The Reservoir Dogs of Rangers

Witnesses in the Rangers Tax Tribunal hearing were assigned a colour cipher. The testimony of Mr Black was particularly revealing. By way of introduction, the Law Lords were provided with the following precis of his career at Rangers:

“While Mr Black had been involved in ‘signing and selling’ 350-400 players in 20 years of involvement at Rangers, he had not, and could not, because of all his commitments, devote any real time to detailed contractual negotiations. At the start of each football season he would meet with his manager to decide on which players might be possible recruits.

Only one individual matches this description. Sir David Murray.

Mr Murray did not consider the Employment Benefit Trusts as a means of tax avoidance, but rather as a means of retaining and rewarding loyal employees. According to Mr Murray the EBT enabled the club to attract players who would not otherwise have been obtainable. During cross examination, Mr Murray denied that the scheme was for tax avoidance.  He described the policy as ‘a method of us acquiring, especially football wise, better players in a more cost effective manner than we would be able to do so’; that the club had been very ambitious at that time’; and ‘it was seen as a correct and proper way for us to proceed’; that Rangers ‘have been very successful, because we’ve been able to attract players of a certain standard that, perhaps, we may not have been able to otherwise’.”

This correct and proper way has been ruled as illegal by the highest court in Scotland. Not only did Mr Murray introduce an illegal method of tax evasion, he charged Rangers £500,000 per annum for his EBT insights and helped himself to £6.3m.

The Law Lords characterized the testimony of the colour-coded former Rangers executives as “obstructive, unhelpful and evasive.”  The Law Lords came to the conclusion that the former Rangers executives engaged in an enterprise to systematically evade tax on an industrial scale.

It follows that as it has been established as illegal in law, it contravened the SFA articles of association. Rangers, by Mr Murray’s admission, engaged in this strategy to gain a sporting advantage. These findings not only rebut the privately commissioned conclusions of Lord Nimmo Smith, but as they are legally binding, they render the LNS report as irrelevant and unsound.

I wonder what colour was assigned to Campbell Ogilvie. Mr Murray’s fellow ‘reservoir dog.’  Red, as an abbreviation for red-handed, would be apposite. Whilst a director of Rangers, Mr Red was the treasurer of the SFA. Should we be thankful that Mr Red did not encourage executives of the SFA to engage in tax evading EBT? If we are we should be far from thankful with the information he withheld and redacted to reduce the LNS report to a travesty.

The problem for Rangers is that since Mr Doncaster has publicly stated that we are the same club, sanctions could be applied to the team under Mr Warburton’s command. A significant points penalty could be imposed. The silverware is in the cross-hairs of four clubs represented on the SPFL board.

Mr Black will  soon be giving evidence in the trial of Mr Green and Mr White.

The reservoir dogs that engaged in a heist at Rangers were Messrs Black, Red, Green and White.

Fit for purpose

In a previous article, The Balance of Power I pointed out that the SPFL board would be deliberating on the implications of Employment Benefit Trusts being ruled as illegal. Apparently four of the six representatives of clubs unequivocally and robustly stated to Chairman Topping and Chief Executive Doncaster that the Inner Court of Session directives were a game changer.

They insisted that the private investigation by Lord Nimmo Smith was not fit for purpose and should be set aside. Nothing short of a full, frank and on this occasion, truly independent, review of the facts would be acceptable. The four clubs have insisted that sanctions, including the possibility of rescinding the award of 13 trophies, are included in the tariffs at the disposal of this commission.

Mr Doncaster will not be allowed to hide behind the LNS report.. The four representatives informed him in no uncertain terms that Rangers engaged in an illegal enterprise to gain a competitive advantage. Some present resorted to expletives when outlining their demand for a thorough review and the word ‘cheating’ was used liberally.

SMSM and Level 5 are doing their utmost to derail the growing consensus for title stripping, however should Mr Doncaster not heed the the views of the four clubs, their representatives will resign and openly state their rationale for resignation.

The desire for vengeance is not confined exclusively to the supporters. Those in the boardroom are evidently spitting blood.

The EBT Decade

I read Keith Jackson’s article in the Daily Record today. As I have stated on several occasions, Mr Jackson is one of a select few journalists who is prepared to write articles that would not be approved by Level 5. Scottish journalists have long been influenced by ‘poachers turned gamekeepers’ who now ply their insidious trade in PR agencies. Journalists are as prone to indiscretions as those from other professions. When PR agents become aware of these indiscretions they can unduly influence journalists. As we have seen at The Herald Group, a commercial arrangement to promote season ticket sales will often be accompanied by a positive story on Rangers. This is no accident. Chris Jack’s output is marginally better than that of Derek Johnstone or Barry Ferguson. There is often little more than a cigarette paper between his views and their pro-Rangers articles, despite the fact that Chris Union Jack never actually played for Rangers. If you are looking for balanced reportage, I suggest you look elsewhere. I’m in no way recommending the Record. It is a shoddy red top rag that does not appeal to the ABC1 demographic which The Herald pursues.

