Last week, Sir David Murray emerged from his bunker to issue a statement via the Press Association. RTC commented in detail regarding elements of the statement here on the Scottish Football Monitor.
I think the statement is a masterpiece in answering charges that have not been made, and accusations not been laid. It also includes a statement which, whilst not original, might be seen as the epitaph for the demise of Sir David’s Rangers – “Tax AVOIDANCE is a right.”
Sir David also risks offending even further the fans of his former team by referring the “new” Rangers and “Rangers Football Club” rather than “The Rangers Football Club”.
And it is always a good day when one can quote the great American judge Learned Hand.
Sir David Murray’s statement in full is shown below, with my observations in bold interspersed through it. It can be seen at the link above on the STV website.
I have decided to issue this statement because of the concerns which I have at the continuing attempts to inflict further punishment on Rangers Football Club.
Get with the programme Sir David. It is THE Rangers Football Club now.
“Continuing attempts to inflict further punishment”? Bearing in mind that Sir David holds some responsibility for the financial circumstances of Rangers, and at least according to Billy Dodds, was directly involved in the operation of the alleged EBT/contract/side letter issue, one might see why he would wish everyone to “move on”.
While the “Newco” Rangers was rejected for membership of the SPL on the publicly stated grounds of sporting integrity, I would question whether this was the underlying motive for many who took this decision. I am not totally convinced by the explanation that they were reacting to the opinions of the supporters of their individual clubs. This, in my opinion, is a suitable answer to cover many other agendas.
What agendas, Sir David? Care to enlighten us? After all a number of the people in control of the SPL clubs were there whilst you were still involved at Rangers. Is this personal animosity to you, or to Mr Green, or to Rangers as a business or as an institution?
Calling the heads of the SPL clubs liars, at least by implication, seems a rather aggressive stance to take.
Surely, as a successful businessman, Sir David accepts that the customers’ views are important?
I applaud the decision of the SFL to accept Rangers for membership and respect the decision of the member clubs of the SFL to admit Rangers to its Third Division.
Interesting that the word “Newco” has vanished between paragraphs. I am also sure the SFL clubs will be delighted that Sir David, a man with no connection now to Scottish football, ”respects” their decision to place the Rangers Football Club in SFL3.
The problems at Rangers have brought no credit to Scottish football and are a tragedy for the Club and for all those connected with it and who support it. They cannot be condoned and it is appropriate that there should be a proportionate penalty for the Club for the events over the last year.
Let’s break this paragraph down.
1 The problems at Rangers have brought no credit to Scottish football – agreed.
2 and are a tragedy for the Club and for all those connected with it and who support it – yes, but a tragedy not caused by outside factors, but by the actions of those, including Sir David, who ran the club
3 They cannot be condoned – one assumes “they” refers to the problems, and therefore it is good to see Sir David not trying to minimise the adverse effects of what he and his colleagues and successors did
4 and it is appropriate that there should be a proportionate penalty for the Club – I am delighted to see such a responsible attitude from Sir David, facing up to responsibility and impliedly accepting same. The “mea culpa, mea culpa, mea maxima culpa” reaction is the first step on the way to forgiveness.
5 for the events over the last year – oh. It was all going so well, wasn’t it? But apparently the events that brought no credit to Scottish football, and cannot be condoned, only took place over the last year. I wonder when Sir David sold up? Yes…just checking my notes…over a year ago.
So what seemed, until the last few words to be an excellent step on the road to redemption for Rangers is instead anther move to shift all the blame onto Mr Whyte. That is not to suggest that the “Motherwell Born Billionaire” © Daily Record 2010 is blameless – far from it – but I do not think any reasonably informed observer could suggest that all the fault lay on the Whyte regime.
However, I urge all those connected with Scottish football to bring this sad affair to a close – now. Bayoneting the wounded is neither justified nor proportionate.
“Bayoneting the wounded”?
As a side note I would commend the full article linked here from the Western Front Association on “The Cult of the Bayonet in the British Army on the Western Front in the Great War” by Dr David Payne.
In the piece he states:-
“During an advance on the battlefield, some British battalions had the deliberate policy of bayoneting the wounded enemy en passant to neutralise them. And there are reliable reports that wounded, and wound-faking, enemy soldiers fired at the backs of advancing British soldiers. There are also personal accounts by soldiers of both sides of bayoneting unarmed POW’s, in and behind the lines, although this was rarely admitted officially by either side.”
