Mr Whyte is keen on keeping me busy. He issued another statement today. As before I thought it would be useful to run down what he had to say to see how it matched what he’s already said, and also to see where matters might go from here.
It is of note that this is the first statement by Mr Whyte since administration which is not published on the Rangers website.
As before, Mr Whyte’s statement is in bold, with my comments below in plain text.
STATEMENT ISSUED ON BEHALF OF CRAIG WHYTE – TUESDAY 21 FEBRUARY 2012
Craig Whyte today promised that if he emerges from administration still in control of Rangers FC that he will give immediate consideration to gifting the majority of his shares to a supporters’ foundation.
I might be accused of nit picking (as indeed I frequently am) but maybe someone should tell Mr Whyte that he is not in administration, but that the company, Rangers Football Club PLC is. There are many things Mr Whyte might emerge from, but administration is not one of them.
It is good to see that he will “give immediate consideration” to gifting “the majority” of his shares to a supporters’ foundation.
I will now give immediate consideration to ringing for a chicken vindaloo from my local takeaway…I will now give my immediate consideration to mounting an expedition to climb K2…I will now give my immediate consideration to giving up writing about Mr Whyte for Lent…
Right. I have given all those matters my “immediate consideration” and decided not to do any of them…
Where was I? OK – on with the statement.
And he provided detailed answers to the blizzard of questions and allegations that have surrounded his decision to put the club into administration a week ago.
Detailed answers! Brilliant! I am looking forward to this!
On the Ticketus arrangement he said that, it was ‘without any shadow of a doubt, the best deal for Rangers.’
The best deal for Rangers…is that Rangers Football Club PLC (now in administration) or Rangers FC Group Ltd?
The Ticketus funds, which amounted to £20m plus VAT, was agreed as bridging finance while negotiations with HMRC were under way to try to reach a compromise on both the ‘wee’ and ‘big’ tax cases.
Now we have clarity regarding the Ticketus deal – £20 million plus VAT – that amounts to £24 million, £4 million of which to be remitted to HMRC as VAT.
“Bridging finance” – an interesting description. Normally that refers to funds needed to “bridge the gap” between funds having to go out, and other money coming in. For example, if a person was buying a new home at the same time as selling their old one, but the sale was only to proceed a few days after the purchase, banks would lend funds for a few days to allow the purchase to go through. Open ended bridging, where there was money needed to pay the purchase price, but where the sale had not been agreed, was frowned upon and now, as far as I am aware, it does not exist. The risks for the lender are too high.
The use of the phrase “bridging finance” would suggest that there was money coming to Rangers at some point, but that, in between times money was needed to pay HMRC.
It is interesting to see that the terminology coined by RangersTaxCase.com is now used by Mr Whyte (or his PR people) bearing in mind that he once referred to the RTC site as “99% crap”.
So Mr Whyte needed these funds to bridge the HMRC situation? That makes no sense.
I also like the suggestion of “compromise” regarding both cases.
The Big Tax Case was under appeal and no decision is released yet. The sale agreement allowed Murray International Holdings to deal with the appeal, not Mr Whyte. What was he trying to “compromise”?
As for the “Wee Tax Case”, Mr Whyte’s Shareholders’ Circular agreed that he would settle this. He did not do so. The funds were arrested in Rangers’ bank. It was thought they had been remitted to HMRC having been arrested for sufficient time, but, at the last minute, there came a rumour of an appeal.
Compromise? As I believe some football fans might say – Craig Whyte, you’re having a laugh!
Mr Whyte said: ‘The arrangement with Ticketus – which was a three-season deal NOT four, as has been reported – was originally to provide additional working capital as had been the case previously under the old board. My corporate advisors came to me with the proposition that it was entirely possible, as well as highly beneficial, to negotiate a deal with Ticketus that would allow us to complete the takeover and maximise working capital for the club’s day-to-day business.
Ticketus “was” a three year deal, says Mr Whyte. He says that it was not a four-year deal. That actually fits with reports. It “was” a three-year deal, and then, after Rangers could not pay the first payment to Ticketus in full, it became a four-year deal.
In addition, the MG05 form, which was intended to release the season tickets from the floating charge, was for four seasons.
The deal was “originally” to provide “additional” working capital – so not bridging finance then. Who were the “corporate advisers”? Were they from MCR LLP, now part of Duff & Phelps? Mr Grier of MCR, now Duff & Phelps, was definitely around Mr Whyte a lot at the time of the takeover.
The Ticketus deal was to allow him to “complete the takeover” and “maximise” working capital for the club. Why then did the administrators say there was no trace of the Ticketus funds coming into the Club? He previously denied that the Ticketus money paid for the purchase – and as the price was £1 one would hope he did not need a loan for that.
