Well, I got it right! I predicted in January a financial penalty, and not title stripping as the outcome of the Nimmo Smith Commission.
I will write at length on the 42 page decision, but I think it is worth pointing out a few factors, which I will do in posts today.
First of all – was this all simply an “administrative error”?
Click on the link below for the full decision.
The Commission has found Rangers Football Club PLC, (now RFC 2012 PLC) which is in liquidation and which the Commission referred to as “oldco” as will I, guilty on all four counts, namely three of breaching the rules regarding non-disclosure of information regarding payments to players, and the fourth of failing to co-operate with the SPL by providing information when requested to do so. Oldco was not, for reasons I will come to, guilty of playing ineligible players.
The Commission imposed a fine of £250,000 on oldco.
No finding was made against the football club, which was also a party to the case.
No finding was made against newco, as newco was not a party to the case, but which did appear as the owner of the football club, and, as per the Preliminary Ruling of the Commission, had an interest in any penalty imposed on the football club.
Already the “spin” has started, based upon the Commission’s conclusion that there was no “competitive advantage” to Rangers FC as a result of the non-disclosure, that the penalty is imposed solely for an “administrative error” or for a “clerical error”.
Those phrases do not appear in the decision.
Instead it is clear from the reasons published by the Commission that they accepted that there was a deliberate decision made by directors of oldco not to provide the football authorities with information which ought to have been provided.
Paragraph 107 states:-
We nevertheless take a serious view of a breach of rules intended to promote sporting integrity.
Greater financial transparency serves to prevent financial irregularities. There is insufficient evidence before us to enable us to draw any conclusion as to exactly how the senior management of Oldco came to the conclusion that the EBT arrangements did not require to be disclosed to the SPL or the SFA.
In our view, the apparent assumption both that the side-letter arrangements were entirely discretionary, and that they did not form part of any player’s contractual entitlement, was seriously misconceived.
Over the years, the EBT payments disclosed in Oldco’s accounts were very substantial; at their height, during the year to 30 June 2006, they amounted to more than £9 million, against £16.7 million being that year’s figure for wages and salaries.
There is no evidence that the Board of Directors of Oldco took any steps to obtain proper external legal or accountancy advice to the Board as to the risks inherent in agreeing to pay players through the EBT arrangements without disclosure to the football authorities.
The directors of Oldco must bear a heavy responsibility for this.
While there is no question of dishonesty, individual or corporate, we nevertheless take the view that the nondisclosure must be regarded as deliberate, in the sense that a decision was taken that the sideletters need not be or should not be disclosed.
No steps were taken to check, even on a hypothetical basis, the validity of that assumption with the SPL or the SFA.
The evidence of Mr Odam (cited at paragraph  above) clearly indicates a view amongst the management of Oldco that it might have been detrimental to the desired tax treatment of the payments being made by Oldco to have disclosed the existence of the side-letters to the football authorities.
I have added emphases. I think that section of the judgement makes it very clear indeed that this was no clerical error or administrative mistake. It was a deliberate, though without any evidence of it being dishonest, decision to hide these details, which ought to have been given to the football authorities. There was no evidence even that the Board had taken advice as to the position.
One might call that, at best, wilful ignorance.
Mr Ogilvie, former Director at Oldco, gave evidence that he knew nothing about the EBT scheme till he got money from it himself, and that he had no recollection of it being discussed by the Board. Bearing in mind how much was paid through these schemes, it might seem that a certain lack of corporate oversight occurred.
The paragraph quoted above makes it clear that this was a deliberate effort to break the rules, not some clerical error.
Next I will look at how the rules about disclosure could be broken, but the players not be ineligible, and after that the “no sporting advantage” decision.
Posted by Paul McConville