L’Affaire Rangers

Prior to some further thoughts on Rangers Lite’s accounts from Benjamin and the nefarious activities of the ubiquitous James Blair, one takes pause to look at the latest own-goal at Hearts. Of course if an actual own goal occurred in the obscured goalmouth one would have to be advised by supporters whose view was not obscured by the control box.

Some jokers have suggested that there is a bigger problem than the obstruction to spectating. They suggest that the stand is facing the wrong way, leaving the spectators at the mercy of the mind-numbing football that makes the eyes bleed. ‘Move-on‘ Budge’s solution, reduced pricing for the seats that do not overlook the goal, is so farcical that I expected the late Brian Rix to appear in a state of undress. But then the thought occurred that I would not be able to see him. Maybe it’s a blessing in disguise as Hearts under Levein are on a one-way trajectory to Palookaville.  Call me Mr. Bright Side but it must be better than playing I-Spy at Murrayfield and being stuck on something beginning with ‘S’.

While on the topic of mind-numbing, the latest legal joust and parry between BDO and D&P apropos the disposal of Rangers assets has hit a snafu as they await police files that are being held in Manchester. These files pertain to the botched criminal trial. Takeaways were few and far between, but one did witness the genesis of a new term viz ‘L’Affaire Rangers.’ As the redoubtable Mr. Whitehouse is a defendant (with Mr. Clark) one need not colour me surprised that he has lodged a complaint with the Institute of Chartered Accountants of England and Wales Apropos BDO’s proposed ‘expert witness.

Prior to getting to the main course, of which I can assure readers contains no lamb additives, there is one more starter to get through. The results of a survey of 16,000  fans, players, coaches and managers by the SFSA (Scottish Football Supporters Association) was inordinately damning of Scottish football governance. The odious SFA was identified as the major culprit. Their decision to knock back the SPFL’s request for a review was not well received. If one wishes to hit the SFA where it hurts then one should boycott this evening’s meaningless friendly at Pittodrie.

Aberdeen fans, to their credit, have protested on the terracing and outside Hampden. They should not be seduced by Malky Mackay’s sop of calling up their players to his squad. I never thought that I would ever see the day that I would agree with Kris Boyd EBT (£215,000) but he called their inclusion as a naked attempt to sell tickets on BBC Radio Scotland EBT. Is the State broadcaster’s selection of pundits predicated on the following criteria:

1. Do you swing the lead?

2. Are you a former employee of Rangers?

3. Are you a tax-evading scoundrel with an EBT?

BBC Radio Scotland EBT was quick to offer the SFA the right of reply. In their Sportsound magazine they allowed the appalling SFA-retained mouthpiece Darryl Broadfoot – who has been dumped so often that a parallel between his exes and fly-tippers on amphetamines is uncannily accurate – to shout down the SFSA representative. Broadfoot was intent on rubbishing the report. His invoice will be winging its way to Regan’s corner office as I write.

Gordon Smith, who could use a bob or two, chimed in that he tried to effect change  but was stymied from doing so. With so many EBT pundits to hand at BBC EBT surely they could give him a tap to prevent this broadcast-fee claptrap.


The heading chosen by Benjamin, our inimitable forensic analyst, is:

Do you believe in Unicorns?

My preferred title would be who butchered the accounts. Was it not mad dog King who signed them off?

Those who have a passion for forensic accountancy ‘porn’ can pour through the entire comment at your leisure. As I have no wish to induce a Glasgow Scale Coma I will pitch my analysis to the man on the Clapham Omnibus.

Benjamin prefaces his thesis on unicorns with a review of RIFC’s first ever annual report to 30 June, 2013:
The first instance (of  encountering a unicorn) was on 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.”
JJ: I have it on good authority that Deloitte confided to one of their clients that ‘they had dodged a bullet‘ by dropping RIFC. However since the coup d’etat by the rogue board , the corporate malfeasance has set a new watermark.

Benjamin continues:

There are, I believe, three technical violations, but none are sufficient to warrant prosecution, and one of the three is not airtight.”