‘The Ticketus deal was by far the best way to protect the club given the circumstances in that they have no security over any assets. The only person at risk from the deal is me personally because I gave Ticketus personal and corporate guarantees underwriting their investment; the club and the fans are fully protected. In terms of exposure, I am personally on the line for £27.5m in guarantees and cash.
Ticketus have no security over assets? But they do have right to over half of the Rangers’ season tickets over the next three years! However it is interesting that Mr Whyte identifies that he has given personal and corporate guarantees. Strictly of course a corporate guarantee is by the company, not him.
What does he mean when he says he is “personally on the line for £27.5 million in guarantees and cash”? Which of his companies has the funds to provide such a guarantee? Does he have sufficient personal wealth to do so?
In the same way as James Randi offers a $1 million prixze to anyone who can demonstrate paranormal abilities under labaoratory conditions, someone might choose to make a similar offer to someone who can identify a company of Mr Whyte’s which has made the money needed to underwrite such a deal?
‘By any stretch of the imagination that is a very substantial commitment to the football club of which I have been a supporter since I was a boy and dearly wish to see through this crisis so that Rangers emerge as a financially fitter and stronger institution. I am the biggest stake-holder in Rangers and I face huge financial losses personally if the restructuring fails or is not allowed to proceed.
A £27.5 million commitment is a substantial one, no doubt. Unfortunately Mr Whyte’s wishes to keep his cards close to his chest previously, and even now, leads a casual observer to be sceptical. He faces “huge losses personally”. He is a venture capitalist – that is what they do – he has never denied, as far as I am aware, that he went into the deal to make a profit.
In addition, as Rangers’ assets were shown on its last balance sheet, issued back when dinosaurs roamed the earth I believe, as well over £100 million, was it such a dreadful risk to pay £1 to buy the club and £18 million to pay off debt, and as a result become the 85% owner of the company? Even with the tax cases looming, that still seems a good deal on paper. Almost a “no lose” affair, especially with the floating charge available to him.
Interesting too that he refers to “restructuring”. I suppose a CVA could be called that, although, to my mind, it suggests a more tangible move, such as a pre-pack.
I like the suggestion of the risk he faces “if it is not allowed to proceed”. Bearing in mind that it would be the court, the administrators or HMRC which have the power to block rescue plans, he ought not to be getting short with any of them.
‘Despite the frenzy of media speculation and misinformation everything I have done has been with the best interest of this football club at heart. Any suggestion that I am trying to make a fast buck or have indulged in illegal manoeuvring is clearly ludicrous.’
As he did in his “farewell” statement, he talks about misinformation. Nature abhors a vacuum and as a result, when Mr Whyte’s affairs are under a blanket of silence, the gaps will be filled by diligent research, such as that done by Phil Mac Giolla Bhain, RTC, the Battered Bunnet, Billybhoy68 and others, together with the more fanciful speculation of the press.
I may be naïve in business matters, but I fail to see how selling off 3 or 4 years of season tickets for working capital now is in the best interest of the Club, especially when the money never makes it back into Rangers!
I also do not think people are accusing him of trying to make a fast buck. A venture capitalist is looking to make several million fast bucks. Their aim would never be so low as only to look for one!
As far as “illegal manoeuvring” goes, I note that the phrase he used in his last statement was “criminal wrongdoing”. Are these synonymous or is there nuance which suggests that activities could be one and not the other?
As matters stand, bearing in mind the involvement of Strathclyde Police and Crown Office, of the administrators and of the Court of Session, it is not for Mr Whyte to tell people what is, or is not, ludicrous.
PROOF OF FUNDS:
As far back as November 2010, at the start of the takeover plans and long before there was any discussion about approaching Ticketus, Sir David Murray and Lloyds Banking Group were provided with – and were satisfied with – proof of funds amounting to £33m. It was several months later, when negotiations were still on-going that the proposed Ticketus deal – ‘100% the best deal for Rangers’- was mooted.
This is a poser. Mr Whyte was not a director of “Group” until 8th March 2011. As it seems all along to have been intended that Wavetower, which became ”Group”, was to buy Rangers, why did he wait so long before he, and Mr Betts, came on board on the same day?
If it was four months earlier that “proof of funds” was given in the sum of £33 million, where did it come from, and where did it go? If Mr Whyte had £33 million of his own money as “proof of funds” as he says here and as he told Tom English, then why did he need the Ticketus cash? £33 million allows Mr Whyte to pay off Lloyds Banking Group in full, pay MIH £1 and have nearly £15 million left over for running costs. At the rate of £3.5 million per month, as Mr Whyte described it, those funds would, without any other income, have kept the club going for around four months, and indeed would have been more than enough to plug the £10 million “worst case scenario” gap.