At least in the circumstances outlined above such an act could be justified and proportionate, as a “risk management” tool, though not referred to in such a bland “management speak” way. In addition, it was common throughout the time that use of the bayonet was prevalent on the battlefield for fatally wounded soldiers to be dispatched by a swift thrust from a bayonet, as an act of mercy.
I suspect, though I have not reviewed the Geneva Conventions, that such acts today would be seen as illegal, and probably murder, or at least culpable homicide, but, as Dr Payne points out, in the heat of battle, and literally to protect one’s own back, the tactic was used.
In any event it is an emotive phrase.
Over the years Sir David cultivated media contacts, leading to the now infamous “succulent lamb” label used to refer to compliant journalists. Indeed a piece in “The Drum” last year said the following:-
“The Drum understands that Craig Whyte has no intention of being as readily available to the media as Sir David Murray who was noted for his approachability by the media and never failed to return calls to journalists on Rangers FC business.”
Media House, run by Jack Irvine, the former newspaper editor, and doyen of the PR industry in Scotland, acted for Rangers under Sir David. IT was taken on too by Craig Whyte, as mentioned in the Drum article. When Rangers Football Club PLC went into administration, Media House was amongst the unpaid creditors.
Charles Green is believed to have made use of its services too.
Is this statement from Sir David one prepared with the assistance of Media House? Whereas, to non-PR people, the feeling might be that keeping one’s head down out of the firing line is the prudent course, Media House have been hugely successful over many years by choosing the correct time to go on the offensive for their clients. Indeed the piece from The Drum is an example of that, including the quote from Mr Irvine in connection with the blaming of Rangers for sectarian issues in Scottish football:-
“I have a message for those who would denigrate Rangers: if you stop telling lies about us, we’ll stop telling the truth about you.”
And for Sir David, who is part of the problem, for all he denies it, to demand that the “sad affair” is brought to an end “now” is an aggressive stance to take. Clearly he would wish an end to an investigation by the SPL which will consider his stewardship of the team over many years. Is this a self-interested position? Yes, and he is quite entitled to be self-interested. Is it appropriate to present it as a plea from above the fray, almost as if he is simply a concerned fan, rather than the former owner? That too seems a brave PR strategy to take.
(Mind you, Jack Irvine and his colleagues are hugely successful in the world of PR, and I am not, so clearly they have a very good idea about what tactics to use.)
Nevertheless, I cannot be anything other than angered at the suggestion that Rangers should be stripped of titles or other competition victories. This suggestion is an insult to the staff and players who achieved these successes thanks to skill, hard work and commitment and for no other reason.
No one disputes that titles and trophies were won on the field of play. This is not a Marseilles situation where attempts were made to bribe opposition teams or players.
“This (financial fair play) is all seen as important for one key reason: because any club that is spending more on players than they can afford, is automatically gaining a sporting advantage over every other club it competes with. … The logic behind the principle however is, I think, broadly sound. And it is this same principle that explains the position of the SPL.
To turn a blind eye, to allow clubs to continually fail to make prompt payments as they fall due, would be to allow those clubs to gain an unfair sporting advantage over all those other clubs that pay their players, the taxman and other clubs on time.”
It is also an insult to the thousands of Rangers supporters who spent their hard-earned money to support the Club they love.
What about the 26,000 small shareholders, whose investments were rendered worthless by a combination of the actions of Mr Whyte and Sir David?
How is enforcing the rules an insult to the fans of Rangers, but not enforcing them not an insult to everyone else?
I hope that those presently in charge of Rangers show sufficient resolve when it comes to resisting this move, despite the incentives being offered to do otherwise.
“Presently”. An interesting word. To me it implies that the custodianship of Mr Green is seen as a transitory one. Presumably there are major discussions going on in private rooms about investment in Rangers? Does Sir David know the exit strategy for Mr Green? Could he be part of it?
I believe that there is a misconception which may lie behind this suggested penalty and accordingly it is my duty to clarify certain matters.
Good! Let’s hear it!
During my stewardship of Rangers no rules were breached or circumvented and I reject and resent any suggestion that anything was done which amounted to cheating.
Sir David thinks no rules were broken. The SPL think there is a prima facie case that they were. That is why an Independent Commission is being established to find out the truth. I wonder if Sir David will make himself available to attend as a witness to explain to the Commission how everything was above board, or is this statement intended to be his contribution?
