to dissolve Rangers Lite if they were not given a UEFA licence? Given that Regan prepared his Supreme Court response in advance, did he run it by King? King’s statement smacks of collusion.
King’s farrago of lies brings into sharp relief the fact that he and his board transgressed FFP regulations. Andrea Traverso at Syon has been conned by the SFA. The unaudited management accounts that the SFA used to underpin Lite’s application are not worth the paper that they are printed on. Regan has allowed a team riding a horse and coaches through FFP regulations to participate in UEFA tournaments. He perjured himself in 2011 when he lied that the DOS/VSS tax levy had not crystallised. Regan is a Rangers-facing jobsworth of the first ordure.
Let’s reacquaint the slow on the uptake with the facts. EBTS should have been fully registered with the SFA. Registration is a deterrent to the practice of under the counter payments. The prosaic facts of the matter is that Rangers paid players under the counter using EBTS as the modern equivalent of manilla envelopes stuffed with cash.
The Registration breach that LNS considered was predicated on the premise that no unlawful payment had been made. We now know that this premise was built on sand. LNS asserted:
“There may be extreme cases in which there is such a fundamental defect that the registration of a player must be treated as having been invalid from the outset. But in the kind of situation that we are dealing with here we are satisfied that the registration of the Specified Players with the SPL was valid from the outset.”
Nimmo Smith contended that payments were lawful when they were clearly under the counter and unlawful. If one takes his argument, and introduces the facts as revealed in court, what we now have is a number of extreme cases stretching over ten years or more where players ineligible from the outset were fielded.
This is why a review is anathema to the SFA. Taking on a Klan incited by a lying cheating criminal to impose sanctions on Rangers is the least of their problems. King will be safe south of the Limpopo as he marshals his even dumber paramilitary wing, The Sons of Strewth, to invoke the spirit of the Hearts Riot. The SFA were asleep at the wheel. They could have averted this car crash with good governance, not the nods and winks as Rangers ran rampant.
I defer to the Rangers Tax Case blogger for the following article, which is the perfect rebuttal to the career criminal’s self-serving bullshit. I have added bold and on one occasion red typeface to emphasise some of the central messages in his piece. Please take pause to read and re-read this article if the truth is important to you:
“To really understand this tale, and its impact on Rangers FC, we need to take another look at the ‘side-letter’ issue. For it was the decision to use, and then hide, these documents that lit the match that lead to Rangers’ self-immolation.
Between 1999-2003, faced with a resurgent and share-issue funded Celtic, Rangers started seeking an edge by lowering the taxes it had to pay on players’ wages. This began with the operation of a Discounted Options Scheme for players. In essence this was a ‘money box’ operation and Rangers began what would become a pattern of lying/forgetfulness (delete as you think applicable) towards HMRC and violating the rules of the Scottish football authorities. Reducing wages in a player’s official contract would result in reduced PAYE and NIC taxes. The rest of his promised wage would be paid with little or nothing deducted for tax through an elaborate ruse intended to disguise the fact that employment-related pay was being channeled to players. Football had become a cut-throat business and an out-of-form or injured player could not rely on a handshake to ensure that he got his full promised pay. So Rangers provided players using this scheme with secret ‘side-letters’ that promised additional payment.
Denying the existence of the side-letters was key to making the “Wee Tax Case” scheme appear to work. Lying/forgetting (delete whichever one you think is implausible) about the ‘side-letters’ was also key to the story of the “Big Tax Case”. It was this fundamental deceit/omission (delete as you see fit) regarding the ‘side-letters’ that would seal Rangers’ fate.
The ‘Big Tax Case’ dealt with Rangers’ part of the Murray Group Management Remuneration Trust (MGMRT) that used Employee Benefit Trusts (EBTs) from 2001 – 2011. A Mr. Black, an important and influential figure at Rangers during the period when the EBT scheme operated, was reported as saying at the First Tier Tax Tribunal “So far as Rangers was concerned it enabled the Club to attract players who would not otherwise have been obtainable”. His reasoning seems pretty straightforward to everyone except the Scottish media and a cabal who appear to have been assembled by the SPL in 2012 to try kill off the idea of removing Rangers’ ill-gotten titles. Establishing Mr. Black’s identity and role in all of this would have been both important and trivially easy for the SPL’s Nimmo Smith Commission. Yet its findings overlooked Mr. Black’s submission. Some might believe this was regrettable.
As with the ‘Wee Tax Case’, the ‘Big Tax Case’ relied upon the use of secret ‘side-letters’ in a laughable attempt to create a “non-contractual” promise, in writing, of money in exchange for services. It would have required a revolution in legal thinking to have the ‘side-letters’ considered as being anything other than binding contracts. Therefore, their existence had to remain a secret from both HMRC and the football authorities. The ‘side-letters’ promised- often specifying appearance pay and win bonuses- money that would be paid into an offshore trust. From their sub-trusts, players could “borrow” money but, in reality, never repay it.
