Monthly Archives: September 2012

Whatever Happened to Duff & Phelps and its Conflict of Interest Investigation?

On 22nd June Lord Hodge dealt with a hearing into the administration process of Rangers Football Club PLC (as it then was).

The BBC reported the outcome as follows:-

The issue over any possible conflict of interest was raised by Lord Hodge at a hearing about the administration process on Friday. The judge said he took no view about what the BBC had said, but wanted to know whether Duff and Phelps had obtained and acted on legal advice on the question of conflict of interest. Lord Hodge said he had done nothing until now because he did not want to hinder the process of Rangers seeking a creditors voluntary agreement (CVA).

But, he told the accountants’ lawyers: “There is considerable public interest in this jurisdiction in relation to the administration.”

Lord Hodge added: “I do not want the administration to come to an end without having received that report.”

The report demanded by Lord Hodge is expected to be ready in three weeks and a further court hearing is likely to be arranged after that.

(As a side issue, I will point out that “CVA” is not accurately described above by the BBC, but actually stands for Company Voluntary Arrangement.)

Since June, apart from the declarations at the time by D&P that they welcomed the investigation as being a chance to clear their name (I paraphrase) not much seems to have happened. Continue reading

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Filed under Administration, Insolvency Act 1986, Rangers

Freedom of Information, Scottish Government, Transparency and Clarity by David

Are we sitting comfortably? – then I’ll begin…

Once upon a time, a Scottish MEP asked the Scottish Government (SG), under Freedom of Information (FoI) for any legal advice it had received on the issue of an independent Scotland’s position in the European Union (EU), were they to become independent….

There had been, and there continue, exchanges in Holyrood and wider debate, over the question of whether Scotland would be automatically a member of the EU upon independence – or whether there would have to be an entirely new application, vulnerable to a veto from existing EU states. The First Minister (FM) is adamant that EU membership would transfer to Scotland automatically and with no need to newly apply, which has led to requests to produce evidence to back up his position (assumed automatic transfer of a membership – where have we encountered that before?).

This is not intended as a political piece, but a short summary is … opponents of Independence want to sow doubts in the minds of the voters with regard to the independence project: on the economy, on defence, on the EU. The FM wants to project clarity and assurance. Continue reading

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Filed under Guest Posts

“Nimmo Smith Blasts Green” … Or Maybe Not…

Lord Nimmo Smith’s Commission has been subject to some rather inconsistent baying and comments which clearly misunderstand what its purpose is after it released its Opinion on the preliminary hearing into the Rangers EBT inquiry.

Whilst it is not unexpected that supporters of the club in question would rail against the possibility of a guilty verdict and an “unfair” punishment, it was surprising (well actually it was not) to see newspapers mis-report the matter. However, I have scooped the press with what is believed to be the only photograph showing Lord Nimmo Smith meeting Mr Green, which can be found at the foot of this piece.

Newspaper headlines referred, for example, to Lord Nimmo Smith “blasting” Charles Green.

There were also complaints voiced about the Commission addressing suggestions of bias, or lack of impartiality, or even the suggestion, unfounded though it would be, that there was impartiality. Continue reading

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Filed under Charles Green, Football, Football Governance, Rangers, SPL

Lord Nimmo Smith and Rangers – The Judge Sets the Ground Rules

Highlights of the Opinion by Lord Nimmo Smith’s Commission

The “EBT” charges cover a period from 23rd November 2000 to 3rd May 2011.

This includes a charge of fielding ineligible players.

There is a further charge against Rangers (In administration) for failing to co-operate after March 15 this year, which is capable at the very least of causing Duff and Phelps embarrassment.

There is a clear distinction between the Independent Commission set up by the SPL and the SPL itself.

No fair-minded and informed observer would consider the possibility that the Commission or a member thereof was biased.

Rangers dropped the bias argument before the hearing on 11th September.

Mr Green has said the SPL refused to reply to his lawyers.

The Commission says that the SPL’s lawyer did so by letter and in numerous emails.

Which of the two statements above is correct?

Oldco and NewCo were going to turn up, represented by the same lawyer, to argue that the SPL had no jurisdiction. At the last minute they declined to attend.

The SPL undoubtedly has jurisdiction over OLDCO.

The SPL undoubtedly has jurisdiction over THE CLUB.

The club is a separate but non-legal entity which continues notwithstanding transfer from one owner to another. Rangers Football Club therefore continue as before even though ownership has been transferred.

The SPL has no jurisdiction over NEWCO, but as it has power to impose sanctions on the club, owned by newco, newco has a direct interest in proceedings.

Therefore newco could face all of the punishments for the offences if proved, on the basis that the club it bought was guilty of them.