(1) Accounts Receivable / Deferred Revenue for seasons tickets covering the 2017-18 season. 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. 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. James Blair is a director of both Club 1872 and RIFC. According to 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 that this is an organization that is wholly owned by Blair and is fully controlle by RIFC Director Blair.  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, 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.

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 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.

JJ: Career Criminal King has been at pains to insist that Club 1872 are a separate entity. Benjamin’s forensic  analysis has discovered that an RIFC director owns Club 1872. We now know why Club 1872 accepted the enhanced price of 27p per share as this was recommended by their owner. All missives from Club 1872 should from now on be perceived as coming directly from their owner, RIFC Director James Blair.

(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 as they are 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.

 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  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.


No-one expected transparency from the rogue board. If one can believe in Continuation in Govania, surely Unicorns are not too much of a stretch?


40 thoughts on “L’Affaire Rangers”

  1. At a genuine loss here. What could it be that it is so potentially damaging, that they fail to add the last two days of the reporting period.

    1. Cy, that’s what makes this plot twist particularly interesting, although it in many ways exonerates King & Co.

      By doing what they have done, they have actually presented financials that are WORSE, not better, than had they included June 29-30 in their statements. By my estimation, it’s upwards of £1m that was left off the income statement.

      But in doing so, the statements accurately reflect the 2016-17 season, and by putting June 29-30 in the 2017-18 accounts, next year’s results will fully reflect the full seasons activity as well. Logically it makes sense why they wanted to do this, but as TJ points out below, they probably chose the wrong vehicle to accomplish their goal.

      1. Benjamin, if £1 million was left of this years accounts and they apparently don’t have banking facilities, who holds the money. Anything to stop a certain individual from temporary investing it elsewhere to make a bob or two before it has to be put back into the kitty.

      2. or have they perhaps shared the money from that particular game between themselves with total disregard for their own shareholders and supporters?

      3. If they do not enter European football next season then their accounts, including Progres, might dupe an outside investor that they had Euro football in 2017-18.

        Their home game was 29/6/17, last years accounts. Their away game was 4/7/17, on next years accounts.

        Looks like they’ve conjoined the tie onto next year’s accounts.

        The only other thing I can think of is avoiding paying tax on this profitable fixture, until next year.

  2. Much like Benjamin Lynch, I know nobody wants to listen to texts of accounting standards. Broadly I agree with what he writes. On item 1, I had remarked on the implausibility of such a revaluation in prior years. It has to include discounted cashflow analysis which defy reality. Auditors often choose to resign when they suspect management of being less than candid and honest with them. They see a tilt in the risk v reward ratio. The reward is comparatively higher for Campbell Dallas than for Deloitte.

    Item 2 – I would not be so quick to jump on this as Benjamin. I’m used to seeing a lot of situations where legal ownership is complicated by further contractual agreements. Effictively a ‘nominee shareholder’. I don’t know if this is the case here but even so it’s certainly a pretty poor choice given his conflicts. Under IFRS, common directorships alone does not make a related party – mainly where that party is not considered to be ‘key management’. I’m not saying it’s wrong, but there are cohesive arguments that might sway the auditors. It’s a judgement call on how bad it smells that you can’t make without all the info they had available to them.

    Item 3 – I think utterly perplexing is the best way I could describe this. Again Benjamin did justice to just how rare it is to see that override used. You effectively need to believe that the compliance with the standards themselves (the same things that ensure consistent ‘true and fair’ treatment) would of itself lead the accounts to be misleading and therefore not give a true and fair view from following them. In this case that’s not just fanciful but absurd. I’d suggest all entities with an unusual event that affects how consistent the results are with the comparative period would make this clear with disclosure. The chairman’s statement, the summary results, adjusted ratio analysis etc. This way is just bonkers.

    1. TJ, thanks for your kind comments.

      The full text of the comments were edited by JJ prior to publication, and he did a very good job editing my tendency to ramble on without cutting out significant points.

