Come Fly With Me

Dermot Desmond at one time held a majority interest in Execujet Aviation Group (EAG) which solicited brokerage fees from its insurers of £920,000. A leaked memo is instructive:

By having the monies paid into the Isle of Man entity EAG [Execujet Aviation Group] are not required to pay Swiss tax on the income of around 22%.”

According to the leaked emails, that cash was funnelled straight from the Isle of Man back into Switzerland, apparently tax free, on instructions from Execujet executives in Switzerland.

It should be noted that there is no smoking gun linking Desmond with this tax artifice. This switch from Switzerland to the Isle of Man yielded a tax advantage of £202,400. One assumes this was an annual arrangement.

Mark Daly from BBC Scotland was the lead investigator on this narrative and a slew of other narratives apropos leaked memos from offshore tax havens. These memos are collectively known as The Paradise Papers. Mr Desmond responded with the following missive:


There would appear to be an agenda at BBC Scotland to tar Celtic with the same toxic tax-evading brush as the company formerly known as Rangers Football Club (RFC). A Moral Equivalence if you will.

Mr Desmond’s question as to the team Daly supports is rhetorical. Mark Daly is a Hun of some renown. However he is not as bitter as the Director of BBC Scotland, Donalda MacKinnon. Let’s put this in layman’s language that cannot be misconstrued:

There is a hierarchy of Huns at BBC Scotland. There is a causal link between this hierarchy and a selective recruitment policy that mimicked the ‘No Catholics’ policy at the former RFC. 

If one kicks with the wrong foot as it were, any aspirations for an executive role at BBC Scotland will soon be dashed on the rocks of WATP expediency. This is not to say that a couple of ‘taig‘ journalists will occasionally slip through their sectarian net, but they operate under a Protestant glass ceiling.

Not convinced? Compare and contrast how BBC Scotland rolled out the red carpet to Graeme Souness and the doorstepping of Desmond. Souness was given a £30,000 EBT bung by Rangers for buying their players. The Taylor Commission accused him of transfer irregularities. The thug, who could play a bit, has long been on the take.

Compare and contrast Desmond’s doorstepping with the number of pundits with EBT’s taking the licence payers coin at BBC Scotland.

Has Dave King ever been doorstepped by BBC Scotland. He should be. His aviation subterfuge in 2007 led all the way to The South African Supreme Court of Appeal. The following is taken from the court transcript:

A Falcon 900B executive jet has been languishing at the Dassault maintenance facility at Le Bourget Airport near Paris, France, since 3 April 2003. The respondent, the Commissioner for the SA Revenue Services, wishes to have the Falcon (with registration number ZC-DAV) sold and the proceeds kept in trust pending the finalisation of an action instituted by the Commissioner against one David Cunningham King and a number of corporate entities. The Commissioner contends that King and a company of his, Ben Nevis Holdings Ltd, have a substantial income tax liability and that the other defendants were, and are, being used by King to conceal his assets. (King was assessed to tax for more than R900 million and Ben Nevis for more than R1 400 million as long ago as February 2002.) One of these companies is Carmel Trading Co Ltd, the present appellant, and the only entity opposed to the sale of the Falcon.

The Falcon has always been and still is registered in South Africa with the local civil aviation authorities in the name of Hawker Air Services (Pty) Ltd (‘HAS’), a company liquidated by order of this Court on 31 March 2006. The holding company of HAS was Metlika Trading Ltd. HAS was an equal partner with Hawker Management (Pty) Ltd (‘Manco’) in a partnership known as Hawker Aviation Services Partnership and the partnership was the beneficial owner of the Falcon. However, Rand Merchant Bank (‘RMB’) is said to have been an undisclosed partner holding a 99.8 per cent interest in the Falcon. The Commissioner has an additional VAT related claim against both HAS and the partnership of some R73 million.”

King, the beneficial owner of Carmel Trading Company, was attempting to make a case that the jet was not within his gift. It’s instructive to note that King used his jet as collateral at Rand Merchant Bank. The unanimous findings of five Supreme Court judges continued:

On 3 September 2002, Hartzenberg J issued a preservation and anti-dissipation order in relation to the Falcon. Such an order, which interdicts a respondent from disposing of or dissipating assets, is granted in respect of a respondent’s property to which the applicant can lay no special claim. To obtain the order the applicant has to satisfy the court that the respondent is wasting or secreting assets with the intention of defeating the claims of creditors. Importantly, the order does not create a preference for the applicant to the property interdicted.

