I have not had the chance to keep up with the administrators’ statements from Ibrox over the last couple of days, so this is my chance. As before, the original statements are in bold, with my comments below in plain text. This is Tuesday’s.
David Whitehouse, joint administrator, said: “Since being appointed administrators last week there has been widespread concern raised with us, not least by Rangers supporters and season ticket holders, about the agreement between the Club and Ticketus.
“Following information received, it is now apparent that the proceeds from the Ticketus arrangements amounted initially to a sum in the region of £20 million plus VAT. Subsequently, £18 million was transferred to the Lloyds Banking Group.
Was the information, as was suggested over the weekend, from Collyer Bristow? Or was it from Mr Whyte, who was described by the administrators as “co-operating” with them. Not so much as to tell them where the Ticketus money was, it would appear!
The apparent role of Collyer Bristow is worthy of attention, I feel. Before I start, I am sure that they have fulfilled all of their obligations and duties regarding client identification, checking of sources of funds and conflicts of interest, but there are some issues that, to a lay observer, might seem worthy of note.
The administrators had suggested they were getting information from “Rangers’ former lawyers”. Gary Withey, a partner in Collyer Bristow, is Company Secretary to Rangers Football Club PLC (in administration). He personally, and his firm, have been acting for Rangers, as I will refer to the PLC. For example, he was the person who, on Rangers’ behalf, sent a formal complaint about Messrs Levy & MacRae to the Scottish Legal Complaints Commission, alleging that L&M were themselves acting in a conflict situation. This complaint was made despite L&M having produced clear expert opinion that its behaviour was entirely appropriate, and that information not having been passed by Mr Withey to the SLCC.
In addition, it is understood that Mr Withey was responsible for the choice of Edinburgh lawyer for Rangers in the Martin Bain case, the original choice, as it turned out, not being up to the high-powered team assembled by Peter Watson of L&M for Mr Bain.
As well as acting for Rangers, Collyer Bristow act, as far as has been made known, for Rangers FC Group Ltd. That company, referred to as Group, has its Registered Office at Collyer Bristow’s address.
Collyer Bristow may act personally for Mr Whyte and for his Liberty Capital Ltd company.
As the suggestion re Ticketus is that season tickets belonging to Rangers were sold off by Mr Whyte, with the proceeds going to Group to settle the Lloyds Bank debt, does this not, I have been asked, present a potential conflict?
If one company on a group transfers assets to another, then the paper trail has to be transparent. It is not for directors to shift funds and assets around without good cause and proper records. After all, the directors run the company in the interests of the shareholders.
What legal advice did Mr Whyte, who assured us he had such “high-powered” assistance, receive regarding the Ticketus deal? Was this provided by Collyer Bristow, and if so, to whom?
Might they have advised Mr Whyte in each capacity?
If indeed Mr Whyte/Rangers/Group was advised by Collyer Bristow on this point, was that advice followed?
These matters might well be examined by the administrators as the insolvency proceeds.
Back though to the administrators – they conform that £18 million went from the Ticketus pot to Lloyds. This establishes conclusively, I think, that Mr Whyte did not get a discount on the debt deal, which for a company apparently facing bankruptcy seems rather odd. Distressed debt is discounted debt, at least in a normal situation.
How do Rangers books reflect this? We would seem to have a situation where (1) Rangers’ season tickets are sold off; (2) Ticketus makes the payment to Group, either directly or to its solicitors, Collyer Bristow; (3) Rangers sells season tickets to its fans, as agent for Ticketus and (5) remits what it has collected to Ticketus.
How can the books show Rangers paying Ticketus? Or has some creative accountancy been deployed to effect the transaction? Is this why Grant Thornton would not sign off on the audited accounts?
“The application of the remainder of these proceeds is subject to further examination.
“We are now investigating all the circumstances surrounding both the purchase of the majority shareholding in Rangers Football Club plc and the flow of funds which stemmed from the transaction and were intended to fulfil the purchasers’ obligations at the time of the sale.
A couple of points here – the first may be a trivial one, but the statement, copied verbatim above, refers to the “purchasers’ obligations”. Purchasers – plural. As far as we have always believed, the “purchaser” was Group – a single entity. I suspect that my observation is simply grammatical pedanticism.
As a second point however, an administrator would not normally be investigating the acquisition of a company. This is unusual, unless, as might be the case here, the concern is that the purchase is closely connected with what went wrong in the company.
“We cannot comment further on these matters while enquiries continue.”
And quite right too. If there is potential criminality, then the administrators need to be very careful about what they say. They will not want to prejudice any criminal investigation by making public statements regarding criminal allegations.
However, this could be a factor which allows the administration process to drag on and on. If there are concerns about possible criminality, then the party or parties suspected would be entitled to independent legal advice before being questioned. The advice might be that, in an effort to avoid prosecution, no answers should be given till any criminal case is closed.
There remains a right against self-incrimination (although there is European case law regarding the powers of government inspectors to demand answers in insolvency inquiries – that’s for another day!)
How easily will the administrators be able to lay their hands on information of the parties they would wish to question, being the present and former directors of Rangers and Group, for example, receive advice to say nothing?
We are a long way from any criminal proceedings, if they ever commence, and these comments should not be taken as an implication that there has been any criminality at Rangers but the UK does not have a good record on dealing with criminal matters in the context of corporate “dodgy dealing”.
Cases take an extraordinary length of time to reach court, and almost the same time again, it seems, for a trial to progress.
Whilst the American system is held up as an example of how quickly matters should go ahead, a la Enron, cases such as that of Conrad Black, and “Sir” Allen Stanford still take a long time. In Scotland too, where any case could take place, it is a common complaint of defence lawyers that the prosecution takes cases till the last minutes for proceeding with them.
In conclusion, this is an excellent report by the administrators, allaying fears that their “softly softly” approach is not in the interests of the creditors. It makes quite clear that, whether or not they are permitted to speak to Craig Whyte, for the reasons mentioned above, they would proceed without fear or favour in their task.
However, there followed the Wednesday statement, of which more later.