      My initial remarks on point #2 acknowledged a big difference in reporting requirements when there is a common element of ‘influence’ as opposed to ‘control’. Blair’s position on the board is not sufficient evidence of a related party relationship as you rightly point out. However, his full ownership and control of another entity IS sufficient evidence and is exactly the sort of situation IAS24 attempts to address.

      If you step back and look at IAS24, it mainly addresses two situations: (1) subsidiary undertakings where ownership is not 100%, and (2) potential malfeasance by management or directors who are attempting to fleece the company through business dealings with another company that they CONTROL. Usually this is a supplier-customer relationship, but not always.

      The twist here is the 1872 isn’t attempting any malfeasance; to the contrary, they are acting in good faith as an unconsolidated fully owned subsidiary of RIFC even though the ownership is held by a director rather than RIFC directly. Legally RIFC is correct when they claim that 1872 is a separate entity. But for accounting purposes, IAS24 closes that loophole.

      1. As I said, I don’t disagree. What I meant about a ‘nominee shareholder’ type arrangement though is that he may have signed a declaration of trust to, for example, hold the shares beneficially for a conglomerate of supporters clubs whose proportionate interest changes.

        That would change the dynamic on related parties potentially. Also it might actually be the case that his limited role at Rangers rules him out as key management there – a bit like you might do with non-exec directors. I do agree with the thrust of your points but also think there’s enough wiggle room that how it’s been treated is plausible too. My gut tells me it’s unlikely Blair would risk his legal career to help out Ashley or King.

        On the subject of fraud I was interviewed by a brief yesterday and may be asked to give expert testimony on an upcoming court case regarding a spectacularly crashed investment fund. At the crux of it is related party relationships with underlying funds. Undisclosed influences do often hide malfeasance.

    2. One last comment, and then I need to go do my actual day job here in America.

      The one piece I left out of the article because it is 100% speculative (even though I believe it is most likely true) is that the 27p price paid by 1872 and Julian Wolhardt was above what would be considered market rate by the principals involved. This did two things: (1) it gave DK an alibi for the recent legal proceedings, and (2) it reduced the cash amount paid by RIFC to terminate the SD deal and therefore reduced their net loss for the year. If that could be proven (which it can’t), RIFC should have taken an additional charge on the income statement and offset that with a capital contribution in equity, and also disclosed BOTH 1872 and Wolhardt as related parties to the transaction. Alas, there’s no way for auditors to detect such an arrangement unless management fed them the documents indicating such an arrangement exists. They’re in dangerous territory here if documents exist proving any of this as it would constitute securities fraud for falsifying their accounts, concealment of relevant documents from statutory auditors, to say nothing of perjury before the takeover panel regarding the ‘true’ price paid by 1872 and Wolhardt for Ashley’s shares after giving effect to the next phase of the operation described below which I believe was agreed upon back in June before the original transaction took place.

      Going forward, once item #11 is approved at the annual meeting, three things I believe are likely to occur, and in this sequential order:

      (1) there will be a crowd funding appeal from Club 1872 to raise cash so they can participate in the upcoming share issue. They need as much cash as they can get, and I suspect the Board would prefer to issue new shares to 1872 more than anyone else.

      (2) After the crowdfunding is complete, 1872 and Wolhardt will be issued new shares at a cut price. Perhaps as low as 10p. The price is wholly conjecture on my part, but it makes sense. The board want 1872 to gain additional voting control as they are effectively an arm of the board and DK. Plus the peepul will hail DK for making it happen as they think they, and not Blair, control 1872. But also, I believe there was a side agreement, perhaps verbally and not even in writing, for why Wolhardt paid 27p in the first place alongside 1872. He was promised considerable additional shares at a cut price, and eventually a place on the board, if he helped facilitate the ouster of Ashley and Kings legal alibi. His net price, agreed upon back in June, will be considerably less than 27p per share. That is all 100% conjecture, but it all fits what we now know. Also, it wouldn’t surprise me at all if Wolhardt ends up being DK’s heir apparent once the takeover panel issues its verdict, although that detail is not central to the overall thesis.