Few businesspeople, even very successful ones, have access to ready cash of that amount.
His solicitors, Collyer Bristow, would need to be satisfied as to the source of the funds, in terms of the Money Laundering and Proceeds of Crime legislation (which is not to suggest that these funds were either, simply that lawyers must consider all payments in light of those rules).
“100% best deal for Rangers” – as mentioned before – which Rangers?
“There is nothing irregular or untoward about it, much as certain sections of the press would like everyone to believe,’ said Mr Whyte. “In business terms it makes perfect sense and is the best possible deal for the club.
OK. The best possible deal for the club. My simplistic analysis, and thankfully those far cleverer than I am, have looked at the figures and declared that to be nonsense. Perhaps, as the administration make progress, we will get the clarity on that issue denied by the absence of audited accounts and an AGM?
“I regret now not making the arrangements more transparent, but at the time I regarded it as I do with all my other business dealings, as a confidential transaction. In retrospect I should have been completely open about it, but I’m not sure Ticketus would have been very happy about their confidentiality being breached. In any event, the deal was, and still is, fully guaranteed by me so the accusation that I paid the bank debt without any personal financial commitment is just plain wrong and quite ridiculous. This was a way of trying to maximise working capital for the club.
We are back again at the working capital argument, the bridging finance tag having disappeared. This is a sale of tickets, which Rangers will sell to customers as agent for Ticketus, and remit the appropriate funds to them.
Mr Whyte has still not explained how Rangers managed to get to the position where they could not pay the first instalment, leading to the fourth year being added to the deal!
Has he “guaranteed” the sale? It is ironic that, even as he mans that he ought to have been more transparent he still refuses to give any details about which of hs companies is involved.
In addition, despite his concern for Ticketus, as a PLC Rangers would have needed to disclose the Tuicketus deal in its accounts. His desire for secrecy and the still limited openness of the PLC structure are clearly very much at odds with each other.
I ask again. If he had £33 million, why get £20 million from Ticketus, unless, having proved he had the £33 million, he had no intention of actually putting it in to the Club.
“It also has to be remembered that this was not me working alone and in isolation. I hired top-rate corporate, financial, legal and tax specialists to guide me through this process and when you’re paying for that kind of advice, it would be daft not to follow it.’
An unkind person might ask how many of these top advisers have been paid, but that would be unfair.
I will post next about a situation regarding the Tixway case which contradicts what he says here, but I will leave that for another post.
£9M PAYE AND VAT ISSUE AND THE BIG TAX CASE:
Craig Whyte explains: ‘It is simply not true to say that Rangers or I have reneged on paying these liabilities since the takeover. The truth is that around £4.4m of the £9m demand is, in fact, the ‘wee tax case’, including penalties, and which is in dispute. We offered to pay £2.5 million of the PAYE and VAT up front with the remainder at £500,000 a month, but HMRC flatly rejected that.
This is extraordinary. Mr Whyte’s position seems to be – Rangers do not owe £9 million in tax since I took over 9 months ago; it is only £4.6 million! In addition we are challenging the £4.4 million wee tax case, which I accepted in May I would pay.
As he said elsewhere, it was untrue to say that Rangers owed £5 million of VAT. He did not, in that statement say how much they owed however!
And the bare faced cheek and arrogance of the man shines through with his suggestion that Rangers would pay the admitted (for now) £4.6 million at one payment of £2.5 million UP FRONT!!! with the balance at £500,000 per month. The implication is that, having deducted PAYE and National Insurance from wages, and having collected VAT, he was going to sit on it till a further four months had passed, meaning that it had taken him over a year to bring things up to date. I see what HMRC “flatly rejected that”. I know from personal experience, though on a much smaller scale, that when HMRC gets its teeth into you, it does not let go, and idiotic offers like the one Mr Whyte refers to do not help.
The answer, I suspect, to his proposal would have been – why have you not given us money which was never yours, Mr Whyte? The bank of HMRC is not one which intends to be on the High Street ever!
I also like the narrow interpretation. Neither he nor Rangers have “reneged” on paying liabilities for tax. In fact, he hs. He agreed to pay the wee tax bill, and is now, many months later, disputing it! If that is not “reneging” I do not know what is.
‘On the big tax case – and, of course, no-one yet knows whether that has been won or lost or how much the liability would be – we wanted HMRC to confirm that they would accept repayments of £2.5m a year if we lost. But again they said, “No”‘.