With Rangers already ringing alarm bells for their debt levels and staggering losses during much of the affected period, the idea that more money would have been found to pay these players legally at the same level is just fatuous. There is no serious argument to be made that Rangers’ team would have been the same had they reduced the net paid to players by about 30% in some years.
On multiple occasions after 2004, HMRC asked Rangers if such side contracts existed. The denials from the club were forthright and frequent. No such ‘side-letters’ existed. Accordingly, these binding contractual documents were not sent to the SPL despite player registration and eligibility to play in league games being conditional upon all documentation related to all forms of payment to players- including even legitimate loans- being submitted for each player. (SPL rule D1.13). The existence of the ‘side-letters’ would not be exposed until the City of London police raided Ibrox in July 2007 as part of an unrelated suspected fraud investigation that did not result in any charges. Heel-dragging and evasive responses on how Rangers were operating the scheme continued.
For all the fuss and ink spilled discussing these subjects in the media, ‘the debate’ has always missed the significance of this issue.
To understand the importance of hiding the ‘side-letters’, let us look at the counter-factual case of what would have happened if directors of The Rangers Football Club plc (as it was then known) had fulfilled their statutory duties to ensure that the club was compliant with its tax and regulatory obligations. We can start by looking at the “Big Tax Case” in isolation and consider that HMRC explicitly asked for an explanation of how the EBT scheme operated at the start of 2004. This was the first of several points where Rangers’ representatives missed a golden chance to remove any doubt over the legality of the way they were operating the scheme. Instead, they dissembled, misled, and withheld. Had they answered honestly/completely (delete as you see fit), Rangers would have been presented with a tax demand immediately. Rangers would have certainly appealed the bill and a tax tribunal would have been scheduled. With fewer participants and much less documentation, such a tribunal would have been conducted quickly. Even allowing for appeals, had Rangers not misled HMRC and the Scottish football authorities, the nature of Rangers’ use of EBTs and ‘side-letters’ would have been a matter of public record by late 2004. Whether the scheme would have been determined to be legal or illegal at this time is beside the point. If ruled to be legal, every other club in Scotland would have been free to copy the scheme and the sporting advantage would then have been lost in 2004.
Any investigation of these matters that ignores the difference in information available resulting from deliberately breaking the rules versus complying with them is not fit for purpose.
Had Rangers’ use of EBTs been ruled to be illegal in 2004, the club would then have faced a tax bill of about £12m. While not trivial, this amount would likely have been found at the time from the club’s or the Murray Group’s then substantial credit lines. In 2004, such an amount would not have presented much of a threat to the club’s existence. More significantly the £35m that would be later paid in net wages by Rangers through the EBT scheme from 2004-2011 would have been either been cut roughly in half or the club would have gone into insolvency much earlier than it did. Rangers were straining financial credulity as things were. Paying the money owed and then grossing-up the EBT wages for every player was not an option. Better players would have had to have been sold to reduce the wage bill and to cover costs for those who could not be moved on.
On 22nd May 2005, Rangers defeated Hibs at Easter Road to win the SPL by a solitary point with Nacho Novo scoring the only goal of the game. Every single Rangers player who participated in the game received payment through an EBT.
Three transfer windows had closed since HMRC’s initial enquiries about the workings of the scheme. It is just blind denial to suggest that the same team would have been on that pitch that day had Rangers provided honest/complete (delete etc.) answers to the initial information requests. Game after game. Season after season. The results were driven by the players on the pitch who in turn were induced to be there, despite some hollow claims to the contrary today, by the their total net earnings.
What is absolutely clear is that the denial of the existence of the ‘side-letters’ gained Rangers a massive sporting advantage. Violating the SFA & SPL rules delayed the normal processes for determining the legality of the scheme. Violating SFA & SPL rules prevented other clubs from learning about the scheme through the normal tribunal process. However, the delay in revealing to HMRC how the scheme worked also set the financial trap that would make Rangers unworthy of investment. Additionally, the ‘Wee Tax Case’ would have been resolved over a decade earlier had the workings of the scheme been revealed to HMRC on cue.
In the spleen venting and venom spitting that accompanied Rangers’ collapse, anger and rage has been sprayed in every direction except where it properly belongs. Boards of directors are formed explicitly to provide oversight over those with their hands on cash register. A good seat for the game and a chance to network in the Blue Room are not good reasons to accept a directorship at any company. Yet Rangers fans, and a lapdog media, have not held a single director of the now in-liquidation Rangers to account for their actions or inaction related to these tax schemes. Two of them have been handed the keys to Ibrox again.
