Rangers Update – Mr Ellis & Mr Hughes, Wavetower Ltd, and the “Fit & Proper” Test

I picked a good night for an early bed! The Rangers Tax Case Blog burst into life with frenzied debate re a new issue and an ongoing matter. As is my wont, I started to post a comment, then realised that it would be better to put the comments here, with a link on the RTC blog.

 

Andrew Ellis and Barry Hughes

This week we saw the resignation from the board of Rangers Football Club plc of Mr Phil Betts, and his replacement by Mr Ellis. Andrew Ellis is already a director of the parent company, Rangers FC Group Ltd. He was in fact rumoured to be looking to take over Rangers himself prior to Craig Whyte’s public involvement.

Mr Ellis was referred to by Mr Whyte in the press release by Rangers on the PLUS SX newswire as follows:-

“Andrew is already a director of the Rangers 
FC Group and his previous experience in 
football will be a benefit to the Club 
as we look to the future.”

Mr Ellis attended Ibrox yesterday for his first match as a director of the Club. As he walked along the road to the ground, in the company of another gentleman, he was photographed by Willie Vass.

Mr Vass is an excellent sports photographer who generally snaps Rangers matches, and events surrounding them. His website can be found here.

However, from looking at his archives, he does not generally seem to wait outside Ibrox on a cold and wet match day to take pictures of people walking towards the ground.

Accompanying Mr Ellis as he walks to the ground is Barry Hughes. Mr Hughes is a well-known figure in the West of Scotland. He was the first boxer to be simultaneously licensed to box, promote and manage. He was a successful boxer, and has managed world champions.

He is a very successful businessman too.

However, in recent years he has been subject to some less than positive coverage, and in view of ongoing matters I propose to say no more about that. However, in light of the baggage he is metaphorically believed to carry, what message is being sent out by Mr Ellis in allowing the photos referred to to be taken?

I should say that I have had met Mr Hughes on a number of occasions over many years. I have always found him to be charming, pleasant and courteous individual. The man described in the press does not match the man I have spoken to. (For the avoidance of any doubt, none of my discussions with Mr Hughes have been in the role as his professional adviser, and therefore I am not breaching any confidentiality by referring to this.)

Did Messrs Ellis and Hughes just happen to bump into each other as they walked to the ground? Was Mr Hughes there as a guest of Mr Ellis? Do they have a business connection of any kind? Did someone tip off Mr Vass that there might be an interesting photo opportunity outside the ground?

The RTC discussion last night wondered if the flurry of comment, especially on Rangers fans’ message boards about the pictures of Mr Ellis and Mr Hughes, would be picked up in the press. It appears from what was being reported that these comments were negative in nature.

I suspect the press will not run with the story (if indeed there is a “story”) on the basis that, as certain issues are ongoing, there is a risk of the newspapers falling foul of the Contempt of Court Act. Safety first is probably going to be the watchword.

Mr Hughes is, in the eyes of the law and words of that great legal scholar Billy Joel, “An Innocent Man” and that he remains until a court declares otherwise.

The juxtaposition of Messrs Ellis and Hughes however has resulted in all sorts of rumour and innuendo. Until shown otherwise, I believe that they happened to bump into each other as they made their way to the ground, and Mr Vass, being a very good snapper with an eye for a great picture, just happened to catch them as he too made his way to the front door.

On the other hand, bearing in mind Mr Hughes’ current situation, it might be in Mr Ellis’ interests, as an example of openness, to confirm that he simply met Mr Hughes on the road. That would silence the inaccurate speculation.

I would guess that Rangers’ excellent PR team at Media House will take steps to make sure that the correct message goes out, as it is clearly not a good thing for people to be discussing openly alleged connections between reputable company directors like Mr Ellis and “less savoury” characters. (For the avoidance of doubt, I am NOT referring to Mr Hughes as such a character.)

 

Wavetower Ltd

This is the original name for the company formed on 17th September 2010 to be the vehicle for the takeover of Rangers.

It was an “off the shelf” company formed by Jordans. Jordans is a business which helps by dealing with the paperwork for incorporation of bespoke companies, and provides already created companies, like Wavetower Ltd, to people who want to be “up and running” straight away.

The first substantive steps with Wavetower therefore were registered at Companies House on 22nd October 2010 when the “pre-installed” director and Secretary resigned, to be replaced as director by Mr Ellis. At the same time the registered office of the company was changed to that of Collyer Bristow, the lawyers engaged by Mr Whyte, and one of whose partners is Gary Withey, now Company Secretary for Rangers Football Club plc.

Messrs Whyte and Betts only came on board (please pardon the pun) as Directors registered with effect from 8th March 2011.

After the takeover Wavetower changed its name to Rangers FC Group Ltd, which I will refer to as “Group” from now on.

This week the Directors of “Group” changed the accounting reference date for the company to bring it forward to 30th April. This has the effect of requiring them to prepare the first accounts for the business, formed for the purposes of taking over Rangers, as discussed above, earlier than first needed. But there is an additional consequence of the move, which seems, from commercial confidentiality purposes, to be a very good one.

This was brought to my attention by “Corsica”, a poster on RTC. The effect, perhaps deliberate, and perhaps not, of the change is that the first mention of the takeover in “Groups” published accounts will be for the year ended 30th April 2012. These accounts need not be lodged with Companies House until 31st January 2013!

One suspects that, because of the tax bill being considered by the Tribunal now, there might not be a “Rangers” owned by “Group” by that stage, but we must wait and see.

