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Archive for May, 2012

We may yet not have agreed all of the rules and regulations around an independence referendum. We still don’t know for definite when we will be asked to vote or exactly what question (or questions) we will be asked to vote on. But the Yes Scotland pro-independence campaign has now been launched.

Now I’m glad that we are getting away from technicalities and moving on to debate the real issues – even if it could yet be more than two years until the actual decision day. Alex Salmond knows that he can only count on one third of voters or so to support independence right now. And so he wants a long run at this to attempt to build up that figure. But that means gambling that a two year plus campaign won’t turn the electorate off entirely.

The Yes Scotland campaign launch wasn’t exactly the slick PR event that Salmond would have hoped for. Originally intended to be held in Glasgow it was moved to an Edinburgh cinema at short notice. And the many posters around advertising the film The Great Dictator were a gift to opponents of the First Minister.

The event itself featured speeches from actor Alan Cumming, who resides in the USA and a message from Sean Connery of the Bahamas branch of the SNP. But there were a few nationalists present who like Scotland enough to make it their home. The Greens and a few of the assorted brands of socialist parties also had minor roles in the production.

There was little detail and much rhetoric at the event, which many observers thought betrayed the fact that it had been organised in a hurry. By most accounts it felt rushed and looked disorganised. And, Liz Lochhead aside, the parade of white, middle aged and older men did nothing to promote the notion of wide support across the communities that make up Scotland.

Even the press conference afterwards was a little chaotic and the participants were not always on message. Asked if voters were being urged to sign the campaign’s Yes Declaration without all of the facts, Blair Jenkins, the former head of news at BBC Scotland, replied, “Well, yeah. It’s about hearts and minds in a broad sense, rather than the detail.”

And there’s the rub. Yes Scotland isn’t a conventional political campaign that will try to persuade voters to support a particular manifesto or candidate, or even a detailed position on a single issue, much as it pretends to be the latter. It’s all about the selling of an idea.

Scotland is great. Scots are great. Scotland should be run by Scots, wha’s like us?

Voters are being asked to make a leap of faith. To support the separation of Scotland from the rest of the UK on the basis that it will inevitably be better, just because it will. It’s obvious, isn’t it?

Now this is not a fight for freedom where an oppressed country is being occupied by another. Or where a nation has been denied democratic rights within a larger country. Scotland is a partner in a union and has its own devolved government dealing with many day to day issues – a position that the majority of its people have consistently favoured.

The No campaign, once it gets going, will concentrate on asking the difficult questions of detail that Salmond and co would rather avoid. Would an independent Scotland be in NATO? Well, no the SNP will say, as that’s its current policy. But it might well change at some point during the next couple of years. Would the Queen be head of state? Yes, she is, of course, Queen of Scotland. But that idea doesn’t appeal to many in the Yes camp, including those on the left of the SNP, who would prefer to see a referendum at some stage. And is this independence within Europe or outside the EU? The rules on whether an independent Scotland would be a member or would have to apply to join are open to interpretation.

The main battleground is likely to be the economy. The stark truth for Alex Salmond is that he will not win an independence vote unless he can persuade the majority of Scots that they and their families would be better off.

That involves creating an economic case for a separate Scotland – but much of the necessary data to do so can only be guessed at. What proportion of the UK’s assets would an independent Scotland inherit? How much of its debt? What budget would be required for defence and foreign affairs? How much could be raised in taxes? Would the country be in the EU? Would it use the pound or the Euro?

And would an independent Scotland, a relatively small country, be strong enough to withstand the economic buffering that all countries are facing in the current climate?

There are so many variables because many of the answers would only come from the detailed negotiation of Scotland’s separation from the UK. For now all we can do is make assumptions, and you can guarantee that the two camps will argue over these. Indeed there are already two extreme scenarios that show an independent Scotland as either a rich nation – or a near bankrupt one.