But on 5 September 2002 and in spite of the order Carmel ‘took over’ the interests of RMB and Manco. Carmel’s attitude was that since it was not bound by the order it could do so. Under normal circumstances such a taking over would have had the effect of putting an end to the existing partnership and creating a new one. In a later judgment on 18 February 2003, Hartzenberg J extended the preservation and anti- dissipation order and ordered Carmel to return the Falcon to South Africa.2 (The Falcon had previously been flown out of the country for fear of an attachment by the Commissioner.) He held, in the course of his judgment that the sale of the interests in the Falcon to Carmel was ‘a contrived transaction, in fraudem legis, to by-pass the preservation order’ and that Carmel was but a tool of King and under his direct control.”

Career criminal King had engaged in a blatant fraud. Colour me surprised. However King followed this up with some perjury:

The Commissioner (of SARS) earlier had sought an order implementing the order to return the Falcon to South Africa pending the finalisation of the said appeal. This had been refused, in part because of a perjured affidavit filed on Carmel’s behalf that the Falcon was safely stored and protected in a hangar at Le Bourget. Another reason was that the aviation authorities had grounded the Falcon on 3 April 2003.

 The Falcon remained put at Le Bourget and this led to a contempt application against, amongst others, King, HAS and Carmel. King, conveniently, had resigned as director of HAS and this, according to Botha J (who heard the contempt application), meant that he could not be held liable for the breach of the order by HAS. After the dismissal of the contempt proceedings King was reinstated as the sole director of HAS. In any event, since the respondent parties involved ‘displayed a willingness to cooperate in bringing about the return of the Falcon to South Africa’, Botha J held that in consequence a committal would be inappropriate. He made an order that would ‘hopefully have the effect of bringing the Falcon back’. It did not. Metlika, who was supposed to provide the finance for the return of the Falcon, withdrew its financial support; Carmel refused to make any funds available for returning the Falcon; and Carmel refused to give consent to the sheriff to return the Falcon to South Africa.”

Note the use of a perjured affidavit and King’s corporate shenanigans. Are you paying attention Lord Bannantyne? King thinks nothing of lying in an affidavit. So what did King do next. He attempted to register the jet in Mauritius. The High Court stepped in to put an end to this attempt to stop SARS disposing of King’s asset. As to the value of King’s attempted fraud and the exchange rate at the time, circa £20m would not be far off the mark:

At the time of the preservation order the value of the Falcon was in the vicinity of R200 million. The Commissioner for SARS also alleged that King’s apparent attitude is that he must at all cost prevent the Falcon from being brought under the control of the court in the hope that something may happen which will make the Falcon or its value available to him in a foreign country. And, concluded the Commissioner, failing this King is ‘patently prepared to see the value of the Falcon lost rather than being utilised to pay’ the Commissioner. These allegations have not been controverted.”

Concluding remarks included the following gem:

Carmel’s first problem is that the Falcon is not Carmel’s property. Carmel may have had a proprietary interest in the Falcon in its capacity as partner in the partnership that was the beneficial owner of the Falcon. However, as I have pointed out, the ‘taking over’ of Manco and RMB’s partnership interest was fraudulent and Carmel cannot rely on a simulated and fraudulent agreement. Carmel relied on a preservation order issued by a Crown Court in England prohibiting Carmel of disposing the Falcon. A sale by the sheriff, said Carmel, would amount to a breach of that order. It is not surprising that, although this was the main defence on the papers, counsel did not press the non sequitur.”

The appeal is dismissed with costs, including the costs of two counsel.

Let’s look at the Moral Equivalence through the prism of aviation. When considering Desmond there is no suggestion of breaking the law. When considering King, we have fraud and a perjured affidavit.

Does anyone recall BBC Scotland doorstepping King in 2007 while he was a director of RFC Plc? Of course not. King is ‘one of the people.‘ The same people who run BBC Scotland.

