Corruption – or sheer, extreme incompetence?

From the outside I watched as the Rangers financial crisis unfolded earlier this year. Rumours which seemed crazy ran ahead of the slide into Administration. Paul Clark of Duff & Phelps, an experienced and respected insolvency practitioner, had no idea what life in the Scottish goldfish bowl was like. The pantomime took off as the staff of the Administrators rapidly gave the impression of being out of their depth. All along, the sustaining belief was that the Blue Knights or someone wealthy with the interests of Rangers at heart would come along and spend the cash needed on the rescue of the Club from its troubles. Indeed, the renegotiation of players’ contracts which ultimately allowed many to go for free was apparently based on this premise. The hapless Paul Murray, the shameless Brian Kennedy and the faceless Jim McColl all pretended to have a stab but in reality were incapable of follow through.

No-one came close to meeting the demands of the Administrators. Unflattering allegations flew. Brian Kennedy perhaps put the final nail into the Blue Knights’ coffin with what some would consider a remarkably ill-judged press conference in which his true failure to grasp the essence of what was required became clear. In a nutshell, he was all over the place on the logic and arithmetic of the deal he himself was proposing.

From nowhere emerged the barely credible Charles Green. A pedigree of companies registered in speculative anticipation of fund-raising surrounded a controversial period as Chief Executive of Sheffield United, a football club not quite strong enough to be in the yoyo category of England’s top tier. His backers were shrouded in mystery. Even when the identity of the financial advisory firm fronted by him became known, planned ultimate beneficial ownership did not. In short, Charles Green winged his way to a cut-price deal with no visible means of financing the deal’s completion. To his credit, his doggedness held out when that was all he had to rely on.

Let’s set aside the curious politics of the HMRC Tier 1 Tribunal’s failure to date to give any decision on the EBT question and of HMRC’s courting of an abysmally inadequate CVA proposal before they announced their refusal to support. Put aside also HMRC’s wish to see BDO appointed as liquidators, and the apparent prevarication which has delayed their entry into office. Forget the optimistic noises which spattered every interview given by Charles Green after meetings with relevant football authorities, and the prolonged wrangling over whether Rangers would continue to be licensed or at what level they would play. Without being churlish, at no time has Charles Green’s optimism been justified by what he has delivered. As ever, the magnificent support of the fans in rallying to buy season tickets has bailed the Club out of potential further financial embarrassment.

No, today’s elements of concern are to do with the dark and unacceptable ways of the SPL’s handling of the case, aided by their partners in governance, the SFA. It is wholly fair to ask whether these organisations are corrupt or merely incompetent to an unbelievable extent. It is also fair to ask why the gleeful chunks of invective hurled at Rangers, some disguised as journalism, has been so restrained as this corruption or incompetence has unravelled. Finally, it is fair to ask where all the talking heads and pseudo-financial experts have gone, now that the SPL has been revealed to be insolvent according to its most recently filed financial information, a picture not likely to be improved by imminent publication of its latest financial statements. Perhaps some local specialist insolvency firm can run Q&A webinars on the financial position of the SPL, of the financial responsibilities falling on its directors and officers because they traded whilst insolvent, and of the consequences for its member clubs should the SPL itself enter into formal insolvency procedures, including measures imposed by that least predictable of sources, the UEFA rule book..

The first element of concern stems from the disgraceful confiscation by the SPL of prize money due to Rangers for the 2011-2012 season. Now, let me be clear; it was very odd that this prize money should have been permitted by the Administrators to be part of the assets acquired by Charles Green. To me, this was plainly wrong. This was an amount receivable which should have been kept in the pot for distribution to creditors. That is the only morally justified (and perhaps legally sustainable) way for that cash to have been treated. It’s a puzzle why this large sum of £2.25m in comparison to the purchase price of £5.5m was then traded off by Charles Green in the infamous Five Party Agreement which saw Rangers admitted to Division 3 of the SFL. It is absolutely outrageous that this sum should then be used to prop up the insolvent SPL or be distributed to the SPL clubs of 2011-12 season excluding Rangers. Creditors have simply been robbed in my opinion and the Liquidator should closely examine the circumstances of this disgrace. Disquieting questions arise.

  • In Green’s pre-acquisition discussions with the football authorities and his Celtic counterparts did anyone envisage this scam? Any pay-out calculated on SPL’s normal principles would benefit those with most points per the league table. Celtic, Motherwell and Dundee United spring to mind.
  • Was this idea cooked up as a sweetener to SPL teams at a time when Rangers’ continuing membership of the SPL was a possibility?
  • Why was this consequence not made public at the time of the Five Party Agreement being achieved? I can find no trace in the press of the day, but I am happy to apologise if proved wrong.

The second element of concern is the matter of sums due to Dundee United, whose whinging behaviour is in my opinion akin to the kid in the classroom who gives the teacher no peace and gets on everyone’s nerves. It is fair to say they bordered on being a victim of fraud by Craig Whyte, because Administration of the oldco arose in February before debts of some £66,000 were settled. However, in May, a letter was issued by SPL confirming that both the SPL and the SFA would withhold cash from future payments due to Rangers oldco on a 50/50 basis, The SFA have paid their share. The SPL now quibbles, naively arguing that liquidation of oldco supersedes any such agreement made. Patently, the SPL is wrong. They skate upon absurdly thin legal ice and thinner moral ice indeed for practitioners, upholders and ambassadors of sporting integrity! If the SPL is not intending to pay the money to Dundee United, what exactly is it intending to do with the cash, and on what legal basis will it do so? In passing, it says little for Green’s team’s attention to documentary detail that no definitive analysis of the football debts to be paid by Rangers was itemised to serve as authority in any dispute.

The third element of concern surrounds the sum of £800,000 paid by Southampton to the SFA at the time of Southampton’s application to have Steven Davis’s registration transferred. I can understand why Southampton chose to send the money as evidence that the money was paid. It is not at all clear why the cash was not passed on to Rangers as soon as Charles Green could provide bank account details. Given Charles Green’s reported difficulty in persuading a bank to accept Sevco 5088 Limited as a customer, and given also that the assets of Sevco 5088 were being transferred to Sevco Scotland, in a context where Charles Green’s people do not seem to have an eye for detail, I can also understand why that took some time. What is unfathomable is why the SFA continue to hold the money. Perhaps tongue in cheek, in today’s Daily Record James Traynor attributes the delay to all the people at the SFA, able to sign cheques, being on holiday. Maybe so. Or is this an attempt by the SFA to hold some cash against some further penalties in the contemplation of the SPL in respect of any adverse EBT decision by the HMRC Tier 1 Tribunal?

It would also be good to know the precise terms and conditions on which the SPL TV deal with Sky has been concluded, to give some reliable indication of its commercial value. Perhaps the confiscation is in some way related to a shortfall in TV income. It would be interesting to know at what value the SFL rights, swollen by the prospective Rangers impact, were included. These questions are for another day.

In all of this mess, it is impossible for me to have trust in the officers and officials of the SPL and the SFA so far as their open, transparent and fair conduct of football business is concerned. Perhaps others will agree – perhaps not.

Of this I am convinced. In my personal opinion, the only explanations which can be thrown up by investigation into the three elements of concern above will be rooted in corruption or sheer extreme incompetence. In reaching this personal conclusion, which facts may contradict, I am mindful of the fact that Charles Green must know more about the £2.25m question than he has disclosed to date.


Professor David Kinnon is a Chartered Accountant and licensed insolvency practitioner. Views expressed are entirely personal.

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