Companies House records, having checked using its Webcheck service 5 minutes ago, has not registered Mr Betts’ resignation yet, nor Mr Ellis’ appointment. Hopefully they will remember to do so within the 14-day period required by the Companies Act, which they missed regarding the resignations of Messrs Greig and McClelland in October.

It will be interesting to see (as I have not yet seen confirmation either way) if Mr Betts remains involved with “Group” or if he has left the scene entirely.

 

The “Fit and Proper” Test

To be approved as a director of a Scottish football club, one needs to pass the SFA’s “fit and proper” test.

Mr Whyte’s eligibility under this is being investigated by the SFA in connection with him having failed to declare his previous director disqualification.

Some have suggested that Mr Betts’ resignation might, in some way, be connected with a desire to play a part in a newco, formed after a Rangers insolvency event. It is said (to paraphrase)that, if a person has been a director of a Club suffering an Insolvency Event, then that will mean that they would fail the “fit and proper” test.

That however is not my understanding. It would be a reason for such a failure but, as with all of these issues, would be subject to the “discretion” of the SFA.

If a director of an insolvent club could satisfy the SFA that they were not implicated in the insolvency, then they could still pass the “fit and proper” test, unless there was some other impediment, like a formal disqualification.

One scenario suggested for Rangers which would allow Mr Whyte and his colleagues to be part of a newco would have been for the Club to be brought to Insolvency by the decision from the Tax Tribunal. In these circumstances Mr Whyte may well have argued that he had valiantly tried to keep HMS Rangers afloat, at great personal coat to himself, but that the holes left in the hull by Cap’n Murray and his crew were just too great, and despite all the bailing out by Wavetower, the ship had gone down. On that basis, a newco, subject to a myriad of other factors of course, would have been entitled to have Commodore Whyte at the helm.

 

 

Some more thoughts re “sources of funds” and UEFA Licences and “overdue” bills to follow

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4 Comments

Filed under Contempt of Court, Football, Rangers

4 responses to “Rangers Update – Mr Ellis & Mr Hughes, Wavetower Ltd, and the “Fit & Proper” Test

  1. Charlie

    Paul,

    Did he get £1 for his ‘great personal coat’ to buy Rangers.

    Sorry

  2. John Johnston

    Good stuff as usual Paul, thanks, and keep up the good work.

    Does Mr. Whyte ‘forgetting’ the reason why he was banned from being a Company Director (and presumibly from being a ‘shadow Director’ too), then ‘forgetting’ to inform the SFA of this matter, not give cause to the SFA to maybe pause from granting Mr. Whyte ‘fit and proper person’ status?

    The QC in the case Mr. Whyte is defending against the £90k building materials bill lodged against him was pretty withering in his assesment of Mr. Whyte’s reliability and indeed credibility.

    There does seem to be an emerging pattern to Mr. Whyte’s business practices, and indeed, his character.

  3. Once again I’m struck by the vast distance between what is honourable and what is lawful. Regardless of how the Rangers case pans out, I don’t think that The Law itself – especially in relation to business practices – is coming out of this very well.

    I am thoroughly dismayed by the vast amount of time, effort, talent, brainpower and money which is required just to try to pin down a single instance of predatory behaviour which may or may not be on the wrong side of the line in law.
    It seems to me that whenever the “right thing to do” and the “lawful thing” intersect, it is little more than a happy coincidence.

    I get the impression that advantage will always lie with the person who can take the meaning or intention of pieces of legislation and twist them to the point where they either mean nothing at all or can be interpreted as meaning their polar opposite. There seems to be very little serious deterrence in the law that dissuades the morally bankrupt from testing every minute detail of the legislation to the point of utter destruction.

    It’s dispiriting to realise that studying the ins and outs of company law can be enough to enable countless shady characters to make an entire industry out of sucking so much money out of the public, money which they might turn out to be legally entitled to but certainly have no moral claim upon.
    These types of people create no real wealth but nevertheless flourish in “sophisticated” societies by abusing the very legal system which the rest of us delude ourselves into believing offers us protection.
    In less “sophisticated” societies such characters would invariably suffer a fatal hunting accident once the rest of the tribe sized up their character.

    We seem to have “progressed” so much that the gene pool has being increasingly contaminated by those who see their purpose in life as being adept at getting away with taking out more than they put in to their society.

  4. I might be picking this up wrong between a few different sources but like my piece on Administration et al i am getting a feeling this “shawdow director” talk is going to start causing a wee bit of confusion. Not surprising considering it is quite a confusing part of Directors, especially in the sense that proving someone to be a ‘shadow director’ is ….ahem…a thankless job.

    No idea if this part clears it up or not:

    A shadow director is defined by section 251 CA 2006 as “person in accordance with whose directions or instructions the directors of a company are accustomed to act” but not if they act in accordance with instructions “by reason only that the directors of the company act on advise given by him or her in a professional capacity”.

    The existence of this relationship is a question of fact depending on the circumstances of each particular case. It is not easy to establish that someone is in fact a shadow director. Specific evidence must be provided – (see Secretary of State for Trade & Industry v Laing 1996 2BCLC 324).

    The company registers, which hold the names of all the directors should also include shadow directors and like any other director, must disclose any interests in contracts of the company by giving notice to the directors. A shadow director must also disclose his holdings in shares and debentures of the company or its subsidiaries and these must be registered in the normal way. Under the Insolvency Act 1986 a shadow director can also be held liable for wrongful trading.

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