The Fall of the Evil Empire Part 3c

The Voice of Gaudd continues his opus on the disaster that was the Fall of the Hun Dynasty.

—————————————————————————————————————–

Craig Whyte
“Wavetower is pleased to announce that it has today acquired 92,842,388 ordinary shares, representing approximately 85.3 per cent of the issued share capital in The Rangers Football Club PLC (the “Club”), for a consideration of £1.” – Message sent to the Stock Exchange in May 2011.
“Obviously I’m a massive Rangers fan and have been since I was a boy. I’m here first and foremost because I’m a Rangers supporter. I also see a great opportunity and think that Rangers can be a great worldwide brand. I believe there are many commercial activities that can be expanded on.” – Craig Whyte after taking over Rangers, May 2011.
When someone buys a football club for £1 you know it’s financially screwed, and when that club is one of the biggest in the country then you know it’s financially screwed major style. So it was with Rangers when David Murray sold MIH’s 85.3% controlling interest in the club to shady spiv Craig Whyte (surely “self-made Billionaire”? – Ed). We know now thanks to the SFA’s Judicial Panel Disciplinary report, entitled “The Stable Door & The Missing Horse”, that Murray and other leading figures at Ibrox were well aware of Whyte’s track record when the deal was pushed through despite later claims of being “duped”. As another dodgy geezer connected with Ibrox, David King, rasped bitterly: “I do not believe that there will be a single person in Scotland who has dealt with both gentlemen that would believe that Craig Whyte had the capacity to dupe David Murray”. Others were well acquainted with Whyte through the pages of satirical magazine, Private Eye, where the activities of the “billionaire” featured on a regular basis – obviously though a publication of which the entire Scottish press corps and David Murray were unacquainted.

Murray of course was desperate to sell due to heavy pressure from Lloyds, who not unreasonably wanted to reduce the £700m debt owed to them by Murray’s crumbling business empire. So Whyte’s reputation was pretty meaningless. So much so that he could’ve staged regular puppy strangling sessions in George Square while kicking crippled orphans in front of speeding buses and the deal would’ve sailed through regardless. So all the wide-eyed claims of being “duped” can be discounted for the drivel they are, for who else would’ve taken over Rangers at that point? Remember Rangers were losing approximately £1m every month, were £30m in debt and had been found guilty by HMRC of illegal tax avoidance on a grand scale. The Scotsman in May 2010 put Rangers potential liabilities at £80m and counting, and by all accounts panic reigned supreme the full length of the marble staircase.

Such was the curse of the financial albatross round Rangers neck, that the unwanted club was practically unsellable; the only other “bid” for Rangers, from “London-based businessman” Andrew Ellis, had expired on the jagged rocks of rangers huge financial liabilities after a protracted death of quite gruesome horror. Speaking in February 2012 as he tearfully apologised for introducing Whyte to Murray, Ellis blubbed: “My interest in buying the club had ended due to the potential cost of the impending tax case but I had met Craig via the Cadbury family and was told by people that he was a very successful and wealthy businessman who was interested in buying Rangers.” Isn’t it amazing how all these successful, and reputedly sharp, businessmen suddenly turn into hapless naïve saps when it’s convenient?

Barring the arrival of some low expectation Saudi Sheikh looking for a football club as a new toy (and what are the chances of that happening in the SPL?), only someone who thought they could gain personally out of Rangers plight would’ve shown any genuine interest in such a financial basketcase. But despite obvious questions over his intentions, and despite his well-documented reputation, Whyte was not just welcomed by the media and Rangers supporters, but positively lauded as a new Bluenose Messiah. The reaction to Whyte riding into town with his bag of snake oil is all the more puzzling due to the fact that the Independent Board Committee of The Rangers Football Club (IBC) was so publically doubtful over Whyte’s intentions. “Although the IBC has no power to block the transaction, following its inquiries, the IBC and Wavetower have differing views on the future revenue generation and cash requirements of the club”, read the IBC statement when Whyte completed his buy out. “And the IBC is concerned about a lack of clarity on how future cash requirements would be met, particularly any liability arising from the outstanding HMRC case,”

The mainstream media as ever failed to do their job, and the Rangers support, as ever, failed to ask any questions – pertinent or otherwise. But just what was Whyte’s true motivation; just what was he up to? In February 2012 The Guardian ran an article by Ewan Murray titled “Just why would a man like Craig Whyte buy Rangers?” It was a very good question. In the article Murray attempted to fathom what lay behind Whyte’s decision to buyout Minty Moonbeams: “The key intrigue about Whyte is as relevant now as it was nine months ago: why would any businessman step forward to take over a company facing a contingent liability of £36.5m plus penalties, which it would clearly have struggled to absorb? Whyte’s explanations of his motives have always been as unconvincing as his attempts at providing background into his own business dealings. Asked why he bought Rangers, Whyte would only ever point out that he was a fan and that ‘nobody else stepped up to the plate’”.

