“I Did It My Way” – Craig Whyte’s Farewell To Ibrox

Craig Whyte released the following statement via the Rangers website on Friday 17th February:

Mr Whyte’s words are in bold, with my comments underneath the relevant sections.

WHEN I took over as majority shareholder of Rangers in May last year, I knew I had been handed a huge privilege – and an enormous responsibility. My intention then was to do everything I could to safeguard the club’s future. And that remains my intention today.

Good start, although selling four years’ worth of season tickets for a payday loan equivalent, and winding up (pardon the pun) HMRC at every turn when they are pursuing you for sums that might reach £75 million are interesting ways of doing so.

It is good that the safeguarding of Rangers’ future is still his intention, even though whilst the administrators are in he can only do so by paying off the debt from his enormous personal wealth.

The traumatic events of the last few days have, understandably, led to a great deal of angst and uncertainty as well as a firestorm of media speculation, much of it ill-informed and some of it downright malicious.

Trauma, angst and uncertainty – not quite what Mr Whyte intended when he came into the Chairman’s seat in the directors’ box for the first time. He has only himself to blame for the “fire storm” of media speculation. His persistent refusal to answer even the soft questions he was asked by the main stream media meant that there was very little clear information about him, and about Rangers.

For example, might people have been speculating about Rangers’ finances because the annual accounts are now 7 weeks late and the AGM that much overdue too? And remember that the annual accounts we are talking about are to year ended 30th June 2011. This covers around 7 weeks of Mr Whyte’s reign.

He has told the various Rangers fans’ groups that auditors Grant Thornton (GT) were finalising the accounts and that papers were needed to let them do so. He did not say that, in all likelihood, GT wished to qualify the accounts and raise doubts about the “going concern” basis of the Club.

If my auditors could not finish the accounts to the end of June by February, then I would be very concerned and would be having very strong words with the management of GT. Perhaps Mr Whyte knows what the actual problem is, but he still cannot bring himself to say so.

I can agree that much of the media speculation has been ill-informed.

Most of the running on the whole Rangers financial mess has, to my knowledge, come from various Celtic websites, and particularly from the journalist Phil Mac Giolla Bhain, Scotzine.com and the eponymous  Rangers Tax Case Blog. It is fair to say that, in the early days of Mr Whyte’s involvement some Rangers sites raised concerns about Mr Whyte and his business history. However these seemed to be drowned out by the clamour of support for the new owner.

Indeed RTC has graduated to the main stream media, with an article in today’s Guardian, castigating the media for its failures in this story.

I have no doubt that some of the coverage of the issue is malicious, but most of what I have read, especially on the sites mentioned, has not been. Bearing in mind the history which was discovered regarding Mr Whyte, and the way things seemed to have to be dragged out of him, his coverage has been a long way from the antagonistic tone he suggested.

That an internationally-renowned institution such as Rangers should find itself in administration is bound to create shockwaves, particularly among the club’s magnificently-loyal fans, and I fully understand their anxiety.

Whilst Mr Whyte might “understand” the anxiety, his is clearly of a very different type.

As chairman, I have been at the centre of this firestorm – and quite rightly so. I knew when I stepped up to take over the club that the challenge of restoring Rangers to financial health after many years of living well beyond its means would be daunting. But I accepted it, both as a life-long Rangers fan and as a businessman with experience in turning round companies in distress.

Interesting. A further admission that, when he took over, the Club needed to be restored to financial health. Clearly a thriving team would not have been sold for £1. However that acknowledgement by Mr Whyte stands oddly with the sell off of the season tickets, and does not accord at all with the signing of improved contracts with higher wages for some players, and with the rejection of the £9 million bid for Jelavic in the summer.

As regards Mr Whyte accepting the challenge as a businessman with “experience in turning round companies in distress” the problem here is that no one has, as yet, been able to identify a company he has turned round successfully. This is not for want of trying, but it is fair to say that the companies with which he has been closely connected have ended up, almost always, insolvent, liquidated or dissolved.

When offered the chance to tell Tom English of any of his successful companies, Mr Whyte refused, as he did not want the scrutiny.

Perhaps if he was a man who did not like publicity, he ought not to have bought Rangers!

The decision to call in the administrators was painful but it was the right thing to do. They have promised to publish a full report as soon as possible and I very much welcome that. In spite of the endless speculation and attempts at character assassination by certain sections of the media, I am 100% confident that the administrators’ report will prove that every penny that has come in and gone out of Rangers has been properly accounted for. And I wish to state categorically for the record now that I personally have not taken a single penny out of Rangers since I became chairman and have paid all my expenses from my own funds.

No one wants to call in administrators. It is recognition of failure. In the same way that no one goes into a marriage contemplating divorce, no one should go into a business venture contemplating insolvency. Mind you, the Rangers conundrum is that insolvency seemed, from early days, the inevitable outcome for Rangers, especially once Rangers lost out in both European competitions.

Mr Whyte welcomes a full report from the administrators. Even if he did not welcome it, it would be coming anyway.

