An Open Letter to Murdo Fraser MSP – Re Rangers FC (In Administration)

Murdo Fraser, MSP, has written to the administrators of Rangers with some advice and suggestions for them. He wants them to rule out any bidder proposing liquidation. He believes that liquidation would not be a good result for HMRC, Rangers or the well being of Scottish football. You will find his full letter here – http://www.rangerssupporterstrust.co.uk/RangersFC_030412.pdf.

 

I thought his letter deserved some comment, so my open letter to him is below.

 

 

 

Dear Mr Fraser,

 

I have noted that you have written to the administrators of Rangers Football Club PLC with your comments and suggestions regarding their handling of the administration process.

 

I note that you are writing, you say, in a personal capacity although you tell them that you are an MSP, using Scottish Parliament notepaper for your “personal” letter and you also advised the administrators of your position on the Economy, Energy and Tourism Committee. Does your use of official notepaper comply with Rule 7.2.14 of your Code of Conduct?

I also note that you write in the capacity of a Rangers debenture holder and therefore as a creditor, unless of course you have chosen to write off the debt owed to you. One assumes therefore that you are a Rangers supporter, although you do not actually say so.

 

As a creditor, and in no other capacity, you have a right to be heard and to vote on the administrators’ proposals, in line with the proportion of the total debt owed to you.

 

I note that you are urging the administrators to rule out any outcome involving liquidation of Rangers Football Club PLC. You do so for two reasons – firstly because you consider that this would deprive HMRC of funds properly due to the tax payer and secondly because liquidation would “jeopardise the future existence of an institution which means so much to so many people all around the world.”

 

Taking those in turn, you state that it is in the interests of HMRC that Rangers exits administration through a CVA.

 

You will be aware that it is not the actions of Messrs Clark and Whitehouse which will deprive HMRC of money due to the taxpayer. Instead it has been the actions of the Board of Rangers dating back over 10 years, by using tax avoidance schemes which have turned out, or are likely to be declared to be, illegal. In addition, a further sum of almost £10 million has accrued in unpaid PAYE and VAT since Mr Whyte took over Rangers.

 

One of the bidders for Rangers is led by Paul Murray, who was a Director from 2007 for almost 4 years whilst the EBT payments continued to be made, despite the first tax determination regarding them being issued to Rangers in February 2008.

 

Do you accept that the unpaid tax issues afflicting Rangers are a result, not of the actions of HMRC or the administrators, but of the past and present Directors of the company?

 

On that basis, do you not see the “moral hazard” should Rangers be allowed to exit administration by way of a CVA paying them, along with all the other unsecured creditors, a few pennies in the pound?

 

Surely HMRC approving such an arrangement would do nothing other than to encourage other taxpayers to withhold tax on the basis that, when HMRC finally catches up with them, they can negotiate a pennies in the pound payment too?

 

At a time when the public purse is sorely stretched as a result of economic circumstances, and the Prime Minister, your Conservative colleague, declares that “we are all in this together” how can you justify Rangers being allowed to escape liability for its unpaid taxes going back many years? I assume that you realise that if HMRC accepted a pennies in the pound deal in such a high profile case many other taxpayers would seek to emulate it?

 

Dealing with your second point, securing the happiness of Rangers fans round the world is not, as far as I can see, one of the purposes of administration under the Insolvency Act.

 

You go on to say that, if Rangers is liquidated and a new club established, some of the fans may disappear, which will damage the Club’s revival.

 

Are you aware, and as a clever man I am sure you are, that a new company will not be “Rangers”? If Rangers goes into liquidation, then that club is at an end. Airdrieonians went into liquidation (and indeed was put there partly as a result of action taken by a company owned by Sir David Murray). A new company took over Clydebank and moved it to Airdrie’s stadium. That team is Airdrie United. It is not Airdrieonians.

 

In the same way, a newco Rangers will not be the team I believe you to be supporter of.

 

You state that Scottish football needs to change and adapt. Has your Committee, of which you are Convener, looked into this issue? If so, how did you propose to make the necessary changes?

 

Or is it simply that, with Rangers being at death’s door through self inflicted injuries, you feel that a suggestion that football is to blame absolves your team of some of the blame?

 

You state that it is in the interests of a strong SPL for there to be a strong Rangers in the top flight to bring in revenue. Ignoring the fact that the financial impact of Rangers leaving the SPL to be replaced by another Club is greatly exaggerated, you appear to be suggesting that Rangers ought not to be punished for the transgressions of the Club over so many years, one of the effects of which has been to allow it to sign players it otherwise would not have been able to afford, and thus gain unfair advantage over other teams.

 

Is it your position that Rangers FC should be punished for its gross financial mismanagement, which has led to the position where not just HMRC, but over 250 other creditors, who dealt with the Club in good faith, stand to receive, at best, a pennies in the pound deal?

 

You state that the long term economic interests of Scottish football and Rangers are best served if it is not liquidated. If a buyer wishes to put £134 million into the pot to pay off all creditors in full, then I would entirely agree. However, have you considered the economic advantage to the whole of Scottish football if a newco Rangers has to start at Division 3 and work its way up the divisions?

 

In any event one would expect such a club to get back to the SPL in 3 or 4 years. Do you believe that such a hiatus would be fatal for Scottish football?

 

Surely one of the Conservative Party’s principles is the encouragement to businesses to stand on their own two feet, and to succeed or fail by their own efforts. “Bail outs” are not seen by your party as a “good thing” unless there is no alternative. It goes against the free market ethos you espouse.

 

However, you seem to want Rangers to receive State Aid in a reduction of its tax bill, and for it to be given a ladder back up from where its ow actions have left it.

 

You then mention that the administrators have a unique chance to see a new form of ownership for Rangers FC. I assume you mean fan ownership, rather than ownership by one or a few large shareholders.

 

Does this philosophy of sharing the wealth also apply to other private companies? Would you encourage, for example, the break up of the banks so that they can be owned by the people, rather than by big organisations?

 

It is admirable that you are doing what you can to save your football club, as I assume it is. However, the letter you have written and the steps you propose seem to raise many wider issues about your political judgement and principles (for the avoidance of doubt I am NOT suggesting you are unprincipled).

 

I would appreciate your response, if you wish to furnish me with one. I should say that this letter will be published on my blog, together with a link to your letter to the administrators.

 

Yours sincerely,

 

 

Paul McConville