If I were of a Celtic disposition I might be minded to write to Tony Hall in London requesting a root and branch clearout of ‘the people’ at BBC Scotland. I would also consider witholding any licence fees until assurances on Editorial Control were forthcoming.







27 thoughts on “Come Fly With Me”

  1. In the last couple of weeks I have taken on Police Scotland, COPFS and BBC EBT SCOTLAND. I have deconstructed the RIFC accounts. I have highlighted King engaging in fraud and perjury. I have accused a former Advocate General of Scotland of engaging in sophistry. I have provided details of a Police Scotland officer singing the ‘Billy Boys’ to intimidate a witness. I have published an allegation that Jim Keegan took silk by fraud.
    No other site provides these exclusives. No other site is as fearless as this site.
    Now imagine it was not here tomorrow on your morning commute or coffee break. Your support makes it possible.

    1. Absolutely Spot On JJ!
      I’ve given up reading the Rags produced in Scotland – I’m sick of reading “Non Event” News!
      Your site is by far, the best I’ve read! Look forward to many more too!
      C’mon Guys Support JJ And Keep him, keeping us informed!

  2. Great contrast and compare. Give it a saucy title like ‘the Peepel Papers’ and maybe BBC will get interested in it. The main source of interest in the Paradise Papers thus far seems to stem mainly from tax efficient arrangements that weren’t meant to be public rather than any legal wrongdoing.

    This should be known by the name EAG not Mr Desmond, because it would be as wrong to lay this at Mr Desmonds door as it would to – god forbid – think think that the Chairman of Rangers (IL) may have had some influence on that company’s actions when actually breaking tax laws.

    The Captive Insurance industry is huge and largely unseen. Any major company that requires significant insurance is likely to currently use one or to have used one in the past. It is not a surprise that a Company which owns significant assets potentially subject to loss might use one. You think British car hire companies don’t? When you hear about record breaking fines being levied against audit firms Professional Indemnity cover – where do you think that insurance is placed?

    These are invariably set up as self sufficient insurance companies in a domicile that specialises in them. Bermuda and Guernsey are popular in America and Europe respectively. This is actually quite a nice summary of what the benefits are of doing this:

    They are called ‘captives’ because though they are insurance companies they normally only have one ‘captive’ customer. They allow benefits like economies of scale (a number of household name companies you probably think of as competitors pool their risks). They have to have a profit motive or they are not tax efficient. These are part and parcel of big business and the use of them is not surprising. That’s why this is not a news story to me. I know countless other businesses with much higher profiles that do the exact same thing. In business terms its like shopping at the duty free. If you’re setting up a company to provide better control and cost savings over your insured risks (and if you take risk management seriously you SHOULD consider it) – then it makes perfect sense to set this company to manage those risks up in the place it is most beneficial to perform them. Most of the time that means a jurisdiction that specialises in that kind of financial business.

  3. Outstanding on a daily basis.

    Truly outstanding.

    Getting the truth out there.

    The institutionalized bigotry in Scotland towards Catholics, Irish Diaspora and Celtic knows no bounds.

    Sure, there’s laws to prevent it. But it’s a thin veneer of faux respectability in the Central belt, once scratched reveals the full ugly truth.

    Keep on scratching JJ.

    Perhaps a freedom of information questionnaire to BBC Scotland regarding numbers of Catholics in staff appointments, numbers of Catholics in each level or grade in the bbc as % of population might give their bigoted policy away. Can an MSP ask the question in Holyrood?

  4. Do former Rangers players and managers, unlawful tax avoiding EBT criminals, employed by the bbc as football analysts and pundits, have their invoices paid by the bbc to offshore companies similarly to Mrs Brown’s Boys?

    Freedom of information, how many payments to individuals, trusts, Production companies does the bbc make offshore to low tax destinations for work executed in the UK?

    I’ll venture hundreds. But Mrs Brown’s Boys is singled out for special attention due to an agenda.

    I’ll venture the whole paradise papers investigation decision is agenda driven at the bbc with victims chosen and friends conveniently overlooked.

  5. Ive written to BBC(EBT) Scotland and enquired why are they putting up and paying EBT recipients who have outstanding HMRC demands.
    Also asked them to confirm that these payments are subject to NI and Tax deductions and not going to an offshore destination where tax is but a figment of imagination.