Keith Jackson is a former Rangers player (under 14s) and his affection for our club is evident in many of his articles. His detractors suggest that he is influenced by Phil Mac Giolla Bhain. Mr Jackson makes no secret of the fact that he follows Phil Mac on Twitter. This practice of monitoring the Twitter feeds of others is now commonplace in journalism.

Mr Jackson provided a piece of information that was unknown to me. David Murray charged Rangers £500,000 per annum as their EBT consultant. What an outrage. Not only did he benefit with a £6.3m EBT of his own, he bought a book written by Paul Baxendale-Walker and then charged Rangers for the privilege of using his tax evading strategy.Would anyone be surprised if he paid these fees to himself via an EBT? In the decade in question he paid himself a minimum of £11.3m off the books.

Mr Jackson articulates a view that our criminal chairman would go ‘nuclear’ if any attempt was made to strip Rangers of 13/14 trophies from an era that is now being referred to as the EBT decade. He did not expand on what nuclear options were available to the individual on licence for Contempt of Court charges. How this could play out is that the SPFL will establish a new commission. As I revealed yesterday, four of the participants in the SPFL board argued robustly for this option. Given that some members have threatened to resign if no further review is instigated, I am persuaded that this is the most likely course of events.

Let’s assume that there is no artifice by Campbell Ogilvie’s former colleagues at the SFA and that those with a self-preservation agenda do not pervert the findings of this commission. If they arrived at a conclusion of title stripping, Rangers would appeal to the SFA. As we have seen with the ‘fit and proper’ decision on King, four existing members of their board of seven will do everything in their power to protect Rangers.The appeal would be upheld and the commission would be told to look at other sanctions that do not include title stripping. You would have to be very naive to believe that the SFA are not subservient to the interests of Rangers.

It will be the perfect fudged compromise. A review that adds legitimacy to the SPFL board and assuages the consensus for title stripping, followed by an SFA veto.

A cynic might suggest that the SPFL and the SFA would engineer this outcome as their default position should the commission ‘go native.’

Club Statement

“There is no need for further SPFL consideration.They should be saying it is time for everyone to move on and work together for the greater good of the game. Scottish football has suffered enough.It is our irrevocable belief that this club’s history, including its many successes, is beyond debate.Rangers cannot countenance or accept any talk, attempts or actions designed to undermine what this club has achieved throughout its long history.Rangers has made it clear it wishes to reach out and work with all clubs to help revitalise Scottish football, which has also suffered in recent years. There is much to be done and Rangers wants to be part of the way forward.Our game has to become more attractive to potential sponsors and partners if the finance levels required are to be generated but this can only be done if we present a coherent and united strategy. Therefore, a line must be drawn now if we are all to prosper.”

This is a better statement than those formerly issued by Je Suis Graham. I assume Stephen Kerr’s invoice is in the post. Let’s look at the argument. Is there no need for further SPFL consideration? I disagree. The successful HMRC appeal is a game changer. The Lord Nimmo Smith commission was not presented with the full facts pertaining to this matter. LNS proceeded on the basis that Rangers had engaged in a tax avoidance exercise. We now note that they engaged in an unlawful tax evasion strategy, which requires a formal review.

The board of the SPFL do not have a delegate from Rangers. Four of the six member clubs on their board are of the view that a new commission must be established.

As for ‘the better good of the game’ argument, this is redolent of our criminal chairman’s submission for fit and proper approval. Would it not be accurate to state that it would be better for Rangers?

The second part of the statement, that it would be in other club’s best commercial interests not to pursue a review, is a veiled threat that any deduction of points penalty, which undermined Rangers promotion prospects, would have economic consequences.

I can summarize the statement in fewer words: “If you want the blue pound in the Scottish Premiership, then overlook the EBT decade.”

Somehow I do not believe that this statement will be enough to assuage the growing consensus for an independent review. If the tax evasion did not create a competitive advantage, the board have nothing to fear. The deliberate falsifying of returns to the SFA resulted in a £250,000 fine that the shyster board refuse to pay.

I would be more persuaded by their argument if they had paid the fine and costs of the LNS enquiry. Surely the fact that they have chosen not to do so would suggest that they do not accept this outcome and that further consideration has merit?

