Tag Archives: Dave King

Will Craig Whyte and Other Directors of Rangers Face Disqualification for £14,000,000 Unpaid Tax?

In which I comment on the Directors of Rangers Football Club PLC over the last year, and in light of a recent case decided by Lord Hodge, have a look to see if any of them might be at risk of disqualification for the non-payment of PAYE, NIC and VAT.

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One of the consequences of the decision of HMRC, of which I will write elsewhere, is that the liquidators, BDO, will be obliged to carry out a formal inquiry into the circumstances of the insolvency of Rangers Football Club PLC. This includes the actions of present and past directors and can lead to various possible outcomes. These are not mutually exclusive.

There can be criminal prosecutions of office holders, if there is evidence of criminal conduct (not an allegation which has yet been made by any official body); the parties investigated can be pursued in the civil courts for losses caused to the now insolvent company, where they have failed in their legal duties; and the Secretary of State for Business Innovation and Skills can initiate proceedings to disqualify the directors from holding such positions. Section 6 of the Company Directors Disqualification Act 1986 applies here, and is shown at the foot of this article.

It is also the case that shareholders of an insolvent company can, in certain circumstances, bring civil proceedings for damages against officers of the company, alleging that breach of duty has caused them losses. On the basis tough that shares in Rangers were seen as financially worthless when Mr Whyte took over the company last year, it is hard to see how even a shareholder like Mr King, owning 10% of the shares, can claim to have suffered a loss. Continue reading

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Filed under Administration, Craig Whyte's Companies, Rangers, The Company Directors Disqualification Act 1986.

The SFA’s “Fit and Proper” Test – A Farce? Part 2 – Dave King and Paul Murray – Bad News for the Blue Knights?

You can see Part 1 of this piece here.

What about Dave King?

According to the Scotsman article referred to by me in Part 1 (and I commend the full piece to readers) :-

“During a breakfast briefing with daily newspaper correspondents, it also emerged that Rangers director Dave King will not be permitted by the SFA to be an official at the Ibrox club post-administration as he was still serving on the board when they entered their current insolvency event under Whyte.“

This is an interesting one too. There is no note on the SFA website of this decision about Mr King. Mr King remains listed by Companies House as a director. Even though the publicity was that he had been dismissed by Mr Whyte on the Friday before administration.

But the Articles do not mention being a director at the time of an Insolvency Event as being a bar. Instead it is being a director within 5 years prior to a member club undergoing an insolvency event. Indeed, this means that a director of a team which had had an insolvency event in, for example 1980, and who had resigned as a director in 1976, would still fall foul of the Articles. There is no limit on how far back the restriction goes – as long as you were a director within the five years prior to an insolvency event at a club, then you are potentially persona non grata. I will come back to this point below.

Mr King might wonder why he has not been afforded the same due process given to Mr Whyte.

He might also wonder why Andrew Ellis is not mentioned either. After all, if the position of the SFA is that being a director at the time of an insolvency event triggers a ban, then why not mention Mr Ellis, or indeed Gary Withey?

As I say, in any event, the Article does not say what is being reported here.

Mr King has been a director of Rangers for over 10 years. He is accused, but denies, criminal tax fraud and evasion on a huge scale in South Africa. The linked article describes in detail the allegations against him, and the findings by a South African court.

Mr King was described as follows by the judge:-

The court had seen King testify for four days and “are unanimous in finding that he is a mendacious witness whose evidence should not be accepted on any issue unless it is supported by documents and other objective evidence”.

“It was remarkable that King showed no sign of embarrassment or any emotion when he conceded that he had lied to the (Sars) commissioner in a number of his income tax returns. In our assessment, he is a glib and shameless liar.”

To be fair to the SFA, this was only published in February 2011, and the tax issues were only known about since around 2001.

As the newspapers report continues:-

“In 2001, Sars levied a tax assessment against King for R912.8 million (£77 million), which has not yet been finalised. The High Court in Pretoria heard in 2002 that King’s income tax returns for the years 1990 to 2001 reflected a modest annual income of R60 000 (£5,000) and King had then asked to be deregistered as a taxpayer.

Sars launched an investigation into King’s affairs in May 2000 when it became aware that he had bought an Irma Stern painting for R1.76m (£148,000) and could not reconcile this purchase with his declared gross income of R60 000.”

The final determined tax assessment for Mr King and his companies totals R2.7 billion (£228 million)!