      (3) Once DK and the 3 Bears are sufficiently diluted from #1 above, they will then have their loans converted into equity at a different price than paid in #1 above. After giving effect of the share conversion, they need to maintain their collective holdings below the level dictated in the Companies Act for concert party acquisition. The best way to do that is to issue them only 1 share each for their loans. And at that price per share, they would run seriously afoul of the relevant takeover statutes unless they have already been sufficiently diluted to the point where those statutes no longer apply. Can you imagine them being forced to offer millions of pounds per share to all shareholders? RIFC would be the most valuable company in the world by a few magnitudes of order! Getting 1872 and Wolhardt into the board as major shareholders first is critical to prevent the takeover panel from getting involved again. Also, the pretense of 1872 being controlled by thousands of fans is central to it not falling afoul of the takeover statutes itself, regardless of what documents exist at the Companies House proving that 1872 is wholly owned by Blair.

      Lastly, much has been written about the need for a prospectus, a NOMAD, etc regarding the prospective share issue. But my understanding is that proposal 11 allows the board to cherry pick who gets offered the shares. They can choose a limited number, and effectively this becomes a series of bilateral transactions between 1 buyer and the club. I am wholly unfamiliar with the relevant legal statutes, but it wouldn’t surprise me one bit if there isn’t a legal carve-out from issuing a prospectus and having a NOMAD in such a situation. There will be less than 10 parties invited to buy the shares and perhaps as few as 6 including the existing directors. I will leave this to JJ and others more knowledgeable than me to investigate as I am out of my depth regarding the Companies Act.

      Again, all of the above is pure conjecture at this point, and there is no evidence proving any of it. It is a theory and nothing more. But it all fits together nicely wrapped up with a Christmas bow. I would be more than a little surprised if I am wide of the mark.

      1. I apologize for rambling on over multiple posts, but one other pertinant detail just occurred to me, some 6 hours later.

        If my theory above holds any water at all, it means that the biggest criminal in this sordid tale does not have an office at Ibrox. It is the owner of MASH Holdings, one Mike Ashley.

        The whole premise of this theory is that Ashley named his price for walking away back in June and left it up to King and RIFC to figure out a way to come up with the cash for SD and for his RIFC shares. Ashley didn’t necessarily care how much would be paid for the parts as long as the payment covered both. After all, he owns SD too.

        The potential problem for Ashley is that while he owns MASH Holdings outright, his ownership of SD, via Mash Holdings, is around 55%. If he accepted more than fair market value for his RIFC shares and reduced his asking price for the SD contract termination accordingly, he effectively defrauded other SD shareholders in the process. With an NDA in place, King and Ashley are effectively in bed together in this affair. While they may not like each other, they both understand the perilous position they both are in should proof of any of this come to light. They will have covered their tracks accordingly.

        As an addendum, look for the related party transaction disclosure in Sports Direct’s accounts next year. This is much more clear cut both legally and from an accounting standpoint. Ashley was negotiating on behalf of both himself and SD at the same time on the same transaction. He can’t not disclose it, even if it gets glossed over or rendered immaterial (and it is immaterial to SD).

    3. A club’s accounts have to meet the standards of Article 47 of UEFA FFP to be acceptable to UEFA.

      That Article itself is subject to further conditions set out in UEFA FFP Annexes. I think it is Annex 7 without checking.

      That Annex requires that accounts are a “fair presentation” of a clubs financial condition.

      In the case of Giannina FC, whilst investigating whether or not Giannina had a tax overdue payable at 31 March (Which UEFA deemed they had and were backed by CAS when Giannina appealed) UEFA Club Financial Control Body found 5 private agreements with employees which the CFCB deemed meant the accounts did not meet “fair presentation” standards and was a further reason to reject the licence application from the Greek club.

      CAS did not rule on this interpretation because it was clear the Greeks had accepted they owed the Greek Tax authority outstanding tax from a prior year before the 31st March, making it an overdue payable as UEFA intended their rules to be applied across the European tax administration spectrum.

      The parallels to Scotland in 2011 are obvious.

      This is not to say that TRFC’s latest accounts fail the “fair presentation” requirement, but when the SFA examine what is presented to them next March, they should be aware of this requirement and seek UEFA guidance before granting a licence.