    1. Hi Joe. I’m unsure of your gripe. Do you believe that BBC Scotland should not employ anyone who has an outstanding tax liability to HMRC?
      If so, how do you expect the BBC or any employer for that matter, to put that into practice, as HMRC, by law, cannot disclose tax affairs of individuals or companies?
      It’s just a complete non-starter.

  6. BBC Scotland is and was a hive of buzzing contradictions.

    In the 80s they had their first Catholic Controller, and another Catholic senior executive, James Boyle, later became Controller of Radio 4.

    At the same time very few Catholics were employed in Queen Margaret Drive, even in the junior ranks.

    At an all-staff Xmas Party in Di Maggio’s in Hillhead an employee who was well known as an unrepentant Celtic fan arrived late. The notoriously staunch Head of Sport, Dougie Wernham, rose to his hooves and bellowed across the packed room: “Here’s that f*****g fenian bastard!”

    No one was surprised. Freemasons were thick in the corridors and offices, and this kind of behaviour was the norm. Wernham’s career came to an inglorious end some yeas later, and he left under a very dark cloud. Karma indeed.

    These days it is even more confused. The political agenda – let’s call it “evening up” or “not raking over the coals” – has become more stark as the quality of the output across the board has plummeted. It is a national disgrace, and the omnishambles of The Rangers Affair reveals that in the most brutal and shameless of lights

    The recently departed Head of Independent Commissioning and Sport is, however, a Celtic fan, but he was well drilled in keeping the good ship Pacific Quay on an even keel, with eyes on the horizon and no peeking at monsters like the SFA and the SPFL swarming in the depths below.

    The culture now is less nakedly barbarian than in the days of dear departed Dougie, but it is infinitely more sleekit. Donalda MacKinnon is of fundamentalist Calvinist Hebridean stock, but she is married to a well-known Hebridean catholic and restauranteur. She also, astonishingly, sits on the board of governors of St Aloysuus College where her children were educated.

    Donalda is a classic BBC lifer, like her absurd (and equally Hebridean and Calvinist) predecessor Ken “Two Lunches” MacQuarrie.

    She is on a humongous salary that is typically disproportionate to her modest talent. She is not there to be inspirational or investigative or ground-breaking. She is there to keep BBC London and the eye-averting cowards in Holyrood happy and not allow too much of a fuss.

    Hingin’ is indeed too good for each and every very one in these two parcels of justice-denying rogues

  7. For decades millions the world over relied on the BBC as the guaranteed beacon of truth and truly independent reporting of news.
    The stewards Of the BBC here in Scotland are an absolute disgrace to this fine institution .
    The sports section is now beyond parody. The governors are to blame.
    Half wit semi literates who are effectively criminals ,if even only in a moral sense, are lauded and given a platform to spout low grade drivel when in fact they should be vilified and have no publicly paid for platform of any kind
    I no longer trust the BBC sports section to conduct a quality balanced discussion on anything

    I am No admirer of DD and in fact don’t mind him or his type being called to account but Dalys behaviour was reprehensible.I hope DD goes all the way and takes this ungodly crew to task . I also hope he funds the much threatened JRs go blow up the SFA and expose the entire scam and cover up on the Rangers scandal while he is at it

  8. Diverting a little from the main thrust of this article… it seemed that all it took for the SFA to find Craig Whyte to be not ‘fit and proper’ to hold a position within Association football was an extraordinary board meeting following the Nimmo Smith enquiry,

    Given the information that’s public record in your article Mr King’s repeated intrusions into football playing matters and past actions taken against Mr Romanov at Hearts – its hard to believe that the SFA can do nothing. They are choosing to do nothing and hiding behind a legal facade. Current Board members were complicit in the events leading to the ultimate Administration and Liquidation of Rangers. No enquiry was ever held. Its not raking over coals if you ignored the fire.