There has not been endless speculation in the media, as mentioned above. Equally I have not seen evidence of “character assassination”. I do not flatter myself to think that he is referring to blogs such as mine, but all I have tried to do is to look at the public records and publics statements, and compare them.

Mr Whyte, who was accused by Sheriff Ross in the Tixway judgement of being very careful in his answers, is also very precise here. He says that every penny in and out of Rangers will be accounted for. From the limited amount said by the administrators so far regarding Ticketus, and the £24 million, it seems that the proceeds of sale of season tickets, owned by Rangers Football Club PLC (in administration) never made it into Rangers. Therefore, if the funds did not reach Rangers, there can be no problem with accounting for it!

Mr Whyte also says he has “personally” not taken a penny out of Rangers since he became Chairman.

What he does not say is what fees have been charged by Rangers FC Group Ltd (Group) to the Club for management fees. It is possible that no fees have been charged, but surely the business expertise of the Group Board deserves to be paid for.

Money can’t buy business acumen of the quality present in Messrs Whyte and Ellis.

Will the administrators tell the public what the position is as regards interest and fees charged by Group to the Club? As Group is thought to be the holder of the floating charge, then it is important to see what they are owed.

Today I learned that my predecessor, Alastair Johnston, has urged the Crown Office to order an investigation into my takeover of the club. Again, I have absolutely nothing to fear because any fair investigation will prove that I have always acted in the best interests of Rangers and been involved in no criminal wrong-doing whatsoever.

Mr Johnston is entitled to raise a complaint regarding alleged wrong doing, if he has reason to make such a complaint. He was the man at head of the Independent Board Committee (IBC) who looked into Mr Whyte with a view to protecting the interests of minority shareholders. It has been suggested that what was produced to the IBC left Mr Whyte’s reputation in tatters with them, but the pressure from the bank to eliminate the £18 million debt owed by the club.

If Mr Johnston had evidence sufficient to report the matter to Crown Office, when did he get it? If he had it from day 1, then why did he wait till now to raise his concerns? If he had evidence of criminality since May, why not do something with it before now.

Has Mr Whyte always acted in the best interests of Rangers? That is debatable. Has he always acted in the best interests of Mr Whyte and Group? Probably – but there is nothing wrong with doing that. Have his actions been against Rangers’ interests?

Well, how does it affect the Club when the season ticket money is shifted elsewhere?

In addition, Mr Whyte denies any “criminal” wrong-doing? Is that an admission of “non-criminal” wrong-doing? How does Mr Whyte explain the non-payment of VAT and PAYE since he took over? What is the reason for that non-payment?

All the time Rangers were not paying its current dues, it was increasing wages to players. It was turning down £9 million offers for players. It was paying for new giant screens.

Rangers could have sold off players in the summer or winter. This would have brought players’ wages down, and also brought in cash, even if only enough to pay the PAYE and VAT.

Were Mr Whyte’s antics in Rangers’ interests? How?

Mr Whyte has one very simple way in which he could act in the best interests of Rangers, even now. He could write off the debt owed to Group!

If he did so, HMRC might take a more sanguine view, because they would not see the situation as one where a man with an alleged history of suspicious insolvencies was walking away with all his money intact.

Will Mr Whyte write it off, or some of it? Have the administrators asked?

While the administrators get on with their work, it is only right that they are given the time and space they require to complete their task. That is why I have decided to take a step back from events so that I do not become a distraction to either that process or to Ally McCoist and the players.

It is nice of Mr Whyte to agree to allow the administrators to do their work. It is the Insolvency Act which permits this, rather than Mr Whyte. Mr Whyte has taken a step back, not voluntarily, but because he is forced to!

In some companies, indeed most, when the administrators come in, the existing directors are moved out of the way, so as not to interfere. When Mr Whyte took over, he moved out the existing Board and management. In administration, the same thing happens.

It is not the place for the existing board to try to carry out management. They have no power to do so.

Mr Whyte may well be a distraction to Rangers, the process and the players – but it is not his decision to step down graciously. The law requires him to do so.

Regrettably, I will not be attending tomorrow’s match against Kilmarnock. Although I would dearly love to be at Ibrox for the game, my priority is, and will continue to be, to assist the administrators in any way I can to bring this process to as speedy a conclusion as possible.

It is good to see that Mr Whyte states that he will assist the administrators to deal with the matter. Perhaps he could explain to them where the Ticketus money is, and how it managed not to appear in Rangers’ books.

He might be able to explain why tax and PAYE was not paid.

Mr Whyte fails to mention the report that it is police advice keeping him away.

Mr Whyte mentioned that Group was prepared to provide funds to Rangers in administration. Is that still the case? An injection of the £10 million or so needed to get the club intact to the end of the season would take the pressure off the administrators, and would justify their decision to admit season ticket holders on the basis of the tickets, which now could be invalidated by the administrators.

Painful though it is for all concerned, administration now gives Rangers a fighting chance – a welcome breathing space – to fix major structural problems that will allow the club to grow and prosper again both on and off the field.

The major structural problems? Income £35 million; Expenditure £45 million. This is the case even before the Big Tax Case is decided. The ambition of a business owner in trouble is, as far as possible, to trade out of it. How can Rangers trade out of their problems? They cannot.