Mr Whyte is correct that the outcome of the Big Tax Case is not known yet. However it would have been prudent for Rangers, either before he took over, of afterwards, to make some provision for losing it. As I have mentioned before, Rangers would have “won” the case is the Tribunal decides that in fact it owes £1 less than the assessments. However that “victory” would be worthless. I cannot see Rangers walking away with nothing to pay. The amount will be many millions.
Let’s imagine the conversation for a minute though.
CW – Mr Hector, I know that we owe you £9 million, half of which I agreed to pay but I have now changed my mind about. Let’s just ignore that £9 million for just now, ok?
Mr Hector – I don’t really think we can ignore £9 million Mr Whyte, but carry on…
CW – (Thinks – this is going well) We’ve got this big tax case on the go, and we don’t know how it will end, but just for a minute, imagine that you win, ok?
Mr Hector – I will imagine that result, and I have no great doubt abut it. As Ms Jessie J would say “It’s all about the money”. I think we are just waiting for an amount. What, pray tell, do you propose, bearing in mind the sums due could well be in excess of £50 million?
CW – (Leaning across desk and lowering voice to a whisper) We’re both men of the world, aren’t we? Here’s the plan. £2.5 million a year till it’s paid off. You can’t say fairer than that.
Mr Hector – (Eyes bulging in astonishment) Did you say £2.5 million per year?
CW – Like the look by the way! Look, how am I meant to win titles at Rangers if I hae to pay all the bill, and after all, most of the people who got the dodgy money have left and indeed I have fallen out with almost all of them! Look, if it’s £25 million, that will only take 10 years to pay! If the result is £2.5 million, we will get it cleared in a year. It costs us £3.5 million am month to keep Ibrox open. You cannot seriously expect us to pay more than £200,000 per month towards the bill. I’m doing my best here!
Mr Hector – NO!!!!!!!!!!!!!!!!!!!!!!!!!!!!
(The above conversation is entirely fictional and should not be taken as referring to any serious individuals).
Given that HMRC had seen fit to reach agreements with huge corporations owing far more than Rangers – Vodafone, for example – it was difficult to understand why they were being so inflexible unless, of course, they were simply determined to make an example of Rangers.
A fine appeal to the Rangers fan here. Vodafone “got away with it” so we should too. Perhaps one of his expensive advisers could explain the differences between the Vodafone situation and Rangers to him.
The time for negotiation was really long before Mr Whyte came on the scene, but now that the Tribunal has run its course, why should HMRC reach a deal with someone as obstructive as Mr Whyte?
His stance also smacks of the driver pulled in for speeding who complains that even though he was speeding, other people were going faster. That argument does not work!
Of course HMRC want to make an example of Rangers. Otherwise businesses would think they could get away with the same tactics, with ruinous effects for the economy!
“In these circumstances it would have been far too risky to pump further funds into the club while the result of the EBT tax case remained unresolved.
It would have been too risky to put more money in, but it was alright to put in the Ticketus money, guaranteed by Mr Whyte? I don’t think that makes sense.
“People need to understand that the big tax case has had, and continues to have, a huge bearing on Rangers’ future and that I have done everything in my power to safeguard the club against the possible outcomes which could have included the possibility of Rangers being forced into liquidation. Anyone who pretends that this has somehow been my goal is either a fool or has a particularly sharp axe to grind.
What has Mr Whyte done to safeguard Rangers from liquidation? He has not put in money. That would be the best way of keeping the club safe.
In recent interviews going back to last year, Mr Whyte has mentioned that “administration was always a possibility”. Liquidation is a possible effect of administration. By his own words he is condemned. It takes only a prudent businessman to contemplate liquidation here.
“Remember also, that HMRC had frozen some our bank accounts while we were in dispute. On top of that we had other funds frozen because of legal claims by certain former members of the board all of which contributed to why we fell into arrears on our monthly PAYE liabilities.
HMRC froze the bank accounts because Mr Whyte promised to pay the debt in relation to the wee case. He then reneged on the deal. He was free to negotiate this one with HMRC but he refused to do so.
He blames the arrestments for falling behind with PAYE.
In October Mr Whyte gave an interview to Tom English. There was the following exchange:-
TE – So what about all your cash flow, then?
CW – The arrestments by Bain and McIntyre don’t help, but we’re fine.
TE – No issues about paying your bills?
CW – No.
Now he seems to be saying that that was the reason for the problems. Mr Whyte’s credibility seems to have been assessed very well by Sheriff Ross in the Tixway case, where he described Mr Whyte’s evidence as “wholly unreliable”.