  9. you wont post this but it’s a fiar comment. Please have a wee bit of balance on an issue like this. It was Desmond’s company that may have avoided tax so its only right to ask questions. Whether its the royal family, church, football director, so called celebrity or whoever, its still wrong for the super wealthy to avoid paying what you’re due in tax. Are we saying you cant ask questions of a celtic shareholder who’s former company is caught up in this?
    This is the same Mark Daly that was praised for ”the men who sold the jerseys’ documentary but is now sneered at as being a hun just cos he asked about Desmond’s involvement? As a supporter of a non glasgow club, it reminds me of a time in glasgow airport. when watching footage on tv in one of the lounges of rangers coming back from a european defeat. A rangers supporter next to me asked, ‘so who do you support?’ when I mentioned a dundee club he then asked, ‘aye, but who do you really support?’ I laughed and walked away. You’re either a hun or a tim is the small minded rhetoric that some folk have and this piece I’m afraid is similar. Desmond asking that question in his letter also plays to those types. Your other stuff is usually spot on but this one turns the subject into whatabouty while avoiding the real issue which is – whether you’re a Rangers EBT cheat or a Celtic shareholder in charge of a company thats used jiggery pokery to avoid tax, or anyone else wirh plenty money – pay your tax like the rest of us.

    1. bb, I think you will find that Dermot Desmond does pay all the tax due to HMRC in the U.K. That is why they trolled the paradise papers looking for anything remotely associated to him, that they could smear him and by virtue the club. I am no expert in Swiss tax law, but if there is a dispute between the Swiss tax authorities and a company that he was associated with, it is up to the Swiss to deal with. Hee haw to do with the churnilist at BBC EBT.
      As Bomber Harris said, They sowed the wind, now they must reap the whirlwind.
      Go for the jugular DD

  10. Just catching up on a your stunning articles (having been in non friendly internet countries). I was also about to comment on the tax efficient arrangements which have appeared in the U.K. press, but TJ beat me to it with a comprehensive response.

    You report that Dave King had a Falcon 900B parked up for a while and which he (again) lied about. May I just add that a gentleman would not take this model as it is rather vulgar. A Citation (525 CJ4) is much classier.

    Terrific and consistently terrific pieces here. Usual donation on its way and this will include the bet which one of your contributors lost and reneged on.

  11. Wouldn’t it be great if a USA news team investigated bbc Scotland and door stepped the directors?

  12. BBC Scotland EBT hunting down foreign legal tax dodgers is hypocritical in the extreme when they employ illegal tax evaders/ avoiders who owe tens of millions and BBC actually facilitate payments to tax dodgers from license payers fees.

  13. Where do I get the 14.6million paradise papers to do my own analysis and revelations?

    I believe the bbc is engaged in squirrel hunting to dupe the general public that they’re on it whilst bigger fish are being protected.

    Including the convenient royal £10m squirrel. Believe me it’s a squirrel.

    This thing is about hundreds of billions.

    For instance what’s BAe, Rolls Royce, BP, Shell, Lloyds and Barclays up to? RBS and BoS. Or Edinburgh glass tower corporations? Or Edinburgh Judges?

    What’s the Rothschilds and Barclays Brothers up to? Etc…….

  14. It appears that stv have not covered the SFSA landmark report on tv or online or on social media.

    I cannot find it reported anywhere across any of their platforms. It certainly was not covered on their flagship 6pm news bulletins yesterday or today.

    Their Editors/ Producers will not cover Scottish fan criticism of the SFA or SPFL. There’s clearly an agenda at play.

    I have now switched to BBC News at 6pm and BBC Reporting Scotland at 6.30pm which are far superior to STV.

  15. Here is a ludicrous thought. So ludicrous that its actually makes as much sense as new club being same club same history. Old Rangers had 140 years worth of history. New club same club has 5 years history plus the 140 years history gifted from the netherworld. So thats 145 years of history.

    If New club same club dies and mark 3 Rangers Same club (NewNewclub same club) claims the self resurrection theory. Then surely Mark 3 Rangers would suddenly have 285 years history winning all the claimed trophies twice.

    Its a great and easy way to win more trophies.

    Now some people might say thats ridiculous and far fetched nonsense. But if you pay QC to say it on your behalf and have a complicit propaganda machine to call anyone who disagrees a hater then Im certain the Gully Billy Deady Bears will jump all over it with conviction. Just pick up the newspapers to see how well nonsense arguments become fact within 20 minutes if its something the Deady Bears want to hear.