The administrators’ argument that this was a legal process and as such ought to be stopped without their consent failed. The case can go forward to  a full hearing.

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The most clear cut and most informative analysis of the saga of Rangers Football Club (apart of course from that on this site 🙂 ) has come from the courts or from legally qualified people presiding over regulatory matters.

The opinion of Lord Hodge in the case of Martin Bain v Rangers spelled out in detail the financial perils for Rangers and included the assessment by his Lordship that Rangers faced “a real and substantial risk of insolvency if the tax appeal were to be decided against Rangers in the sums which have been discussed”.

We had the decision of Sheriff Ross in One Stop v Tixway, which blew any remaining credibility Mr Whyte had to smithereens. In that case the Sheriff said of the former Rangers Chairman “I reject the evidence of Mr Whyte as wholly unreliable. It is not possible to ascertain whether he is not telling the truth or is simply unable to recollect the true position, and has convinced himself that this arrangement is something that he would not have entered into. Either way, his evidence is contradicted by virtually every other piece of evidence.”

Gary Allan QC chaired the SFA Judicial Panel which found that Rangers and Mr Whyte were guilty of various offences against football’s rules. Their judgement laid bare a concerted campaign by Mr Whyte to avoid paying millions of pounds of taxes, which money was used to keep Rangers Football Club running as far as February (and as the administrators started with around £3 million in the bank which should have been paid to HMRC, that non-payment probably enabled Rangers to make it to the end of the season).

Lord Glennie then overturned the transfer embargo imposed by Mr Allan’s Panel and confirmed by the Appellate Tribunal under Lord Carloway.

We also had Lord Hodge’s opinion on the application by the administrators to regularise their appointment when it turned out they had failed to notify all relevant parties.

We can now add to the ever growing pile of judicial consideration the Opinion published yesterday by the SPL. This is written by the SPL Independent Commission, consisting of Lord Nimmo Smith, Nicholas Stewart QC and Charles Flint QC.

It deals with their hearing last week to determine further procedure in the so-called Rangers EBT investigation. This is the procedure condemned by Mr Green as unfair and seeking to arrive at a pre-determined conclusion.

So, now that these three legal luminaries have considered preliminary matters and issued their opinion, where does it take us?

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After referring to the appointment of the Commission, the opinion narrates some of the relevant history.

At paragraph 4 it states-

The SPL was incorporated in 1998.   Its share capital consists of sixteen shares of £1 each, of which twelve have been issued.   Oldco (Rangers Football Club PLC) was one of the founding members of the SPL, and remained a member until 3 August 2012 when the members of the SPL approved the registration of a transfer of its share in the SPL to The Dundee Football Club Limited.  Each of the twelve members owns and operates an association football club which plays in the Scottish Premier League (“the League”).  The club owned and operated by Oldco played in the League from 1998 until 2012 under the name of Rangers Football Club (“Rangers FC”).

This confirms what seemed rather odd, namely that oldco, even though no longer owner and operator of a football team, remained a member of the SPL for almost two months after the sale of its entire assets.

Para 6 says:-

On 14 June 2012 a newly incorporated company, Sevco Scotland Limited, purchased substantially all the business and assets of Oldco, including Rangers FC, by entering into an asset sale and purchase agreement with the joint administrators.   The name of Sevco Scotland Limited was subsequently changed to The Rangers Football Club Limited.   We shall refer to this company as Newco.

This comes back again to the point I discussed earlier this week  namely that the purchaser seemed to change from Sevco 5088 Ltd to Sevco Scotland Ltd, although this statement by the Commission does not tally with the Rangers spokesman mentioned in the piece I quoted.

Para 7 states:-

Newco was not admitted to membership of the SPL.   Instead it became the operator of Rangers FC within the Third Division of the Scottish Football League (“the SFL”).   It also became a member of the Scottish Football Association (“the SFA”), the governing body of the sport in Scotland.  These events were reflected in an agreement among the SFA, the SPL, the SFL, Oldco and Newco which was concluded on 27 July 2012 and in this Commission’s proceedings is referred to as “the 5-Way Agreement”.

Let’s look at that again. Newco became a member of the SFL and became a member of the SFA (not that it had the existing membership of oldco transferred to it).

Para 8 summarises the definition of the notorious EBTs to be considered by the Commission. It states:-

“Payments made by or for [Oldco] into an employee benefit trust or trusts for the benefit of Players, including the Specified Players, employed by [Oldco] as Professional Players, Registered and/or to be Registered as Professional Players with the Scottish Premier League  and Playing and/or to Play for Rangers FC in the Scottish Premier League and payments made by or for [Oldco] into a sub-trust or sub-trusts of such trust or trusts of which such Players were beneficiaries, payments by such trust or trusts and/or sub-trust or sub-trusts to such Players and/or for the benefit of such Players and any and all arrangements, agreements and/or undertakings and the like or similar relating to or concerning any of such Players and payments.”