And if things were so tight, why not sell Mr Jelavic for the reputed £9 million offer in August? Why not try to sell more players to get the wage bill down and capital in?
Why give players extended and more lucrative contracts?
“Negotiations with HMRC about trying to reach a compromise on the EBT case continued right up until the very last minute, but HMRC would have none of it – if they had, that would have released further funds and we could have avoided administration. I understand why the fans are angry and believe that I am to blame, but in the position we find ourselves in meant that administration was the only option.”
Mr Whyte accepts the blame will not be the heading. In fact I missed that the first two times I read this!
I fail to see how a compromise would have released further funds – HMRC had not arrested £10 million, for example!
HISTORICAL FINANCIAL PROBLEMS:
“The fact is that Rangers, had they not gone administration now for the reasons I have given, would have done so some time in the future whoever the owner was because they could not go on funding losses of up to £15m a year. People seem to forget that the previous board under Alastair Johnston were talking seriously about administration two years ago. If things had turned out differently with HMRC, then I seriously believe I had the correct plan that would have avoided administration and put Rangers back on a sound financial footing.
The deficit has gone up from the £10 million he identified to £15 million. Perhaps that includes the £5 million he contracted to pay towards transfer fees each summer?
When Mr Whyte refers to things turning out differently, he can only mean that in an alternate universe somewhere, in the infinity of worlds, in the same way as an infinite room with an infinite number of monkeys and an infinite number of typewriters will eventually turn out the complete works of Shakespeare, at least one HMRC official somewhere in the whole of space and time would have agreed to the deal.
What was his plan, as it is not the big tax case which caused the insolvency?
“‘Of course, there would have been some pain especially after the spendthrift days when the massive debts were run up in the first place – but that’s the hard facts of life.”
And what about increasing players’ wages significantly, as he boasted he did over the summer. Odd way to reduce costs!
FANS’ DEAL AND FUTURE INVESTMENT:
“If I can succeed in coming through this administration process I am very keen on the idea of gifting the majority of my shares to a supporters’ foundation. It makes a lot of sense, but fan ownership would work only after the current process if completed because the club has to get into a position where it is running at break-even in order for that prospect to be viable.
As I mentioned above, it is not Mr Whyte in administration. He is “keen” to put shares at the disposal of a fans’ foundation. He seems to envisage spitting the club with the fans at tee point when the health of the club is secure. But surely he needs support to get to that stage, and none is forthcoming.
“I am open to all serious offers of outside investment. Indeed, I am currently in active discussion with a number of potential bidders and investors. However, the reality is that everyone needs to have a final settlement of the big tax case one way or another.
It is not for Mr Whyte to be entertaining offers for Rangers till finances are better. It is the administrator who is in control. Where is he digging up the potential bidders and investors? He remains the owner, but with no control.
“I remain very confident that Rangers will emerge from this and move on in a much better position than it found itself in before the takeover. There is a lot of raw emotion at the moment, and that is understandable, but I’m sure people will look back on this and realise that I was absolutely right in what I did.”
I think this is called wishful thinking, to be polite, or as Lord Sorn was prone to say in the Court of Session “it’s a pile of dingo’s kidneys!”.
MY FUTURE INVOLVEMENT:
“I will not continue as Rangers Chairman post-restructuring. Regardless of administration and irrespective of the tax case, the club had serious long-term structural problems financially and they needed to be addressed with some urgency. I knew that when I stepped up to the plate and, despite the accusations and abuse that I have suffered over weeks and months, I was determined to see things through. I will admit there have been times when I have wished that I had never entertained the idea of taking over Rangers.
Mr Whyte will step down as chairman. What will he do? Will he join a local speaking club in Costa Rica or Monaco? Will he, like Ken Bates, Milan Mandarin, Peter Ridsdale and Ron Noades move round football becoming involved in different teams?
This paragraph makes you wonder (and he never explains it) why, with all these problems, he took the task on.
On the other hand, a decent European run would have kept the club afloat till the Tribunal decision anyway. Maybe it was one player’s petulant behaviour which set all this shambles in unstoppable motion.
I suspect there are many fans of Rangers who also wish he had never entertained the ides of taking over!
“But I am a Rangers fan, and, like other Rangers fans I don’t do walking way.”
And a brilliant non sequitur to end. I’m not walking away, says the man who is walking away!
Perhaps he is not walking away in the same way that the fans who left prior to the end of the Kilmarnock game did not walk away (they must have teleported out!)
So do we have the detailed answers we were promised? Not a chance, and I suspect his repeat appearances might be few and far between.