    I wonder if the soviet media machine were as blatantly skewed by nonsensical garbage, framed to suit particular clandestine agenda, as we have here in Scotland, where double twisted fallacies are passed off as prudent objective journalism.


    I salute your courage to highlight and shine alight where professional journalism fears to tread.
    The search for truth and transparency on all things clandestine and sinister should be the professional journalists dream. Sad reality that truth has less value than twisted biased propaganda for the brainwashed society that we live in.

    I wish I had funds to pay more per month than I do. What chance do i have of getting any employment in a country that pays you to be false superficial and ruthless. Its enough to make me want to go to sleep and never wake up again.

    Ive actually come to detest all football. My heart tells me the whole thing is so corrupt that its not worth the excitement i used to get going to watch any of the teams anymore.

    I thank you kindly for your honest Blog and the time you spend with your very excellent writing styles. Hard hitting honest and thoroughly good arguments everytime. For the most part backed up with factual objectivity.

    The fact you need to be in exile to promote your views is an outrage on UK freedom of speech. Where the truth is not needed. Move along nothing to see here. Here is squirrel for your entertainment.

  16. ‘Mr Stalin, you are responsible for the death of millions’

    ‘ yeah, but Churchill drinks too much and smokes too much. Me bad, he bad. We Are The Politburo’


    Mr. John James, I wanted to drop you one last note to say that I have fully examined the latest accounts for RIFC, the relevant accounting standards issued by the International Accounting Standards Board, as well as what I believe to be the applicable statute in play. I did so with the intention of writing up what I thought would be a blockbuster article proving beyond any doubt that RIFC had deliberately falsified their accounts with the intention of misleading investors prior to the share issue that will likely take place after their upcoming annual meeting. In short, had I been able to prove it, it would have been a big feckin deal of epic proportions. Alas, while there is a lot to not like in the accounts, there is no smoking gun proving any of it. There are, I believe, three technical violations, but none are sufficient to warrant prosecution, and one of the three is not airtight. Below is a synopsis of the findings provided for closure.

    The relevant body of law, I believe, is The Companies Act 2006 – Part 15. If someone wishes to correct me on that point, I won’t argue.

    The relevant accounting standards, which have the force of law by virtue of The Companies Act above, can be found on . Users will need to create a free account in order to download the relevant PDF’s referenced below if they wish to follow along. Alternatively, for additional amusement readers could go watch paint dry. The relevant standards are: (1) Conceptual Framework For Financial Reporting, (2) IAS 1 Presentation of Financial Statements, (3) IAS 18 Revenue, (4) IFRS 15 Revenue from Contracts with Customers, and (5) IAS 24 Related Party Disclosures.

    So 3 issues I intended to prove. The summaries below are as brief as possible as I don’t want you to lose any readers over what amounts to non-events at the end of the day. Nevertheless, I apologize for the length.

    (1) Accounts Receivable / Deferred Revenue for seasons tickets covering the 2017-18 season. RIFC have recorded both a receivable and liability for this. Performance has not taken place, revenue not recognized, and cash not received from customers, yet both asset and liability are on the books. Under IFRS 15, this is a clear violation (as well as for US GAAP). But IFRS 15 is only mandatory for fiscal years beginning after Jan 1, 2018. While early adoption is permitted, RIFC has disclosed that they will adopt it for the 2018-19 accounts. Therefore the relevant standard for the year ending June 30, 2017 is IAS 18. While what RIFC has done violates the spirit of presenting an accurate balance sheet, IAS 18 is very brief and is silent on the specific issue at play here. There is no specific formula or criteria in IAS 18 for when to recognize either accounts receivables or deferred revenue (although it is covered in great detail in both US GAAP and IFRS 15). Essentially there’s enough wiggle room for management to do what they have done and not fall afoul of the standard as written even if your humble author feels it’s bad practice. However they will have to change their accounting practice for the 2018-19 accounts once IFRS 15 is mandatory.