Yet for all this information, and the finding by a court that Mr King ADMITTED to lying in his tax returns (which one assumes is a crime in South Africa as it is here), and the finding that Mr King is a mendacious witness and a glib and shameless liar (which one assumes could constitute perjury), the first indication by the SFA that they are concerned about Mr King comes in a chat with journalists over breakfast, regarding him being on the Board of Rangers when the music stopped!

As Mr Regan says in the part of the Scotsman article in quoted in my previous piece – “The fit and proper person test is a myth. There is no test!”

Mr King’s continued role on the Rangers’ board for over ten years is proof of that.

However Mr Regan’s breakfast comments might help Mr King, because he can argue that he has not had due process, nor proper notification of a decision. If no formal decision has yet been made, then Mr Regan has jumped the gun, and could have caused his organisation as much trouble as Mr Whyte did for Rangers in unguarded and premature comments to journalists about Martin Bain!

Which Former Directors of Rangers plc might be Disqualified as not “Fit and Proper”?

Every director and office bearer of Rangers going back to the 15th February 2007 falls foul of the 5-year pre-insolvency rule.

That list is as follows:-

Craig Whyte

Dave King

Andrew Ellis

Gary Withey

Phil Betts

John Greig

John McClelland

Martin Bain

Donald McIntyre

Alastair Johnston

Paul Murray !!!!!!!!!

Donald Muir

Michael McGill

James Wilson

Sir David Murray

Quite how is Mr Murray, who is at the head of the “Blue Knights” going to get round this issue?

Mr Regan has made it clear – all he needs to do is to fill in the form and say that he is a fit and proper person! The problem is solved!

Conclusions

The SFA fit and proper person test is a farce. As I joked previously Hannibal Lecter gets in as long as he is prepared to lie on the form, or to indulge in “smoke and mirrors” tactics re interpretation of the rules.

Whilst the English FA is setting up a body to deal with this, the SFA refuses to do so, as it would involve a “cast of thousands”.

Maybe Mr Regan could ring his colleagues at the FA and ask them how they plan to do it, or even read the documents published by the FA?

If Mr Regan feels that the matter is one where the Articles are not fit for purpose, as was pointed out by the late Paul McBride QC last year in connection with the Neil Lennon suspension saga, then they should be changed.

As it stands the Articles regarding the fit and proper test (which does not exist!) do not reflect either what happens in reality, or what Mr Regan thinks should happen. Therefore they must be changed.

The Rangers mess is extending through all areas of Scottish football. It might allow the fundamental reforms needed to prevent a recurrence in the future, or, on a more modest level, to allow the SFA to do what it is required to do!

 

Posted by Paul McConville

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Filed under Football, SFA

The SFA’s “Fit and Proper” Test – Self-Certification for Football Clubs – A Farce? Part 1 – Craig Whyte

Secretly recorded phone conversation between the SFA and the new Chairman of Dukla Pumpherston of the Scottish First Division:-

SFA      –           Is that Mr Hannibal Lecter? This is the SFA calling.

Lecter  –           Hold on, just finishing my dinner, these fava beans and chianti are delicious…how can I help you?

SFA      –           Just wanted to make sure you are a fit and proper person to take over Dukla.

Lecter  –           OK. What do you need from me?

SFA      –           Just sign the form to say that you are fit and proper and pop it in the post to us.

Lecter  –           And then you will meet to consider it?

SFA      –           No. As long as you tell us that you are fit and proper, then that’s you in!

Lecter  –           Thank you very much!

Call ends

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And a quiz question too, which will be answered below – what do the following have in common – the unicorn, Pandora’s Box, Brigadoon, the SFA “fit and proper” test, Theseus and the Minotaur?

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The issues of football governance at the forefront of media coverage just now, not just in Scotland but in England too, as well as worldwide.

The BBC recently reported, under the headingOwners face increased scrutiny in football governance revamp”, that the English football authorities propose to put the suitability of prospective club owners and directors “under scrutiny by a new regulatory body set up to help improve football governance.” The FA Regulatory Authority will have, amongst other responsibilities, the duty to check if the “fit and proper” test is satisfied by English club directors. Government pressure has forced the FA to act.

This contrasts with the parlous state of football governance in Scotland as detailed below.

Craig Whyte

Craig Whyte has been declared not to be a “fit and proper” person to be a director of a Scottish football club by the SFA.

The investigation by the SFA started in October after the BBC Inside Story revelation that he was a former disqualified director. Matters were delayed as a result of the alleged lack of co-operation shown by Collyer Bristow, acting for Rangers and Mr Whyte.