      That is basically what the Greek FA did in the Giannina case.

      1. Interesting…

        For my 2¢, I think the fair presentation clause is the least of their worries. They disclosed what they did, why they did it, and their independent auditor agreed that what they did reflected a fair and true account of the year’s activity.

        For me, the biggest hurdle regarding FFP is the matter emphasis in the audit report regarding the going concern assumption. That is a big red flag for UEFA.

        Also, if they were to somehow fail to convert the debt into equity, their losses the last 3 years are £17M, well exceeding the €5M allowance. And that assumes there will continue to be an allowance that grants additional losses if covered by equity contributions. That point, I don’t believe, has been confirmed going forward. In prior seasons it was understood to be a transitionary issue that allowed clubs like Man City and PSG time to come into compliance by gradually reducing their losses while covering those losses with fresh equity. It’s a big assumption that the transition provision will continue, and if it doesn’t, RIFC are totally screwed.

  3. Is it a surprise to anyone that no official approach has been made to the Dons for McInnes?
    It’s one thing Milne urging everyone to move on but he will want the reported £1m compensation fee up front, particularly given the state of finances at Ibrox.
    The £4m required and promised by NOAL now won’t have included the transfer fee. So already the cash shortfall forecast will be out of date.
    There’s 7 months till ST renewal cash starts to flow in.
    Will be interesting if Lord Bannatyne has taken an interest in the Rangers financials and King’s commitment via NOAL as the banker of last resort.
    It seems inconceivable that King’s counsel only a few weeks ago was claiming his client to be skint and once again distancing him from NOAL and low and behold the same NOAL pops up and is good for £7m plus,£8m if McInnes is hired, to plug the sizeable forecast gap between income and exexpenditure. Are King, and his counsel, so stupid that they thought no one would notice?
    It also seems to have escaped the media’s attention that King is now on his own with the other board and concert party tapped out and no longer prepared to throw good money after bad.
    That appears a significant event to me but studiously avoided by our media!

    1. The Daily Rectum persists that the McInnes signing is getting closer and closer.

      This line of pishery is suggestive of detailed backroom discussions and negotiations. Which are developing in the right direction.

      Milne and McInnes do Aberdeen fans no favours by allowing the rag to Continue in this light without being corrected.

      Both need to come out and declare no approach has been made. Allowing the rag to dupe Gullibillies is one thing but putting your own fans (and players) on tender hooks in the middle of a competitive season is another.

      Of course, it’s all designed by the Rectum to unrest Scotland’s second best club.

      Put it right.

  4. Excellent pieces again JJ, my humble thanks to you. Also credit to Benjamin and TJ, fantastic comments guys. Yet again all things down sunny Govan continues to be a total shambles.

    Cheers mucker. Donation to follow.

  5. We owe Benjamin a debt of gratitude for his forensic dissection for the layman of the smoke and mirrors that passes for the annual report down Ibrox way.

  6. The esteemed and revered Chairman has an erstwhile hidden talent for the violin. He fiddles the accounts.

    It would appear the business objective of European football is one thing and performance once there entirely another.

    The Progres game at Ibrox on 29th June 2017 has simply been erased as ever having taken place. Rather in the same way Hitler erased pesky resistance towns from the map.

    Progres didn’t happen.

    Next years accounts (if they get there) will start from 30th June and two days in 2017 will be permanently lost from the RIFC five years of accounting history or supposedly 145 years of football history.

    Progres was just a dream. They fell asleep, Portuguese siesta style, on 28th June and woke up on the 30th.

    Club 1872 is simply a new milking machine on the Estate. Glib May have a tenant farmer running it, but he knows Glib pays his wages and his job is to direct all the milk to Glib.

    Is it possible that their disastrous foray into Euro football in 2017 actually cost them money? I recall Euro minnows reported this some years ago. They reported costs were higher than income.