    (2) The issue of related party transactions and disclosures surrounding the Sports Direct termination and the simultaneous share transfer from Ashley (MASH Holdings) to Club 1872 and Julian Wolhardt is extremely complex, both legally and financially. IAS 24 comes into play with Club 1872. James Blair is a director of both Club 1872 and RIFC, and while there is a carve-out in IAS 24 for situations where the relationship need not be disclosed if a “key management personnel of one entity has significant influence over the other entity”, this situation is much more nuanced. For one thing, according to the Companies House, Club 1872 has exactly 1 share outstanding, and it is held by James Blair. While the organization is run like a non-profit coop, it is, I believe based on the evidence, an organization that is wholly owned by Blair, rendering the carve-out provision moot as 1872 is fully controlled (accounting, not legal, definition) by RIFC Director Blair. The difference between ‘influence’ and ‘control’ in IAS 24 is large and transactions are treated differently. There are no bylaws or any other binding documents either on Club 1872’s website or at the Companies House that would prevent Blair from doing whatever he wishes with the 1872’s assets. Furthermore, the transaction to buy Ashley’s shares of RIFC by Club 1872 was done to achieve a stated business objective of RIFC whose board Blair sits on. RIFC’s stated business plan depends on qualifying for UEFA competitions, and based on the plain reading of the FFP regulations and RIFC’s cumulative losses over the past 3 & 5 year periods, they are clearly in violation of the regulations BUT can easily come into compliance if the soft loans are converted into equity during the 2017-18 season as cumulative allowable losses would then be increased from €5M to €35M over the measured 3 year period. As I discussed earlier, Ashley was opposed to the dilution of his shareholding and had sufficient voting power to successfully block it at the last annual meeting. Ashley selling his shares to a more management friendly party is absolutely critical to getting item #11 approved at the next annual meeting later this month and subsequently meeting UEFA FFP regulations in the current season to be eligible for UEFA competition next year. Therefore one can draw a straight line from this transaction to RIFC’s business plan and from there to the going concern business assumptions and conclusion from both board and the audit firm. Even if you assume that the price paid for Ashley’s shares shouldn’t be reflected in RIFC’s accounts (and that’s an even more convoluted subject), they received tangible benefit from the transaction by removing Ashley from the scene, and the RIFC Board, by way of James Blair, had complete control over 1872’s actions in doing so. It meets both the spirit and textual definition of a related party transaction as defined in IAS 24, and they didn’t disclose it. It would be nearly impossible to prove that RIFC’s accounts were misstated because of the complexities involved in both the relationships and the transactions themselves, but this was a technical violation of IAS 24, and therefore the Companies Act 2006, as the relationship between RIFC, Blair, and 1872, as well as the transaction itself were not disclosed in the Notes. That said, technical violations like this are typically enforced with a restatement of accounts and/or notes. From an accounting standpoint, this is a molehill and not something to get worked up over UNLESS there is sufficient evidence to show that RIFC gained a tangible financial benefit in the 2016-17 accounts — i.e. that by 1872 buying Ashley’s shares for the price they did, RIFC’s cost to get out of the Sports Direct deal was proportionately reduced to £3M from an otherwise higher amount. And that, in my view would be impossible to prove as there is no listed market for RIFC shares. As a side note, Blair stepped down as a Director from Club 1872 two days ago (Nov 6) without fanfare, but he remains the sole shareholder of record at the Companies House. The related party relationship discussed above will persist until he either transfers his ownership of 1872 to an independent party or steps down from the RIFC board.

    Lastly, what I thought was the biggest issue turned out to be a nothing burger with a plot twist interesting enough for an accounting journal. Grab your pocket protector and your slide rule, because what I am about to lay out is accounting porn.