The Supreme Court Defence

Someone who benefited from a £2.5m EBT, Barry Ferguson, has been the first individual who evaded tax, in his case £1,325,000, to invoke the argument that the EBT discussion is still open and subject to a Supreme Court ruling. This is palpable nonsense Mr Ferguson. As the late, great, Hugh Adam pointed out, few footballers are likely to compete in a Brain of Britain competition. Mr Ferguson’s position is as flawed as one would expect from an individual whose greed resulted in significant pecuniary advantage.

Allow me to introduce a novel consideration to Mr Ferguson and those who participated in this illegal enterprise. Why would anyone who plays professional football believe that they should not have paid tax on their earnings? Mr Ferguson, as captain of Rangers, could have set an example to his team mates and insisted that he wanted to pay tax to build hospitals and to support the National Health Service. Mr Ferguson could have insisted that he pay tax to support and fund the education of his children. On this day when we celebrate the brave men and women who gave their lives to fight against a Germanic yoke, did Mr Ferguson not wish to support our armed forces? At Ibrox, we celebrate the contribution made by those engaged to defend our liberty. Why does a former captain of Rangers believe that not one penny of his £2.5m should be spent on these brave men and women?

The ‘fat lady’ of the Supreme Court is not going to sing for you Mr Ferguson. Three distinguished law lords at the inner court of session have deliberated carefully and arrived at a conclusion welcomed by every tax-paying citizen in the UK. Why would BDO appeal this decision on your behalf? Which point of law would compel the 7/8 distinguished knights and dames of the realm to sit in judgement? Would you argue that a ruling in Scots Law has no jurisdiction on a Scottish employer?

Your disingenuous article in the Daily Record is a sham. We are aware that Traynor and Kerr of Level 5 are flat out to deal with the fallout of your tax evasion. Did you ask Level 5 to review your copy prior to publication?

The sooner you accept the consequences of your illegal tax evasion the better Mr Ferguson. Of course Neil McCann, who is fond of brandishing rule books on television, should be asked whether a side letter on his £500,000 loan should have been registered with the Scottish Football Authority? Is it not the height of hypocrisy to know the rules but believe they don’t apply to you because you played for Rangers?

Mr King has challenged the jurisdiction of HMRC in Guernsey. This expensive action failed. Mr King was so fond of expensive actions that he spent £50m in his attempts to avoid the consequences of his tax evasion. How much of your £2.5m are you willing to risk to challenge this ruling on your tax evasion Mr Ferguson? Surely, if you believe that the directives of the inner court are unlawful you would be prepared to challenge their veracity at The Supreme Court?

Mr Ferguson is a tax evader, just like the current Chairman of Rangers, whom he openly supports in his puff pieces in The Daily Record. I trust you have £1.325m in an escrow account or you might be phoning in your Daily Record articles from one of Her Majesty’s Prisons. Lester Piggott was jailed for three years for evading tax on £3.25m.

Mr Ferguson might not yet realize that even if he repays the exchequer, he may be imprisoned for tax evasion.

Is it any wonder Mr Ferguson is promoting a Supreme Court ruling given that his liberty depends on it?

For the avoidance of doubt

My decision to posit an argument for the case against title stripping was not well received. I don’t court popularity. I will always express an honest opinion without fear or favour. It’s important to stress that I do not condone cheating. My argument was that by focusing on title stripping, those who engaged in tax evasion may escape Scot free. Everyone who received an EBT should be forced to repay to the exchequer the tax that they evaded. Everyone who administered the EBT loans should be banned from holding office in Scottish Football. Anyone who was a non-executive director, as was the case with Paul Murray and Dave King, should also be banned from Scottish football. Their silence makes them complicit. I trust that HMRC will pursue SDM first. He owes 53% of £6m, which is £3.18m. Barry Ferguson owes £1.325m. Employer’s national insurance of 13.8% was evaded. This should be pursued via BDO.

All the pundits in the Scottish game, like Neil McCann, who are compromised, should have their contracts rescinded.

Title stripping in itself will not provide the apposite restitution.

I am a pragmatist. My solution is achievable. Title stripping punishes those who did not engage in this artifice, including the honest men and women behind the scenes and the supporters who had no idea what was going on. SDM controlled the media and used individuals such as James Traynor to pour scorn on Hugh Adam’s honest words. The complicity of the media in this debacle should not be overlooked.

The guilty should be punished. They should be hit hard in their pockets.

A letter to Peter Lawwell

“Dear Mr Lawwell.

I wanted to express my grave concern about the outcome and implications of the so-called ‘Rangers Big Tax Case’.