Even if the Big Tax Case disappeared the Club would still owe Group a figure in the mid or high £20 millions. In addition they would still have their £10 million deficit. Maybe administration would “solve” that by eliminating the debt and allowing the highly paid players with little or no resale value to be disposed of.

So I send Ally McCoist and the team my very best wishes for tomorrow. And I will end by simply saying to Rangers fans: I know that tomorrow you will prove why you are the best football fans in the world.

His last rallying cry seemed to work as reports suggest that Ibrox was full. However it appears that fans were leaving an undoubtedly disappointing game prior to the end.

It does rather appear as a farewell message. From the triumph of May when, a week after the purchase Mr Whyte was on the pitch with the SPL trophy, to being booed on the steps of Ibrox, and advised by police not to attend the match. It also seems, to me, a very sad statement, redolent of broken dreams.

His only comfort might be his money.

Statement from joint administrator David Whitehouse of Duff & Phelps:

CRAIG WHYTE has co-operated with us since our appointment as administrators and we believe his announcement brings further stability to the situation as we conduct the administration of Rangers’ business.

As administrators we will continue to ensure the Club’s business is run seamlessly as a plan to exit administration is developed.

And just to finish of we had this bizarre coda from the administrators. As with much of what has happened this week, I do not really understand the point of what Mr Whitehouse is on about here.

If Mr Whyte has co-operated fully, why the mystery of the £24 million?

I wonder if this was negotiated by Mr Whyte as a form of indemnity so that if, in future, the administrators were to consider action against him, he could use in evidence Mr Whitehouse’s statement. That may be incorrect speculation, but I simply cannot see any other sensible reason for the statement having been made.

Maybe it is in return for Group funding the administration? But in that case I am sure Mr Whyte would have told us.

Perhaps the further information apparently discovered by the administrators was deliberately left till after today’s match to avoid disorder. We will find out soon enough.

Advertisements

9 Comments

Filed under Administration, Craig Whyte's Companies, Football, HMRC v Rangers, Rangers

9 responses to ““I Did It My Way” – Craig Whyte’s Farewell To Ibrox

  1. mik

    Thanks Again Paul, The Administrator is not coming out well in this at all, could you concieve of HMRC requesting their removal. they seem very Pro Group

  2. TheBlackKnight

    Some very curious goings on Paul. I hope no-one is attempting to ‘muddy the waters’?

    I certainly hope the SFA and authorities are looking out for any further (perhaps deliberate?) acts that could cause Scottish Football’s reputation to be further sullied.

    (excellent as always)

  3. I’m a little perplexed as to why CW is still permitted to promote his views via the website during this period of administration.

    As for the Duff and Phelps statement at the footer, I cannot fathom the credit attributed to CW when so many questions (if indeed asked), remain unanswered at present. The statement highlighting stability appears incorrect. Did they mean instability ?

  4. Cortes

    Excellent. Many thanks, Paul, especially love the wee final teaser.

  5. David

    Good one Paul. Funny what you say about Mr Whyte in relation to writing off amounts owed to him/the Group. I recently watched an interview with him from middle to late last year, on Rangers TV I believe, accessed via a link in RTC. When asked what he was going to do with the £18milion that he had secured over the club, once he had turned its fortunes around, his reply was exactly that, to write it off! And when followed up with “and just why would you do that?”, his response was “because I am a Rangers supporter”.

    Aye right!! You can just see that’s what his intention was when he entered into this. Chucking away 18million quid, that’s what a good venture capitalist does, isn’t it?

    He does mention the club needs “restructuring” in the interview, as well. Do you think he would be referring to a Newco, even back then?

    If I can find the interview again, I’ll send you a link to it, if you’ve not seen it already.

  6. Geoff Jowett

    Re Rangers going into administration, am I correct in my assumption that they have been paying their footballers via an ‘Employee Benefits Trust’? If so, does this mean that they have paid their salaries in the form of loans, in perpetuity? If that is the case, now that the club has gone into administration, shouldn’t these ‘loans’ be called in by the Administrators, according to administration law?
    If I’m correct in the above assumptions, it will be interesting to see what happens when all those footballers have to return all their ‘salaries/loans’

    • Geoff,

      The allegation is that an element of the salaries were paid by way of “loans” from the EBT. However, the money paid to the players in this form would have come from the Trust, a separate legal entity from the company now in administration.

      In theory, once the company, in this case Rangers Football Club PLC puts money into the Trust, it cannot control what happens with it, nor get it back. Therefore any “loans” are due to be repaid by the player to the Trust.

      In Rangers’ case it is understood that there were letters confirming that the loans did not need to be repaid, and indeed suggestions that there was a formal contract stating that these “loans” were actually salaries.

      We will see what actually happened when the Tax Tribunal makes its decision soon.

  7. Is Craig Whyte not simply engaging in a conventional asset stripping move on a failing business, with a view to reinvesting in his new business (Rangers United 2012?) having got the taxpayer and other creditors off his back?

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s