  7. I’m glad I’m not the only one who was severely puzzled by the famous “negative goodwill” of £27MMM or so in the first set of RIFC accounts which appeared to me like just creating asset value by the twitch of a pen / keyboard. It also looked to me like it’s the only thing which is stopping liabilities exceeding the somewhat fictional value of the assets….

  8. Very interesting – and good spot re the cut off date. You should though have asked your forensic accountant why Campbell Dallas LLP signed off these accounts; that firm was taken over on 30 September 2017 (before the accounts were signed off) by Baldwins Limited, an English accountancy firm.
    Normally in this situation, one would expect CD now to be a shell LLP, all its assets having been transferred to Baldwins. If that is the case, could the CD partners be trying to dodge a bullet in the event anything happens to RIFC (god forbid)?

    1. When I first started investigating all of this, I had initially thought of Campbell Dallas as a concert party to the fraud that was staring me in the face (which I later determined to be accounting disclosure irregularities rather than outright fraud). I had never heard of CD and thought they were some fly-by-night operation recruited by DK to facilitate his crimes. Upon doing some due diligence (and remember, I am in America and have virtually no business dealings in Scotland), I was able to ascertain that CD is actually a sizable firm that values its professional reputation. My initial suspicion was wide of the mark by a considerable degree. Even if there is a crooked individual in the firm, and that can happen from time to time as accountants are not immune from sin, the firm as a whole is playing it straight and performing their public and professional duty as required. Their role in all of this is, at worst, an unwitting patsy. As I wrote up in another missive, I believe RIFC is actively concealing information from CD, and CD would nor should be held liable for criminal conduct of their client provided CD performed their duties as required. But as I stated in that missive, that is pure conjecture on my part and there’s no proof. It’s a theory and nothing more based on the facts publicly available.

      As to why CD signed off on these accounts… I believe RIFC presented a credible case that the 2016-17 accounts should reflect the 2016-17 playing season as that is how EVERYONE understands the business to operate. The timing of the qualifiers and RIFC’s fiscal calendar essentially mean that in any given year they could have 0, 1, or 2 of these qualifiers show up in their results every year depending on whether they are drawn home or away in any given year. That makes the financial statements very difficult to rely on from one year to the next because they wouldn’t be comparable if one uses the lens of playing season to analyze the accounts. In essence, I believe they made a compelling case that following the relevant accounting rules actually hinders the common understanding of the accounts, and that is precisely the scenario that the rule I brought up was meant to cover. As an aside, the cleanest way to resolve this going forward would be to simply change their fiscal year end date to something in early to mid June after all UEFA and SFA competitions have concluded but before the first UEFA qualifiers for the following season. If I had any sway, I would urge that practice be adopted for all European clubs, Celtic included.

      As to the related party transaction not being disclosed properly and the reasoning CD would have signed off on it without disclosure, RIFC would have argued that the share purchase was a separate transaction between independent parties and that they had no involvement (ha!). To be a related party transaction, it would have (1) had to be considered a bundled transaction with the SD contract termination, and (2) convincing evidence that one of the parties involved in the share purchase is a related party to RIFC as defined in IAS 24. That’s a tangled mess on a number of levels, and I think CD looked at what RIFC presented and simply came to the wrong conclusion. It’s a complicated subject to begin with, and if RIFC were deliberately misleading CD on top of it, CD would have had a very difficult time reaching a conclusion different than what they did. And remember, it’s not the auditor’s job to present the accounts — their job is to independently validate, within reason, that the information management presented in the accounts is materially correct.

  9. Off topic, but may be of interest to Norn Irn readers.

    Switzerland getting pumped up for the Belfast match?

    Aye, right.

    The sports sections of the Swiss newspapers lead on Ice Hockey stories, with football next, and the first football piece in the Tribune de Genève is that the injured Behrami will be there for moral support (sic) .

    Don’t be surprised, this is par for the course.

    The tone of the article about the match itself in the TdG is that they now have everyrthing to lose and nothing to gain after falling down in Lisbon due to “trying to be perfect”, which I think means they didn’t organise the defence well enough.

    They won nine out of 10 qualification games but it was Portugal who qualified directly on goal difference (admittedly by 12 goals).