As was required of a PLC, all accounts were fully audited and made available to all entitled parties. All football rules were complied with. All enquiries from entitled parties or organisations were answered.
As has been pointed out, despite the duty on teams to provide accounts to the SFA and SPL, these organisations did not have the money, or were unwilling to spend the money, carrying out their own audits. They clearly relied, as they would normally be entitled to, on the audits carried out by the auditors for the purposes of the Companies Acts. However the requirements of football rules meant that some matters were not covered specifically by the audit which was carried out.
An example relates to the EBT payments. This was noted in the relevant annual and audited accounts. However it did not distinguish the payments depending on the position of the recipient. Therefore the beneficiary could have been Aggie the Tea Lady, Sir David, or the entire first team. The published and audited accounts say nothing about that.
To say that all enquiries were answered is surely true. The issues are (a) if they were answered correctly and (b) what about the questions which were not asked.
To those who criticise certain actions undertaken on behalf of the Club, I suggest that they familiarise themselves with all relevant rules before they come to any conclusions or express any opinions.
This is particularly relevant to the SPL rules where it would appear that there are efforts to retrospectively rewrite laws to incorporate items not previously covered.
The SPL rules variously required disclosure of all contract of service matters and all payments from a club to a player.
It would now appear that these are to be rewritten to incorporate non-contractual loans from independent third parties and other non-contractual matters.
The Rangers position is that the payments by way of EBT were all discretionary loans from the independent and offshore trusts. However Mr Dodds, as referred to above, contradicts that, as did the information dug out by Mark Daly for the second BBC Inside Story programme on Rangers.
The general understanding of the EBT scheme as operated for the benefit of the Rangers players is that it was done in such a ham-fisted way that the tax reductions it was meant to achieve were not accepted by HMRC on the basis that it was in fact clear there were contractual payments by the employer, rather than non-contractual loans by an independent trust.
I don’t see any attempt by the SPL to re-write the rules. Instead, and belatedly, they are seeking to apply them. Prima facie there is evidence that payments were made to players by or on behalf of Rangers which were not disclosed as part of the registration process, and that there were “side letters” regulating these arrangements which also were not made available to the football authorities.
Thus there were undeclared payments, based on “contracts” which were not disclosed.
Of course the Rangers FC has the right to dispute the charges, as it clearly will do. That is why a commission has been established to determine the issue.
If this is the case then press comment over the past few years would appear to indicate that several clubs other than Rangers may well have fallen foul of the soon to be changed historic laws.
“Whataboutery” from Sir David.
It would also appear that the SPL is once again seeking to invest itself with a power of retrospective penalty beyond that prescribed in its own rules.
No they are not.
Much has been said and written about EBTs. It should be noted that the tax treatment of these is an issue as yet unresolved and it is wrong to prejudge the outcome. It must be stressed that the tax tribunal will determine the appropriate tax treatment in respect of the arrangements operated.
It is possible that the Tax Tribunal could find against HMRC and that, on the same evidence, the Commission find Rangers guilty. That is because the issues facing both tribunals are different. The issue for the SPL Commission is not whether Rangers paid the correct tax. That could form a separate disrepute charge at a later date of course.
This is not a criminal matter and there is presently no question as to the legality of these schemes.
Agreed that it is not a criminal matter. However the legality of the operation of the MIH scheme is very much at issue.
Rangers agreed contracts of employment with its players (and staff). The EBT scheme involved the contribution of funds into an offshore discretionary trust managed by independent trustees. The trustees could and did make loans to individuals carrying interest with scheduled repayment dates.
Sir David knows about how these operated. Perhaps he could tell us. What were the scheduled repayment dates? What rate of interest was chargeable? Who paid the trustees? How did Rangers decide how much to put into these discretionary trusts? How much money is left in any of them where the players or staff left Ibrox years ago?
Why would anyone willingly seek a repayable loan, rather than payment of salary or bonus, unless they knew, as per a side letter, that the loan was never going to be repaid? Did the trustees produce these side letters, which would of course hopelessly compromise their independence and the “loan” status of the payment?
Did the side letters emanate from Ibrox where, on paper, there would be no control over the so-called independent trustees?
There was no contractual or beneficial entitlement to the funds on the part of any individual and the monies paid to EBTs were not “remuneration” in terms of any rules applying to the Club.