Ewan Murray’s conclusion that Whyte was a “hedge fund player who gambled on Rangers both winning and losing the tax tribunal” has some merit, but it may well be that Whyte was simply offered the chance to make a quick buck in return for being Murray’s fall guy; after all, looking at Whyte actions while at Rangers it’s difficult not to conclude that he always intended his presence to be of a very short, taxi-meter running duration. As ex-Rangers chairman Alastair Johnson said: “First, during the process of due diligence it became clear he didn’t care about cash flow. That indicated to us they were in for a short ride. They had no interest in operating the club.” Whatever Whyte’s motivations he is seen now as the man who destroyed Rangers, a rather unfair accusation as the club was already effectively destroyed before Whyte scampered onto Murray’s vacant throne. Yet rather than pin the blame where it really belongs, the David Murray worshipping media have attempted to pin the sole responsibility for Rangers’ death on the poor googly-eyed scapegoat.

A scapegoat? Certainly for journalists such as James Traynor of the Daily Record who invested so much butt licking time with David Murray. By the time Rangers fell into administration the initial standard grovelling that greeted Whyte’s arrival had given way to snarling, finger-pointing denunciation. Yet it was Traynor who described Whyte in his tatty rag on 7 May 2011 as a “Motherwell-born ‘turnaround’ specialist’” despite there being no evidence at all that Whyte had turned around a solitary troubled business. Ewan Murray in The Guardian again: “Last September, when meeting the Scottish press, he was asked to offer just a single example of a company which he had successfully turned around from a difficult position. The 41-year-old declined on the grounds he likes to keep his affairs private.” And as we know the tabloid press respects privacy.

So Whyte wasn’t a “turnaround specialist” nor was he a “billionaire” with stupendous wealth as reported by “duped” journalists, so what did anyone involved with Rangers believe Whyte was going to achieve? Whyte didn’t even have the money to pay off Rangers bank debt, something he could only do by flogging off three seasons worth of Rangers ticket sales for over £20m to “duped” finance firm Ticketus. Thanks to Ticketus’ rather unwise investment, Lloyds got their £18m, Murray was £1 richer and able to bail out before the balloon finally burst, and Craig Whyte became the owner of a debt-ridden club that was busy shuffling off its mortal coil. To blame Whyte for Rangers death is a bit like blaming a vulture pecking at a lion-chewed gnu for the unfortunate beast’s fate.

When news of the Ticketus deal became public the media assumed that Whyte had used the cash to cover Rangers operating costs following his strenuous ‘cross-heart and hope to die’ assurances that he had not used the loot to buy the club. “It is disgraceful that at every turn there are people who continue to damage Rangers,” Whyte screamed when the accusation was aired, with one bulbous eye independently swivelling in the direction of the applauding “duped” Rangers support. “People who when they were asked to step up and rescue the club were all talk and no action.” The truth was that Whyte was managing to keep Rangers running not by using up the Ticketus cash, which was mainly nestling in Lloyd’s back pocket, but by simply failing to pay £9m of PAYE and NIC taxes. “I’m the same as everyone else. I don’t know where our taxes have gone,” gasped “duped” Rangers manager Ally McCoist has he hurriedly hid his wage slips. “These are all questions that will have to be answered. I haven’t spoken to Craig since Monday. We must get answers. The Rangers supporters deserve answers. My overriding feelings are of disappointment but a gritty determination to get through it.” [yes he actually said “but a gritty determination to get through it”, I didn’t make that up].

Rangers eventually entered into administration due to over-sensitive HMRC being less than enthralled by Whyte waving two-fingers in their direction, but again administration at some point was inevitable given the state of Rangers finances. Only by using the money that should’ve gone to the taxman was Whyte able to keep the club running into 2012. On 13 February with the bell tolling in the background, Rangers, after finding out that HMRC were about to force administration, scurried out to the Court of Session and filed legal papers giving notice of their intention to appoint their own administrators, Duff & Phelps. Later it would emerge that incredibly Duff & Phelps had been involved with Whyte’s takeover of Rangers. A BBC documentary, “Rangers: The Men Who Sold The Jerseys” revealed the role played by senior partner David Grier in the deal. In June 2012 Duff & Phelps was ordered by Lord Hodge at the Court of Session to produce a report “showing they had obtained and acted on legal advice on the question of conflict of interest.”

Clearly Whyte had administration in mind from the beginning, so there was probably never any intention of honouring the Ticketus deal. In May 2012 Duff & Phelps wrote to Ticketus basically stating “tough luck”, and the London firm was left with the no doubt hopeless prospect of trying to get the £25.3m it was owed of serial debt ditcher Whyte rather than Rangers. “The club’s administrators have informed me they have written to Ticketus to terminate the agreement that is currently in place with the club and supporters can now take heart from the fact that season ticket sales will be as normal,” boasted prospective owner Charles Green being rather economical with the actualité as usual.