For all of the talk of an idealistic nation living peacefully in some sort of tartan clad paradise, or of a country with devolved powers remaining in a strong union with its neighbours on this small island, it is the amount cash in their pockets that will determine how most people will vote when the chance is offered.

But for now we have two years of intense debate and political argument to look forward to. The political anoraks among us will love the endless to and fro, the cut and thrust of it all. I just hope that the people of Scotland will stick with it – this will be the most important vote that we will ever have.

 

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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.

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Neil Doncaster, the Chef Executive of the Scottish Premier League, has talked of the way in which a new club formed after the liquidation of Rangers FC PLC (in administration) could be admitted to the top league.

But to do so would fundamentally alter the nature of Scottish football– and should be opposed by all who value sporting integrity.

Doncaster was quoted as saying he was “baffled” that no one could understand that a Newco and a CVA are in fact pretty much the same thing.

Now, I’m pretty sure that Neil Doncaster knows exactly why a company achieving a CVA – an agreement with its creditors – is not at all the same as a company being liquidated and an entirely new and separate company being formed to buy its assets. He has had legal training after all.

No, this is all an attempt to get around the squaring the circle argument I’ve mentioned several times. A new company has to look new enough to avoid getting landed with the old debts, but at the same time it must appear old enough to retain the history and the honours of Rangers, such as they are.

A totally new club would have no difficulty avoiding any debts or penalties. Why would it be liable for anything to do with a totally different company? But then how could it avoid starting at the bottom of the league structure like all other new clubs?

There is simply no process in place by which a brand new club can join the SPL. Read the rules. Read the football licensing policies. It can’t happen.

On the other hand, if it is argued that this new club deserves a place in the SPL by right, as it is really Rangers in new clothes, how can it walk away from the debts that have been run up?

Doncaster’s solution to this issue seems to be that the new club could be allowed into the SPL if it agrees to some entry conditions. These would not be penalties for the past, you understand – that was all a different club. They would be the price that the new club must pay for being allowed to join the SPL.

What he means in reality is that a new club could be allowed to buy its way into the SPL.

If the new club agrees to, perhaps, a lesser share of revenue and maybe some points deductions over a couple of seasons it could skip the queue of established football clubs that would love to join the SPL. It could avoid the whole tedious gaining promotion business and simply purchase a place in the top division.

Now at this point we more to a franchise model rather than a sporting pyramid one.

In the same manner as so called “expansion” teams in the NFL can buy their way into the league when additional places are created, this new football club could, we are told, simply agree an entry fee and then play in the SPL.

But such a process would fundamentally change the nature of our game. No longer would the top division be made up of the twelve clubs that had earned a right to be there on the basis of their football results. No, it would include a side that was there simply because it was willing to pay the entrance price.

Now introducing such a system would logically lead us to a number of questions.

Could Dundee, or indeed anyone else that fancies it, decide to make a bid to replace another SPL club? What about non league teams? If one of them managed to get itself a rich patron, could it then make an offer? Would the SPL place be up for auction to the highest bidder?

Or would this proposed route exist for one new club and one new club only? In which case the game also changes fundamentally – but in a very different way.

This summer Scottish football will stand at a cusp. A point in history where the future direction of the game will be decided. There are two competing forces in conflict here: sporting integrity and money. And those who run our game must make a choice.

Does our game become one where places in the SPL can be bought and sold?

Or does it reject the new club and set its stall out as a game with sporting integrity at its core?

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The Scottish League season is now over and, with all cup involvement having ended a very long time ago, Rangers Football Club PLC (in administration) may have played its last ever game.

It is now twelve weeks since administrators Duff and Phelps took over the running of the cash strapped club, and there has been a tremendous amount of sound and fury. But has anything substantial actually changed in that time?

The debts are still there. Costs haven’t been cut to any great extent. And few redundancies have been made, which is unlike any other major administration situation. In fact the biggest change is that Duff and Phelps have earned themselves somewhere north of £2,000,000 in fees so far.