 Para 9 indicates that the periods covered in the “complaint” run from 23 November 2000 to 21 May 2002, 22 May 2002 to 22 May 2005 and 23 May 2005 to 3 May 2011 in relation to EBT payments and after 15 March 2012 in relation to failure by Rangers to co-operate with the SPL and to comply with the SPL Rules. Bearing in mind that this last charge is effectively levelled against Duff & Phelps, who were running the company as administrators, it makes the declaration by them that they would have nothing more to do with these proceedings remarkable. A finding that administrators had failed to comply with the regulatory body’s investigations in an industry where they were administrators would at the very least be embarrassing and at worst could have serious financial and disciplinary consequences for the firm and the partners involved.

The “charges” allege that Oldco and Rangers FC breached the relevant Rules of the SPL, and also those of the SFA, by failing to record EBT payments and arrangements in the contracts of service of the Specified Players and/or other Players and by failing to notify them to the SPL and the SFA.   There is one Issue directed only against Rangers FC, alleging that the club was in breach of the Rules by playing ineligible players.  The fourth chapter alleges that during the period from 15 March 2012 Oldco and Rangers FC failed to co-operate and to respond to requests for documents.

The Notice of Commission was served on Oldco, Newco and Rangers FC by letters dated 2 August 2012.

The Commission then goes on to comment on certain preliminary matters.

Independence

They state in para 10:-

It is fundamental to the constitution of a body with investigatory and disciplinary powers, such as the present Commission, that it must act independently of the person or body appointing it.   We must of course operate within the terms of our remit, and apply any rules which are applicable, but in reaching our final determination of the Issues, and in making any incidental decisions, we shall exercise our own judgement, on the basis of the evidence which is adduced, in accordance with the principles of natural justice, and unfettered by the influence of the Board or of anyone else.   None of us would have accepted his appointment on any other basis.   We have the use of SPL premises and are assisted by SPL staff, but this is because we have given instructions to that effect; the members of staff, in particular, act under our instructions.

The Minute of the Board Meeting appointing the Commission is referred to:-

Continue reading

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Filed under Administration, Charles Green, Football, Football Governance, Rangers, SPL

SFA v Charles Green – Round 2 – and Why Mr Green Should Be Cleared

The following emanated from Hampden today.

The Compliance Officer has issued the following Notice of Complaint:

Alleged Party in Breach: Charles Green (Rangers)
Date: On or around 12th September 2012
Disciplinary Rule(s) allegedly breached:

(1) Disciplinary Rule 66 (Bringing the game into disrepute by calling into question the integrity of the Commission, chaired by Lord Nimmo Smith and appointed by the Scottish Premier League Limited (“SPL”) to examine alleged breaches of the SPL’s Rules regarding the use by Rangers PLC and Rangers FC of Employee Benefit Trusts to pay players, by suggesting in a media interview that the outcome and sanction of said Commission had been pre-determined by the SPL.)

(2) Disciplinary Rule 71 (Not acting in the best interests of football by calling into question the integrity of the Commission, chaired by Lord Nimmo Smith and appointed by the Scottish Premier League Limited (“SPL”) to examine alleged breaches of the SPL’s Rules regarding the use by Rangers PLC and Rangers FC of Employee Benefit Trusts to pay players, by suggesting in a media interview that the outcome and sanction of said Commission had been pre-determined by the SPL.)

Principal Hearing Date: Thursday, 4th October 2012

Mr Green has until Monday, 24th September 2012 to respond to the Notice of Complaint.

Rule 66: No recognised football body, club, official, Team Official or other member of Team Staff, player, referee, or other person under the jurisdiction of the Scottish FA shall bring the game into disrepute.

Rule 71: A recognised football body, club, official, Team Official, other member of Team Staff, player or other person under the jurisdiction of the Scottish FA shall, at all times, act in the best interests of Association Football. Furthermore, such person or body shall not act in any manner which is improper or use any one, or a combination of, violent conduct, serious foul play, threatening, abusive, indecent or insulting words or behaviour.

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Mr Green was not prepared to let the ink dry on the Notice of Complaint, issuing the following response:-

RANGERS Chief Executive Charles Green said: “We made very clear in the statement that we made that we have never questioned the integrity of the panel. That is beyond reproach. Continue reading

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Filed under Charles Green, Football Governance, Rangers, SFA