To quote from his website:- Ian Fraser is an award-winning journalist, commentator and broadcaster who writes about business, finance, politics and economics. His work has been published by among others The Sunday Times, The Economist, Financial Times, BBC News, Thomson Reuters, Dow Jones, Daily Mail, Mail on Sunday, Independent on Sunday, the Herald, Sunday Herald, The Scotsman, Accountancy, CA Magazine and CityWire.
In 2008, and then updated in 2010, Mr Fraser wrote an article chronicling the hubris which brought the Bank of Scotland/Halifax to the crash which lead to the, by then, Lloyds Banking Group being “rescued” by the British Government.
Mr Fraser’s article can be found here and I heartily commend it to one and all.
HBOS was of course the banker for Rangers Football Club PLC, and for Murray International Holdings and the rest of Sir David Murray’s companies.
I hope Mr Fraser does not mind me quoting the introduction to his piece at length:-
“Lessons must be learnt from the short and calamitous history of HBOS, the bank which went effectively failed in September 2008.
“At best, there were some appalling corporate governance failures at … HBOS, with an obsession with growth taking precedence over risk management and prudent banking practice soon after … September 2001.
“At worst, the bank was dangerously out-of-control and probably also fraudulent, having been pump-primed by its management team to deliver maximum short-term profits growth (and maximum rewards for executives), irrespective of whether the bank had a chance of surviving long term — or whether customers were harmed.
“Throughout the bank’s calamitous seven-year life, the Financial Services Authority (FSA) and other authorities for the most part turned a blind eye to the bank’s blatant wrongdoing and recklessness. This applied in spades after Chancellor Gordon Brown appointed James Crosby a director of the FSA while he remained chief executive of the bank, in January 2004. After that, any attempt to properly regulate HBOS seems to have been abandoned, with dire consequences for many of the bank’s customers, Lloyds shareholders, and the British taxpayer.”
It struck me, as it has a number of observers before, that Mr Fraser’s comments on HBOS could be applied, at least to some degree, to Rangers in recent years.
“Appalling corporate governance failures” – check.
“Risk management and prudent practice ignored” – check.
“Dangerously out of control” – check.
“Delivering maximum rewards for executives irrespective of chances of long term survival” – check.
“A blind eye by the regulators” – check.
“Appointment of senior officials to important roles in the regulators” – check.
“Dire consequences for customers, shareholders and the British taxpayer” – check.
Of course the parallels are not exact.
However, it is clear that Rangers board took on the high-risk strategy once the first EBT Tax determination arrived from HMRC in February 2008 of banking (pardon the pun) on (a) a good result in the appeal and (b) continued success in the Champions League.
The spending on players did not slow. There were no apparent signs of cost cutting, and nothing was put back in reserve in case the tax case went wrong.
One of the Board at the time was Paul Murray, leader of the Blue Knights. Having been at the collective tiller as Rangers headed for the rocks before, how does he plan to run things differently this time, if he succeeds in his plans?
Did he know what was happening and approve the plans to ignore the case? Or was he shut out of the decision making process?
Once Mr Whyte took over, then of course the systematic non-payment of due tax commenced. Directors were removed and no one was left to put a brake on Mr Whyte’s activities.
During the operations of the EBT’s it is understood that many of the Directors benefited from them. It is not of course per se wrong for them to have done so, but when a business fails due to chronic overspending on one hand and non payment of bills on the other, questions need to be asked of the executives who were highly paid for their knowledge and expertise.
Over the years too a number of Rangers officials served on the Boards of the SPL and SFA. The present SFA President is the former Rangers Director, Campbell Ogilvie.
A criticism of the regulatory bodies in Scottish football has been that they have been too soft on some clubs, Rangers being one.
In the same way as appointing Mr Crosby of HBOS to the FSA coincided with a lax regulatory approach, did the same happen as regards Ibrox?
“Dire consequences for customers, shareholders and the British taxpayer”. I don’t think much if anything needs added to that.
Whilst the involvement of HBOS with Rangers is still under scrutiny, it is interesting that there are such similarities. What can Mr Murray tell us will be different if he succeeds in his takeover plans now?
Posted by Paul McConville