I won’t go through the whole fiasco, the many bidders who have come in and then walked away: the Blue Knights, Bill Ng, Brian Kennedy and Bill Miller. Suffice to say that they are all out of the picture now.

The consortium that is/ might be/ will be buying the club is led by one Charles Green. He is backed by a band of 20 or so unknown UK and eastern businessmen – the Green Knights if you will. Despite Ally McCoist’s insistence on transparency elsewhere the names of these investors do not seem to be forthcoming.

So what is the Green Knights plan to save the club? Well, we know they don’t intend to pay the debts off, that’s for sure. The £140,000,000 or so that is owed will not disappear either. Rangers’ accounts, if they actually produced any, would show a club that is insolvent. Its meagre assets come nowhere near to the sums owed.

Things are so bad that I’ve seen comparisons with the Greek economy recently. Perhaps the Greeks are missing a trick here: as far as I know they haven’t shown the EU the red card yet. Perhaps that symbolic act would make the situation better.

Still, Greece does have a long history of civilised behaviour and has won a European championship, so comparisons with the Ibrox mob are clearly way off the mark.

The Green Knights say they will offer up a CVA, putting a mere £8.5M into the pot. Now firstly we need to remember that the administrators’ fees come off that sum before anyone else gets a look in.

And secondly that our old friend Craig Whyte is still in play. He may have sold/ agreed to sell his shares to the Green Knights but his floating charge has not gone away. And that means he is next in the queue to be paid, before all of the other 200+ creditors that we know of. I’ve always said that Whyte would walk away from this sorry mess with a big profit and I stick by that. He will be owed somewhere around £20M.

Now readers with astute financial brains will have realised that once Duff and Phelps and Whyte are paid there will be zero left from that £8.5M. So what will the ordinary creditors be offered? That’s right – nothing.

That means creditors – including of course Her Majesty’s Revenue and Customs – will have no choice but to liquidate the club if they are to have any chance of seeing any money at all.

At this stage the Green Knights will undoubtedly form a newco and seek for it to buy the assets of Rangers, starting a brand new club. See what I mean about nothing really having changed? We’ve been here before. Several times actually. OK, there’s no incubator this time; instead it’s a newco from a natural birth.

So rather than go through the various permutations of events that might happen next, let’s simply list some of the outstanding issues that stand between the Green Knights and the rescue of Rangers.

Yesterday saw Lord Carloway and his panel rule against the club in its appeal against the SFA’s fines and transfer ban. This means that no new players over the age of 18 can be signed until next summer. The club currently has 40 professional players, but how many of them will walk away?

The Big Tax Case appeal has still to be resolved. The overall sum owed is so large that a few million here or there in the eventual bill won’t actually make a lot of difference. But its conclusion will make HMRC more determined than ever to ensure that the club is not seen to get away with tax evasion.

The SPL investigation into whether payments made to players under the EBTs were against footballing laws. All payments made to players have to be included in a contract lodged with the governing bodies. Now you would assume that illegal payments were not included! So over many years and involving many players the rules were broken, probably hundreds or even thousands of times. The punishment could be severe.

In addition to all of this, there are football’s rules to consider. The SPL will meet again in two weeks to discuss changes to its Articles of Association. The proposed changes would give clubs the right to decide on whether to admit a newco rather than the matter being left to the SPL Board. There are also outstanding votes that could set entry punishments on a newco – The Cheats’ Charter.

And, if all of that is ever sorted out, a newco might just be able to apply to join the SPL. It could even win a vote of SPL clubs – but only if they ignore the principle set by the Hibs chairman that sporting integrity must come first. “It’s not a question of any sum of money in return for that integrity, integrity is beyond purchase,” said Rod Petrie. Well said, sir.