Assuming that the judgement in favour of HMRC is not appealed and overturned by the UK Supreme Court, then the implication is that Celtic and the rest of Scottish Football were playing in a rigged game for the best part of a decade. One of the competitors had a colossal unfair advantage by being able to employ players on the back of not paying the tax due on their wages.

This meant that myself and thousands of others were unwittingly paying millions of pounds into a grotesque parody of sport. It meant we were most likely deprived of more happy memories and wonderful trophy-winning days. It also meant that the strategy and investment of Celtic’s Board on behalf of its shareholders was being systematically undermined by ‘questionable’ methods.

I don’t doubt that the outcome of the previous Lord Nimmo-Smith Commission into side-letters will muddy the waters in some way (and may be used by some in a spurious ‘double-jeopardy’-based argument for taking no action). However, let us be clear: confirmation of players being employed without paying due tax is something new. And something that needs to be considered by proper inquiry and disciplinary processes.

Should the SFA and SPFL fail to take action it will be a shameful admission that the concept of sport counts for very little in Scottish football. There will be no moral hazard and no justice for all of us who love the game and who were misled for the best part of a decade.

As the Chief Executive of Celtic, I hope you are making the strongest possible representations to the SFA and SPFL (and if necessary UEFA) over the issue of Rangers’ apparently stolen titles and trophies. I also hope that you are speaking to other clubs to build a groundswell of support in favour of disciplinary action being taken.

As members of the SFA and SPFL Boards, I hope that you and Eric Riley will vote in favour of the instigation of disciplinary proceedings against Rangers. I note that the current incarnation of the Ibrox club maintains that the Big Tax Case outcome has nothing to do with them, while still proclaiming that they are the proud owners of 54 titles and numerous other trophies. This obfuscation cannot be allowed to stand in the way of justice being done, and being seen to be done.

I have no doubt that many fans of all clubs will vote with their feet and wallets if Rangers (IL)’s apparent systematic cheating is not addressed ‘without fear or favour’.

I know I will. Because it would mean that the game is utterly worthless.

Thank you for your time.”

The open letter to Peter Lawwell was written by CFC blogger The Clumpany. He is one of the more informed and intelligent individuals on the other side of the divide. As you would expect from me, something rarely accorded to me by my detractors, I will play the message, and not the man.

Other clubs, notably Arsenal, deployed EBT. Ray Parlour paid only 22% tax on a salary of £1.5m. Thierry Henry, Patrick Vieira, and Dennis Bergkamp are also alleged to have benefited from a significant part of their salaries paid as a loan. Prior to settlement in 2005, Arsenal won:

2 League Championships (2002, 2004)

3 FA Cups (2002, 2003, 2005)

There was no clamour from other English clubs for Arsenal to be stripped of these five major titles. I accept that Arsenal  were quick to offer settlement when the details of Mr Parlour’s preferential tax arrangement were made public during his acrimonious divorce proceedings in 2004.

Is it a more heinous offence to continue to deploy and conceal payments for a longer period than Arsenal did? I can see the merits in this argument, but what would be the benefit to clubs today if retrospective stripping of titles was effected? I don’t see any causal link to yet another calamitous season in UEFA competition. Could anyone possibly posit a case for the extra revenue that was denied CFC being sufficient to arrest the sales of  Hooper, Wanyama, Forster and Van Dijk? CFC have become a selling club and this was brought into sharp focus last night. Would CFC have managed to retain the services of these players if they had been paid £2.5m off the books, as was the case with Barry Ferguson?

I am more persuaded by the point in regard to the investment required by CFC’s board, than to the lost enjoyment of the fans. There is a reasonable doubt that Rangers could have won these titles without the aid of EBT. David Murray borrowed £10 for every £5 spent by CFC, but I do not envisage Peter Lawwell pursuing the former executives of the Bank of Scotland. Mr Murray’s access to soft credit underpinned much of our success. As Hugh Adam aptly put it, he was a super salesman. He was more adept at raising money than the board of CFC during this time.

Would you not agree that this factor, more than EBT, skewed the balance in favour of Rangers?

Would you not agree that the development of the best sports facilities in Scotland, with a £650,000 grant from Sports Scotland, several million from the lottery commission and the balance from Bank of Scotland, led to Rangers’ players being better prepared than those of CFC, and this advantage could have contributed to their success?

There are a myriad of factors that led to our success during that period. Reducing the argument to just one factor does not serve your case well.

What would best suit Scottish Football as a whole would be a more balanced approach from a new commission. Title stripping won’t make CFC a better team and it won’t lessen the bad taste in your mouth from reverses during this period.