So Whyte took Rangers into administration where they could default on debts and emerge without any of the inconveniences like actually having to pay for stuff like everyone else. Administration may have been inevitable thanks to two decades of overspending and no little amount of mismanagement, however liquidation at that particular moment was less so. Had Duff & Phelps and Charles Green presented an acceptable company voluntary arrangement to HMRC and other creditors it is possible that liquidation could have been avoided, at least until EBT tribunal verdict. The CVA though did not begin to meet the criteria stated by HMRC for agreement, offering creditor’s just nine pence in the pound and failing noticeably to treat all equally. By then Whyte had scooted off back to Monaco after doubling his investment cash when the club was sold for £2 to Charles Green.

So we’re back to the question of what Whyte was up to and just why did he buy Rangers? Well if you believe David Murray then Whyte duped everyone with the clever ruse of telling them what they wanted to hear. Not only was Whyte going to pay off Rangers £18m debt to Lloyds, he was going to make another £9.5m available for players and stadium repairs, and another £5m of immediate working capital for Ally McCoist to roll around in while giggling and clapping happily. Not a single word about putting adequate money towards a potential settlement with HMRC should Rangers lose their EBT appeal. Didn’t that strike anyone as rather odd? Not David Murray anyway, he even used Whyte’s rather dodgy business activities as a justification for carrying out no background checks: “There’s only so much information. After someone has been disqualified for seven years, it’s not that easy to check. And it is also down to the individual, is it not, to make us aware of that. So we did check, to the best of our ability.” So maybe being disqualified for seven years would….ah forget it.

Yet we know Private Eye had no problem at all reporting Whyte’s nefarious dealings, and still on the theme of private eyes, the IBC had their own sleuth who also had little problem discovering the extent of Whyte’s shady business record. That report was presented to David Murray by chief executive Martin Bain despite Murray later stating: “If the information [on Whyte] had been available to me at the time I wouldn’t have done it. I did it in good faith.” It’s simply not credible to claim, as Murray does, that someone would take over a debt-ridden, loss-making club which had huge potential tax liabilities steaming in its direction, with the intention of spending even more money to make the situation even worse. Given Whyte’s failure to carry out any kind of serious due diligence and his immediate cessation of tax payments to keep the club going, the shady spiv well knew that Rangers was a lost cause.

So let’s look at the facts we have so far. We know Rangers were heading into unavoidable administration given the liabilities and insufficient revenue generation, with liquidation a strong possibility. We know David Murray would not have wanted to be around for that event regardless of the pressure being heaped upon his stooped shoulders by Lloyds. We know that Andrew Ellis introduced Whyte to Murray. We know that the IBC presented a dossier on Whyte to Murray, and we also know that Rangers financial liabilities had left the club unsellable for four years. Could it be that Whyte was introduced to Murray by Andrew Ellis as the guy who can give him that desperately needed exit in return for financial recompense?

Whyte had a track record of defaulting on company debts, especially tax, so he may not have been particularlyperturbed at doing so again if it was going to be well worth this while. How much Whyte gained financially during his period at Rangers is at this moment unknown, but his claims of coming out of the whole saga with no arse in his trousers isn’t exactly credible either. So let’s say Whyte was the man brought in to do what David Murray couldn’t face doing and that was to guide Rangers into administration, and through his close connection with Duff & Phelps to make that administration as painless as possible for Rangers. “Although we’re going through a very, very painful process at the moment for all Rangers fans, it’s a process that really is absolutely necessary,” stated Whyte shortly after Rangers entered into administration “and we will come out the other side of this as a stronger, more sustainable business.”

Maybe that was the plan, and Whyte intended to sell up for a tidy profit afterwards, but if so then despite the recruitment of Duff & Phelps the Cunning Plan appears to have been ineptly managed. Could it be that all those concerned underestimated the reaction that would erupt due to the unprecedented damage to the collective Rangers masterrace mentality? Could they have so misjudged the attitude of HMRC to such a public wedgie? Or did Whyte regard liquidation as inevitable and so planned for the utter demise of Rangers from the very beginning? Was Duff & Phelps rather extraordinary behaviour during the administration of Rangers partly due to the need to spin out the club sale process until Whyte’s favoured buyer had enough backers in place to be named exclusive bidder? Certainly Charles Green arrived in a rather unexpected manner and was very quickly embraced by Duff & Phelps much to the teeth-gnashing fury of the Blue Knights and others.

Liquidation also solved another problem, it left the new club without the impending doom of the EBT tax case, which had it gone against Rangers, as seems likely, would have certainly lead to the club’s demise anyway. So Green buys up Rangers, and after liquidation creates what is to all purposes a phoenix company with the assets, trademarks and trimmings of the defunct Rangers but without the crippling debt and potential liabilities. Green for his part may have suffered some unexpected setbacks due to the laudable supporters’ campaign which scuppered disgraceful attempts to push the new club into the top tier straight away, but it’s almost inconceivable that the new club will not be back in the SPL in three years’ time; probably before then if the SFA and SPL managed to gerrymander league reconstruction. When that happens Green will in all likelihood sell at a considerable sum and hand a tidy profit to his mysterious financial backers. Now I wonder who they might be?

In Part 3d – The Men Who Spent The Cash & The Men With No Lines.