But it doesn’t even end there. All SPL clubs are required to have a UEFA Club License to play in the league. And a newco simply cannot meet the criteria, which include a three year playing record. What’s more, the SFA cannot grant an exemption to this rule. UEFA itself could, in theory. But why would it? Why set a precedent, why drive a nail through the heart of its own Financial Fair Play rules?

So, there is much for Mr Green and his band of merry men to do, it seems. And not an awful lot of time to do it in. The close season in football is not a long one and the time available to sort out all of these issues before next season start is short.

Will there be a team in blue playing at Ibrox come the opening day of next season? Right now I wouldn’t put money on it.

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Scotland’s voters went to the polls last Thursday to elect councillors to our 32 local authorities. And while the results are very important to every Council individually it is the indications they give us for national politics that the media will focus on.

The headlines: it was a very good result for Labour, a good result for the SNP, an ok result for the Tories and a disaster for the Liberal Democrats.

The Labour Party came into these elections with the most to lose. It controlled only two councils: Glasgow and North Lanarkshire, although of course the Single Transferrable Vote makes coalitions the norm. Labour was fighting these elections on the back of the worst results in living memory at the Scottish Election. And it was forecast to lose further ground to the SNP, which had confidently predicted that it would win Glasgow outright and remove the labour majority in North Lanarkshire.

The new Labour leader Johann Lamont will be very pleased at the voters’ verdict. Labour did much better than expected, gaining around fifty seats and giving her something to build upon in the coming months.

Glasgow was always where the most attention was going to be placed. At one time it would have seemed absurd to contemplate anything other than a Labour victory in Glasgow. But in the new two-party Scottish political world the Nationalists were legitimate challengers.

An SNP victory in the city would have been the party’s biggest win ever. It would have been used to signal both the death of the traditional Labour party in its heartland and a sign that an independence referendum could be won. So the SNP threw everything it had at Glasgow in an attempt to achieve that historic victory.

But late on Friday afternoon as the final ward declared its result Labour had already secured a majority. With 44 Labour councillors to 27 for the SNP it was a comprehensive victory in the end.

Labour also maintained its majority in North Lanarkshire. And the party won overall control in Renfrewshire and West Dunbartonshire too, as well as making significant gains in Aberdeen and Edinburgh.

For the SNP this was another good night. Despite its failure to win in Glasgow the party did gain overall control in both Dundee and Angus Councils and it increased its total number of councillors by more than fifty. It has more elected members than Labour does and can therefore make legitimate claims to be the overall winner on the night.

But the SNP is not a party that simply wishes to govern under the current political system. Its purpose is an independent Scotland and its focus is the referendum to come. And, judged against an overall objective of persuading a majority of Scots to back independence, there was no breakthrough in these elections.

Tory leader Ruth Davidson was, frankly, on a hiding to nothing. Her party started from a very low level and could only go one way: further down. The coalition government’s record impacted all across the UK, with the Conservatives suffering massive losses in England and Wales. A slight drop in the overall number of councillors in Scotland was not a disaster, and that’s probably the best Davidson could have hoped to achieve.

For the Liberal Democrats this was another dismal showing. It seems that Scottish voters, like their counterparts south of the border, will continue to punish them for its participation in the coalition government at every opportunity. Willie Rennie’s party went into the election with 151 councillors across Scotland and ended up with just 71. And that number has already decreased by one – a newly elected Highlands councillor left the party almost immediately after being elected!

The biggest losses were in Edinburgh, partly perhaps because of the party’s association with the disastrous tram project. But it suffered awful results across the whole country with losses leaving the party unrepresented in a number of local authorities.

This disaster will clearly be laid at the door of Nick Clegg rather than Willie Rennie. But it is difficult to see any recovery in the Lib Dems’ fortunes while the Westminster coalition remains in power.

The party’s night was summed up nicely in one Edinburgh ward where an independent candidate in a penguin suit polled more votes than a Lib Dem. But then given the options, I can see why that happened. In fact given the choice between Nick Clegg and a real penguin I know which most voters would probably p-p-p-p-pick.