    (3) RIFC’s accounts are officially for the year ended June 30, 2017, yet they chose to disregard the match played on June 29th in preparing their accounts. All sorts of red flags went up when I saw that, and upon reviewing the text of all the accounting standards referenced above with a fine tooth comb, the words ‘shall’ and ‘must’ are used frequently. To be explicitly clear, they are complying with IAS 1 Paragraph 37 in presenting all financial statements for 1 year annual periods, and then violating standards 1, 7, and 8, among others, by choosing to ignore transactions 2 days earlier and not include them in the annual results. IAS 1 does allow for a shorter or longer reporting period (e.g. a 52/53 week year), and also to lengthen or shorten a specific reporting period (e.g. as a means to permanently change the annual year end date). But that is not what RIFC are doing here — they are continuing to report annual periods ending June 30, but they have simply chosen to cut-off the end-date for 2016-17 two days early, and they have done so arbitrarily (although with good reason), on an ad-hoc one-time basis, and with neither consistency to prior practice nor stated intent for future practice. Choosing to disregard a material event within the reporting period is simply not allowed by the standards, nor is it permissible to arbitrarily change the cutoff date of the financial statements on a one-time basis with the intent of including/excluding a specific transaction as they have clearly done. It appears that RIFC made it up on the spot to suit their purposes, and their auditor simply looked the other way! So that’s a big deal, one that would end the careers of both management and auditors in the United States, and potentially land some folks in prison for good measure. The Companies Act in the U.K. appears to be not as stringent, although it’s still a BIG deal. I’ll leave it to more qualified individuals to quantify the range of potential sanctions, although I now believe that is a moot point. As I was writing it up, complete with footnotes to the relevant accounting standards, I came across paragraphs 19-24 of IAS 1. I’ll spare your readers the details, but suffice it to say that those paragraphs act as a get-out-of-jail-free card to make it up as one goes along and completely disregard whatever accounting standards one wishes. The threshold for doing so is exceedingly high, and there are additional disclosure requirements when the threshold is met, but it can be done. The standard makes clear with bold print that this should be done in ‘extremely rare circumstances’. How rare is extremely rare? Well, do you believe in unicorns? We can theorize that they exist; we can even agree on what they look like; but nobody has ever actually seen one. Until now. Accountants don’t go through years of training and additional testing for certification simply to throw everything they’ve learned out the window. It just isn’t done. Ever. The accounting standards are sacrosanct for the profession, even while they are vague or imprecise in certain areas. Usually when abnormal business transactions unduly complicate the presentation of the financial statements, the relevant accounting standards are still applied, and then management will supplement the financial statements with additional reports, metrics, commentary, etc that bridge the gap between their understanding of business and financial performance and the stated financial results that are IFRS (or GAAP) compliant. That is what I would have expected to see here as it is actually quite common across every industry and jurisdiction. I have read through thousands of annual reports in my career and have never come across the application of Paragraphs 19-24. RIFC presented their annual results through June 30, but in fact, as Chairman King made clear in his report, the statements actually cutoff on June 28th and ignore all financial effects of the match played at Ibrox on June 29th and any other ancillary activity on the 30th. The particular circumstances for why RIFC chose to do this are certainly unusual, and in my opinion meet the threshold laid out in IAS 1 paragraphs 19-24. With that said there were still two technical violations. Paragraph 20(c) requires them to identify the title(s) of the IFRS from which they are ignoring, among other things, and 20(d) requires them to quantify the impact of ignoring said IFRS which they did not do. Again, those are technical violations that can be easily remedied, and the underlying financial statements are materially correct even after considering the violations of those two points.

    1. One last comment that doesn’t necessarily pertain to the 2016-17 accounts:

      This is the 2nd time I have seen a unicorn in RIFC’s accounts. The first instance was page 36 of the 2013 annual report where RIFC acquired substantially all of its present fixed and intangible assets, worth an estimated £27M, by paying the paltry sum of £6.75M including the assumption of debt. The result was a £20M negative goodwill asset on the balance sheet, a concept which hitherto had only been theorized in accounting textbooks.

      Even when they do everything correctly by the book, so to speak, RIFC’s accounts are a recurring treasure trove for enterprising forensic accountants. I am not at all surprised that Deloitte resigned from auditing their books a few years ago.

  18. Just a couple of questions really…

    1- why is the Court of Session decision on King taking so long when it looked like a straightforward ruling was likely.

    2 – has ANYONE started a crowdfunder to push for a judicial review of the SFA/SPFL with regard to EBTs /player registrations and dodgy titles? The wrongdoers wanted ‘interest’ to fade via a combination of time, apathy and media silence. Have they succeeded and all ‘appetite’ has gone?

    1. If you are a regular reader you will know that I contacted Lord Bannatyne’s clerk of court. He has a case load and this ruling might not be high on his priority list. As for the second part there is no crowdfund appeal as yet. Some of the principals in this exercise read this site. Keep your powder dry.
      The wheels of justice turn slowly.

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