A stunning Panorama documentary on BBC Scotland last night, made by the respected journalist Mark Daly and the team who previously exposed Craig Whyte’s controversial business background, has at last revealed the full story behind Rangers’ tax scams.
Over 100 employees of the cash strapped football club received tax free payments totalling more than £50M over a period of at least ten years. These included over 60 footballers – meaning that the club both benefitted from employing players it could not otherwise have afforded and also broke football’s contract rules many times over several years.
Make no mistake – this was cheating on an industrial scale.
The revelations are not so much a smoking gun as a ticking nuclear bomb.
And football’s authorities must now take action against a club that has won cups and titles through this massive conspiracy. It has cheated the whole of Scottish football and must be made to pay for its actions.
Use of the controversial Employee Benefit Trusts, or EBTs, was even more widespread than had ever been thought. The scheme involves establishing a Trust with offshore trustees, which then offers discretionary loans to employees on top of their wages – and on a tax free basis. The loans come from the Trust, not the employer, and they must not be contractual. It’s a little more complex than that, but on the face of it, EBTs are not necessarily illegal.
But if EBTs are used to pay any part of basic wages – regular contractual payments – it becomes dodgy. And if the employees receiving the loans are told in writing that they will never need to pay the money back, then the tax man becomes interested. Because then all the payments made become taxable income – and if tax hasn’t been paid on them they will come after the body that set the trust up in the first place.
This is the basis of what in the lexicon of Rangers FC PLC (in administration) has become known as the Big Tax Case. Her Majesty’s Revenue and Customs issued a tax demand to the company related to EBTs, and the result of the appeal against that assessment is still awaited. But if Rangers lose the appeal, as is widely expected, the final bill will have penalties and interest added – and could end up somewhere over £75,000,000.
The BBC documentary exposed the beneficiaries of Rangers’ EBTs.
Former owner Sir (for now) David Murray was the biggest single beneficiary netting over £6M. Other former Board members also gained with ex-director John McClelland receiving £225,000, the SFA president (for now) Campbell Ogilvie receiving £95,000 and “the greatest ever Ranger” John Greig making £40,000.
Past managers also received payments: Alex McLeish got £1.7m, Dick Advocaat £1.5m and Paul Le Guen £201,250. It was also revealed that Graeme Souness, received £30k through an EBT in 2001, 10 years after he left Rangers. Why would that be? Could it have anything to do with Souness’ role at that time as Blackburn manager – and the fact that he purchased several Rangers players?
Sixty three players in total have been revealed to have received payments, ranging from £7,500 to Steven Smith up to £2.494M paid to former captain Barry Ferguson, who received the highest total sums.
Others to benefit have included Scottish pundits Neil McCann (£500,000) and Billy Dodds (£190,000), Dutchman Fernando Ricksen (£684,225), top scorer over several seasons Kris Boyd (£215,000) and current club captain Steven Davis (£600,000). Tore Andre Flo, the Norwegian striker who cost the club £12M also netted a cool £1.3m on top of his substantial wages.
To repeat: these are 63 players who helped Rangers to win leagues and cups while receiving payments that broke football’s rules. In effect each and every one of them was ineligible to play in any competitive football matches.
And the usual penalty for fielding an ineligible player is that the result of each match is changed to a 3 – 0 defeat. Imagine how different football would look if this action was taken in the case of hundreds of games.
But there’s more.
The BBC programme also exposed a conflict of interest at the heart of the current management of the club, which was placed into administration on 14 February 2012. It seems that administrators Duff and Phelps, appointed by the courts to run Rangers, advised Craig Whyte during the period when he bought the club from Sir (for now) David Murray.
Whyte made a deal with Ticketus to gain over £20M in return for the rights to several years’ worth of season tickets – a deal that the BBC programme said was known to David Grier, a senior Duff & Phelps partner. They have copies of e-mails that appear to back this view. Grier later said that he was unaware of the Ticketus deal until August 2011.
If Grier was indeed involved in the Ticketus deal then he had a clear conflict of interests. He had worked with Whyte to but the club yet was now part of the company administering the club on behalf of the creditors. An administrator should be independent of all parties involved.
The BBC showed its evidence to forensic accountant and licensed insolvency practitioner Roger Isaacs from the Institute of Chartered Accountants for England and Wales.
Mr Isaacs said: “… in those circumstances, given that he was a partner of Duff & Phelps, I’m surprised that that involvement wasn’t firstly disclosed, and secondly doesn’t give rise to the sort of conflict of interest that I would have expected to have precluded Duff & Phelps from accepting the appointment as administrators.”
Duff & Phelps have now started legal action claiming that Whyte and his lawyers, Collyer Bristow, were engaged in a conspiracy to defraud the club of £25m.
So, where does this leave Rangers?
There can now be little doubt that the appeal against the Big Tax Case will be lost. All of the evidence necessary to prove the illegality of the scheme is known to exist.
There could also now be moves by creditors to have Duff and Phelps removed and new administrators appointed – a process that would take time. And that is something that the club simply doesn’t have.
Charles Green’s takeover is dependent on securing agreement from the clubs many creditors to a payment plan. If that doesn’t happen, and happen quickly, it will all fall apart.
But that would still leave the EBTs issue to be resolved by the footballing authorities.
Over the Murray years we are told that Rangers revolutionised Scottish football. There seemed to be no player they could not attract – and now we know how it was all financed.
How many tainted titles did Rangers win? How many tarnished cups?
Surely this is the end for the club? Liquidation must come soon because of the financial mess the club is now in. The debts are just too much to be paid off.
But the footballing authorities should first act. And there is only one suitable punishment for such massive cheating – expulsion of Rangers Football Club from Scottish football.