It must surely have taken extraordinary circumstances for Dave King and Paul Murray to have been given so much trust on so little basis. Time will tell if the current wave of sycophancy towards a Rangers board is again ill-considered.
One of the few mistakes we made in analysing Rangers during the last four and a half years was in over-stating the role of the “Big Tax Case”. During David Murray’s tenure as effective owner of Rangers, the club lost a sum in excess of £140m. (depending on whether you want to include accounting tricks for asset revaluation or not). None of it came from David Murray personally. He organised the finest Tom Sawyer “painting the fence” trick in Scottish business history and convinced many fools to pay for his bombast. The biggest fool of all was the Halifax Bank of Scotland (HBOS). About £70m of this incredible loss would be taken up by the bank directly or indirectly through Murray Group debt. (Though they would recover £18m of this through the sale of Rangers in 2011). The reality borne out of such horrendous losses is that Rangers were poised for collapse. After Lloyds effectively pulled the plug on the Murray Group credit lines on taking over HBOS in late 2008, it was just a question of when. The last years of automatic qualification for the UEFA Champions League group stages in 2009/10 and 2010/11 by virtue of being Scottish Premier League champions provided enough cash to stave off insolvency in those years. At the time Rangers’ Chief Executive Martin Bain warned “We must however take cognisance of the fact that Scotland’s diminishing European co-efficient means that there is no longer automatic qualification to the Champions League from the SPL or the significant revenues participation brings.” Defeat to Malmo in the qualifying rounds for the 2011/12 tournament meant no Champions League group cash would be heading to Ibrox that season. The die was cast on the 3rd of August 2011. Craig Whyte’s tenure had barely begun, but insolvency was already guaranteed before the end of the 2011/12 season. With more than a hint of irony, Rangers FC were able to complete the 2011/12 season for a single reason: money destined for HMRC as PAYE, NIC, and VAT was used as working capital to pay wages and other bills that could not be delayed. Had the club paid its way on-time, insolvency would have occurred around late October 2011. It is highly doubtful that the club could have completed almost an entire season in administration. Certainly, it would not have been possible to liquidate Rangers and form a new club mid-season and pretend it was the same club. Selling Nikica Jelavic for £5m in January 2012 provided the money to fund administration and complete the 2011/12 season.
It seems improbable that we would be having the ‘same-club’ debate today other than for Craig Whyte’s diversion of taxes to keep the show on the road.
What role did the tax case(s) play in all of this? The most important point in this entire affair is that Rangers’ failure to disclose the ‘side-letters’ allowed the situation to build to a point where there would be no escape from the inevitable insolvency. The evasiveness over ‘side-letters’ meant that a CVA was always unlikely. The use of taxes collected in season 2011/12 as working capital just banged down the lid on the coffin and made liquidation a certainty. The window for saving Rangers was in 2004. With every passing season, David Murray’s reckless spending and his board’s failure to implement spending cuts, the tar pit that was waiting for Rangers just got deeper and stickier. Only in the past few weeks have we seen the emergence of a most gentle repudiation of the disastrous David Murray years in the Scottish press. Scottish football has been slowly recovering from the effects of trying to compete with Murray’s ways. Yet there are some in positions of supposed influence at Hampden who seem to be actively trying to recreate this period rather than ensure it can never happen again.
This project (RTC) began out of incredulity that the biggest story in the history of Scottish sport, the impending insolvency of Rangers FC, was not getting press coverage. This blog had one primary objective- stimulate a mainstream media discussion of what was really happening. That objective was achieved, briefly, in the summer of 2012. I thank all of you who contributed and assisted with making this possible. Sadly, any hope that the Scottish mainstream media would find redemption is long gone. Faced with crashing circulations and declining radio advertising rates, they have retreated to the comfort of familiar ways. If anything the press have become even more uni-polar and afraid to speak truth to Rangers’ often bellicose fans. It is perhaps unfair to criticise them on this last point from the comfort of anonymity.
This is not a subject where people will be swayed by persuasive argument. Almost anyone who cares about these matters will already have a fully formed opinion that will now be closed to reasoning. So the arguments will continue to rage on into futile infinity. However, anyone who can still be objective would be able to see that Rangers died by its own hand. What should have been a moderately important tussle with HMRC in 2004 festered into a calamity by the actions and inaction of those who ran the club.”
As Alex McLeish asserted Rangers would not have won the league on this occasion by a solitary point had it not been for the input of his EBT All Stars. When Hugh Adam revealed that Rangers were cheating, King and his board dismissed him as a rambling old fool and cheated some more. If The Glib and Shameless Liar is the best the camp to retain the titles can muster, title stripping is a shoe-in.