    It just amazes me that the national team has so consistently got themselves motivated in the face of such a depressing press and largely apathetic public, at least within the non football following element.

    Nothing to do with neutrality by the way, just Switzerland.

    Hopp anyway lads!

  10. Regarding the new Hearts stand, the police control room is just a minor hiccup.
    The whole design and build process has been a total amateur clusterf***.
    The Building Warrant which would be essential for any normal building project to proceed has still not been issued. It is number 16/03739 and is still noted as ” pending consideration ” on Edinburgh Council website.
    The club shop, ticket office and club offices were relocated to new premises under their Wheatfield stand. These premises are in use every day of the week despite there being no completion certificate or temporary occupation certificate issued.
    I’m sure there will be lots more in the coming weeks.

  11. Dave King’s no SBL, not even close, after 5 years they’re only in debt for 20M – he might want to go have a chat with his mentor about how to accelerate this up to and beyond SBL’s impressive 170M turd that sank all the way to the bottom – goodness, at this rate it’s going to be another 40 years before he grows the debt up to 180M

    20M, a squad that’s not worth very much (thanks for the emphasis Mr Boyd) and a payroll completely out of whack with Lite’s position and a soon to be named manager rather adept at standing on his head – that’s literally what it’s going to take to drag this squad to even a position of mediocrity – do Lite really think they can do better next year in Europe (courtesy of the blind & deaf monkeys at the SFA granting their licence) than this?

    Senderos, Clint Hill, Joey Barton – how’d they all work out for Lite? – ZERO pounds return, money spent, money gone

    Get this – Celtic’s left back is worth more than Rangers International, Ibrox & Murray Park – all added together – this says as much about the stupidity of money in football, but it also exposes the VAST gulf between the 2 major Glasgow clubs

    The creative negative goodwill, the favourable interpretation of Standard Accounting Principles and all the smoke and mirrors can’t cover up the stone cold truth

    Will the ripples of blood just be too pleasant to dream and sing about – or will some start to get the magnitude of the problem – 5 years in they’re lining up like the good old days, but them days are gone & they don’t appear to be on their way back any time soon


  12. “L’Affaire Rangers”… Hmmm
    I wonder if Monsieur Barton had a hand in that coinage?
    If so, chapeau to him…
    I think it has a certain whiff of a cheater’s scandalous shitstorm à la Profumo.

  13. thought you would have known that the hearts stadium is not yet completed and that the police control unit is yet to be reconstructed to enable viewing of the goals at that end

  14. Regan told Raman Bardwaj on the telephone Malky MacKay is in the Scotland seat for one game.

    Regan’s voice sounded as though he’s under pressure.

    Guess the SFSA Report has fazed him.

  15. In RIFC AGM resolutions 10&11, the Rogue Board want unconditional authority to issue 81,478,201 shares as they see fit @ The Great Gullibilly Dilution Swindle. Blog to follow. Given the bad taste in my mouth from those who cancelled their recurring donations it may well not be tomorrow.

    1. Can’t do recurring monthly but always try to pitch in sometime mid-month.
      I’ve got a feeling there’s more to this SFA Hampden thing.
      Is it preparing the ground for sevco to rent Hampden while GCC renovate the bigotdome for free as part of some urban renewal scam.
      Worth watching.

      1. Government aid to Sevco and sectarianism.

        There’s absolutely no reason why the sfa and the Scotland team should be considering leaving the historic national stadium at all. None whatsoever.

    2. JJ, sorry to hear of those who have cancelled their donations. I will chip in when I can, likely in 2018. My current financial situation is unstable, and it’s likely I will need to find new employment on Jan 1. For now I will have to make my contributions with content rather than pounds. But you do a great public service on this blog that cannot be valued in dollars, euros, or pounds.

      As to the share issue, #11 specifically, being able to issue shares to whomever they want is, legally, what will allow them to convert the debt into equity without a broader share issue. But I’ll be a monkey’s uncle if that’s as far as they go with it. They need new cash in the door – they’ve said as much – and they’re not issuing a prospectus and finding a NOMAD. Hence, they will use that power to issue shares to a select few of trusted, wealthy benefactors.