After the club entered administration, a panel chaired by Lord Nimmo Smith was convened and reported to the SFA in the two-week period set for it to do so.

The decision followed the Special Board Meeting which considered Lord Nimmo Smith’s report highlighting “a number of other potential rule breaches by the club and its owner”.

As a result, Rangers have been charged with bringing the game into disrepute. As Stewart Regan of the SFA said:-

“Specifically, areas of potential breach to be considered by the Judicial Panel include:

·         Obligations and duties of members

·         Official return

·         Financial records

·         Division of receipts and payment of expenses (Scottish Cup).”

I think I will look into what the Judicial Panel can do at a later date. For now, it is interesting that the finding regarding Mr Whyte comes ten months after he took over at Ibrox, and almost five after the BBC revelation of his disqualification! I will return to issues about delay. Continue reading

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Filed under Alleged Humour, Football, SFA

Rangers Football Club PLC – An Interesting Slant on Corporate Governance

According to the Daily Record, Dave King has been sacked from the board of Rangers Football Club PLC. Mr King took up a place on the board in 2000.

This has not yet been formally confirmed, either on the Rangers section of the PLUS SX newswire or on Rangers’ own website. Indeed Rangers website still does not list new director Andrew Ellis as a Director. However, Gordon Smith and Ali Russell, who are not Directors, are pictured.

By my reckoning, if it is correct regarding Mr King, then Rangers Football Club PLC has only two directors left: Craig Whyte and Mr Ellis.

Mr Ellis is a non-executive Director.

The Business Link website is helpful in determining what executive and non-executive Directors are meant to do.

“Types of directors

There are two types of director, executive and non-executive. There is no legal distinction made between executive and non-executive directors – the difference is that non-executive directors do not get involved in the day-to-day running of the business.

Executive directors perform operational and strategic business functions such as:

  • managing people
  • looking after assets
  • hiring and firing
  • entering into contracts

Non-executive directors use their experience and expertise to provide independent advice and objectivity, and they usually have a role in monitoring executive management. A non-executive director might be appointed to carry out a specialist role on a part-time basis or for their expertise in specific activities, such as strategy and contract negotiation.

They usually work part time, attending board meetings and spending time on specific projects.

Non-executive directors bring an objective view of the business, can improve the board’s effectiveness at relatively low cost and provide valuable business connections.”

 

In 2003 the Higgs Report was released. This document attempted to deal with various corporate problems by emphasising and strengthening the role of the non-exec as as independent protector of shareholders’ interests and as someone to exercise some restraint on the execs.

Derek Higgs made various recommendations for quoted companies (Rangers Football Club PLC is a quoted, though suspended, company.)

A Board of directors should be of appropriate size. At least half the directors should be non-execs. The non-execs should be independent.

The Chairman and Chief Executive should not be the same person.

A Senior  Independent Director should be appointed to whom shareholders could come with concerns, rather than having to go to the execs.

The non-execs should meet at least once a year without the execs, and this should be recorded in the Annual Report.

At that time the average board of a listed company comprised 7. Three execs, three non execs and a Chairman.

As regards non-execs it was recommened that they satisfy themselves that financial information is accurate and that risk management processes are in place and robust.

Rangers however seem to have a new idea. The “non exec” Mr Ellis is either there to have a day to day role, in which case he is not an non-exec, and even if he is truly a non exec, he cannot be an independent one due to his close connections with Mr Whyte.

There is therefore no independent scrutiny of what Mr Whyte does, and as a result the 26,000 or so small shareholders for whom Mr Johnston and the IBC expressed concern at the time of the takeover have no one to represent their interests.

Mr Whyte has taken the unusual stance recently of meeting some of the fans’ organisations, including some with less than angelic reputations. He has eschewed the normal methods of releasing information regarding cash flow, profit information and details regarding accounts and AGM’s via press release, and through the proper channels.

Concerns have been raised that his method of releasing such “market sensitive” information could be in breach of the rules. This may explain his wish to de-list from PLUS SX once a year from the takeover has passed.

It may be that Mr Whyte has a raft of new directors, both exec and non-exec, to step in.

Perhaps Ali Russell and Gordon Smith will officially be elevated to the Board.

Till then it seems that Mr Whyte pays as much attention to the needs of good corporate governance as he does to filing deadlines and fixing statutory meetings!

 

 

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Filed under Companies Act 2006, Craig Whyte's Companies, Football, Rangers