The use of STV means that a whole number of Councils fall under the heading of No Overall Control. There will be many delicate negotiations ahead as the political parties try to make alliances or to persuade Green or independent Councillors to come on side. It may be a while yet before many voters know exactly what the administration in their area will look like.

A word on the turnout. Despite dire predictions of less than one in three voters bothering to turn out, the final figure averaged at about 40% across the country. This is still not great of course, and does show that many voters either simply don’t care about local elections or see little point in voting one way or another. It is incumbent on politicians from all parties to look at this issue and to re-engage with the people they all represent.

The next test of Scottish opinion is likely to be a referendum rather than an election. There is much still to be agreed on the practicalities of exactly what question, or questions, will be on the ballot paper.

But what is clear is that Scottish politics has now has very much become a two-party system. The SNP and Labour dominate a landscape that sees all other parties relegated to also rans.

And that is the context against which the independence referendum campaign will be fought.

 

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Sporting integrity: what does it mean?

For me, integrity underpins sport. The values and morals that offer a level playing field to all teams is the foundation of competitive sport. Rules must be applied fairly and equitably with all teams treated in the same manner.

And when actions are taken that undermine sporting integrity the culprits must be punished – whoever they are. No one must be above the rules, or too big to be punished.

Regular readers will know exactly where I am going with this.

In Scottish football there will be a vote tomorrow. The Cheats’ Charter will be discussed once more. This is the set of proposed rule changes that would allow a football team that goes bust to set up a new club and have it play in the top league in its place. And these amendments are being discussed for the benefit of one particular club.

Now Scottish football is not a franchise system like the NFL. There are several divisions with promotion and relegation between them on sporting grounds. The top team in a lower division will be promoted. The bottom team in a higher division relegated. And any new team must start and the bottom. It has always been this way. There is not one example in more than 100 years of football of a new team being allowed straight into the top division.

But the rules should be different for Rangers, we are told. And why should sporting integrity be forgotten about? Money. It’s as base and as crass as that. The argument is that the league cannot afford to lose a big club, so the rules should simply be changed to accommodate it.

Kilmarnock chairman Michael Johnston summed it up quite nicely when he told us that his club would support the Cheats’ Charter:

“Member clubs are mindful of a sporting integrity aspect but the commercial benefits outweigh that.”

So there you are. A man whose version of integrity is that it is second to money. He can be bought and sold. And sadly he will not be the only person in a position of power within Scottish football who thinks this way.

Why should Scottish football dismiss sporting integrity so easily? Other footballing bodies have shown that rules apply to everyone regardless of commercial considerations.

In Italian football, a match fixing scandal in 2006 saw the champions Juventus, Lazio and Fiorentina all relegated and AC Milan hit by points deduction.

No one argued that Juve, the grand old lady of Italian football, was too big or too famous to be relegated. The club broke the rules and so the champions of Italian football were punished for their crimes.

In France, Marseilles have had a league title taken away after being found to have fixed matches.

And other sports have taken action against big names too.

Snooker suspended John Higgins, a multiple world champion, on suspicions of match fixing. While it was never proven that he did cheat, even the failure to report an approach made to him resulted in a ban from the sport.

Athletics has acted against many who have been found guilty of taking drugs, at all levels of the sport. Even the winner of the Olympic 100m, the blue riband event, was not immune. Ben Johnson had his gold medal removed and a world record taken from him. The fastest man on the planet wasn’t immune to punishment.

In these cases sporting integrity came first. The big names, all of whom undoubtedly brought great commercial benefits to their sports, were not given a free ride. The rules were enforced in exactly the same manner as they would to any other competitor.

And that is the way sport should work. The rules must be applied to all on an equitable basis without grace or favour.

So when Scotland’s top flight football clubs come together tomorrow will they choose to make sporting integrity a priority?

Or will they put money first and sell off their principles and their sporting integrity?

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