That is what the Tax Tribunal is pondering and as a related but not identical question what the Commission will decide upon. Bearing in mind that the appeal against the HMRC assessment has been proceeding for over four years, it was unlikely Sir David would raise his hands in surrender in this statement by admitting that the payments were remuneration! That would have been a story!
Since 2001 when the EBT scheme was introduced, the amounts contributed were disclosed in the audited financial statements of the Club. These audited accounts were provided to the SFA and SPL as required.
As I and others have mentioned before, the accounts did not divide up the payments. There was a lump sum stated therein. How could anyone looking at the accounts know to whom they related?
In any event, if the payments were not contractual, and not remuneration, why did it matter whether they were declared or not? Surely it only matters if they were contractual payments!
The SFA and SPL did not have the resources to audit the accounts of all of the members. Maybe it should, and maybe they will, going forward. That does not excuse a breach of the rules however.
As the law stands, it is the right of every taxpayer to minimise his tax liability. For example, taxpayers are entitled to maximise contributions to pension funds and benefit from the resultant tax allowances. Tax AVOIDANCE is a right. It is tax EVASION which is a crime.
What did Sir David think of the recent furore about Jimmy Carr, condemned by the Prime Minister for his immoral tax affairs, even though there was no apparent question of legality about his scheme at all? Does Sir David accept, in light of the stance taken by the Prime Minister, that the use of EBTs might at best have been immoral?
I also think that the line “Tax AVOIDANCE is a right” might become a notorious legacy for Sir David.
It is a misquote, or more accurately a simplified quote, from Judge Learned Hand, in the case of Helvering v. Gregory, 69 F. 2d 809, 810 (2nd Cir, 1934), aff’d 293 U.S. 465 (1935).
The full relevant quote is in fact as follows:-
“[A] transaction, otherwise within an exception of the tax law, does not lose its immunity, because it is actuated by a desire to avoid, or, if one choose, to evade, taxation. Any one may so arrange his affairs that his taxes shall be as low as possible; he is not bound to choose that pattern which will best pay the Treasury; here is not even a patriotic duty to increase one’s taxes.”
There is therefore, one might suggest, a difference between saying that it is a right to avoid tax, and the judge’s statement that one may arrange one’s affairs to lower tax. There is quite a difference in scale and emphasis.
Indeed in the Helvering case, Judge Learned Hand toned down the “pro-tax avoidance” message quoted above by saying:-
“But the meaning of a sentence may be more than that of the separate words, as a melody is more than the notes, and no degree of particularity can ever obviate recourse to the setting in which all appear, and which all collectively create.”
As Professor Henry Ordower, of St Louis University School of Law commented in his piece in which can be found here:-
“This limitation on tax planning requires that the substance of the transaction, rather than its form, control the tax outcome. The outcome must match the intention of the taxing statute that otherwise applies to the transaction’s form. Transactions lacking economic and business purpose, other than to capture a tax advantage by meeting specific statutory requirements, fail this judicial test.”
I suspect that the “form over substance” v ”substance over form” debate would have occupied some time in the Rangers EBT Tax Tribunal.
As an aside, Judge Learned Hand is one of the most distinguished of American jurists, (as well as having one of the best names for a judge ever). More can be read about him here, with apologies for using Wikipedia as a source.
In December 2010, as a result of legislation changes introduced by HMRC, EBTs were rendered tax inefficient. Thereafter the Club made no further contributions to EBTs. For the avoidance of doubt, many thousands of employees in many areas of business and commerce have benefited from EBTs.
It was efficiency, not morality or legality that led to Rangers stopping using EBTs.
Rangers sought only to provide financial security for players (and staff) within the rules of law and football. To suggest that this amounted to cheating in the sporting context is an allegation which is without any foundation.
In the spirit of politics, I would refer the gentleman to the answer given before – namely the remarks by Neil Doncaster about financial fair play.
I, of course, wish the “new” Rangers every success for the future. I have no doubt that the present generation of players and staff will make a positive and beneficial contribution to the SPL and, in due course, return the Club to a position of pre-eminence in Scottish football.
And there you go again Sir David – it is not a “new” Rangers. It is Rangers Then, Rangers Now, Rangers Forever. All this talk of “new” Rangers will lead to you being condemned by the fans of eternal Rangers.
However, I am determined to support those who served the Club with such dignity and integrity during my stewardship.
And whilst under your stewardship a huge tax bill and massive debt was run up?
Posted by Paul McConville