      A couple follow-up points from the last few days. I’ve been doing some digging…

      (1) the total cost of the Ashley buyout was £5M exactly. £3m from RIFC cash, £1M from Club 1872 for shares, and another £1M from Julian Wolhardt for shares.

      (2) both 1872 and Wolhardt now have > 10% shareholding in RIFC. 1872’s ownership is listed on their website and kept up to date. Wolhardt had 8%+ previous to this transaction, and now has around 13%. He will be pushing 19.9% I think after the upcoming share issue if my prediction is accurate. I expect the lions share of new cash coming into RIFC to come from 1872 and Wolhardt.

      (3) there are a grand total of 9 individuals who will have debt converted to equity: NOAL & fellow board members Park, Bennett, and Murray. And outside investors including 2/3 of the 3 Bears. Taylor, Letham, Ross, Scott, and Murdoch. I believe Andy Ross and Barry Scott are chums with Woldhardt; all 3 are based presently in Hong Kong.

      (4) further evidence that 1872 is a de-facto unconsolidated subsidiary of RIFC: their official mailing address listed on their website is Ibrox. The contact information at the Companies House for the firm, and all its directors, lists the address of James Blair’s law firm in Edinburgh. The Secretary for 1872 is a corporate shell entity that also lists Blair’s law firm as its business address. Additionally, there appear to be 4 current Directors listed at the Comanies House, none of whom have obvious ties to Ibrox. 2 were original Directors who resigned last spring only to be reappointed on May 22. And then 2 more have been appointed this week prior to their board elections later this month. The entire slate of directors resigned last Spring over Blair’s involvement with the organization. Apparently the peepul have some notion that 1872 should be independent from the RIFC board and objected to Blair sitting on both boards. He has now resigned, and it appears that others are signing up to nominally lead the organization. Blair still holds the only share, but as TJ points out, that may be more ceremonial than substantive. There’s no other documents one way or the other in the public domain, and it’s not clear that anyone affiliated with 1872 is aware that Blair is the sole shareholder and his shell company is the official Secretary.

  16. I presume the expensive RIFC plc (unlisted) shares will be swapped at 27p or more to the loans providers.

    Anything less proves King a liar on share value to the courts.

    Will they try and Spiv swap their loans at 1p a share? Maximising their shares!

    Regardless, after any swap the value of the club and its assets remain the same but shares must drop to 0.5p or thereabouts with the dilution.

    Will Cronies like Jabba pick up free shares in lieu of invoices? One recalls super salary’s free shares from Green.

    Where will the £500k or so come from for a Nomad, admin fees and prospectus and letters and printing material to make it possible?

    Afterwards, lenders become shareholders of penny shares in a bust company with too many shares issued. No status as creditors and no chance of seeing the money again.

    Incidentally, who will not take up the swap and remain controlling Creditor? Lol!

    Sevco and SMSM have turned on Regan as MacKay has been binned and 20yo KT was made Scotland Captain over others like 25yo Ryan Jack. KTs strength of character and leadership shines at such a young age . They presume Regan is now working for CFC interests. If they are correct. CFC fans should be routing for Regan!!!

  17. Benjamin 2.07

    Thanks for that response it was the kind I hoped my original input would get from someone with accountancy prespective.

    Now here is a thing not a lot of people know:

    back in Sept 2011 UEFA obviously had some concerns with the RFC submission under Art 66 providing UEFA with an update as at 30 June on tax due.

    By Sept 2011 the taxman had called at Ibrox to collect the overdue £2.8m wee tax bill, so it was obvious that something was amiss from what RFC claimed in that submission stating the position at the end of June.

    UEFA VERBALLY agreed to accept what they were told and more importantly whatever explanation was given them by the SFA convinced UEFA not to ask for future financial forecasts which is normally triggered by a red flag event or significant change.

    How lucky was that just 5 months before RFC went into administration.

    However the going concern qualification should as you say alert UEFA but chances are that, like 2011, they will accept what SFA tell them.

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