Rangers: were they cheating football, and the taxman?

I leave shortly, once more, for a city rather drier and a good deal more violent than dear old Glasgow. But before I do let me leave you with two thoughts for now, addressing the question – were Rangers cheating?

That means two things – cheating the taxman and cheating football by breaking the rules over notifying the Scottish football authorities of player payments.

First – were they cheating football?

Well the short answer is that it is for Lord Nimmo-Smith’s independent commission to answer in January.

However the lawyers have already given us some fascinating pointers. We have known for months from lawyers inquiring into the issue that there is, in their words “a case to answer”.

Now, the First-tier tax tribunal opinions have shed fascinating light on whether or not Rangers cheated? For now that must remain a question but the facts as revealed in the FTTT report are quite unambiguous.

The majority view is that the trust payments were loans not salary, thus there was not an absolute entitlement, thus the football authorities did not need to be told.

Ibrox hopes that’s enough. It hopes football regulation essentially follows tax precedent. But by the time Lord Nimmo sits HMRC may have lodged an appeal – and the majority report is merely unfinished business.

With the chancellor, public accounts committee. And many an MP baying for blood over corporate tax avoidance and even Starbucks rethinking their moral and fiscal stance, it’s interesting mood music as HMRC considers its next move.

Even the majority report is deeply critical of the operation, specifically Mr Red, in the anonymised reports, who ran the trust scheme at Rangers. So was Mr Red himself!

Page 4: “He did accept that the Group had been less than forthcoming in response to HMRC’s enquiries than he would have wished, but he explained that he had been guided by Messrs Baxendale-Walker.”

That is, the Murray Group continued to take its guidance from the organisation of Paul Baxendale-Walker, soft-porn king and struck-off solicitor.

Further, page 4 continues:

“Mr Red was somewhat defensive in his evidence about the Group’s motives in operating the Trust.”

And, simply, that Mr Red lied according to Counsel, for the Respondents (HMRC) Roderick Thomson.

Page 36:

“He had lied in material respects to the Tribunal, Mr Thomson claimed.”

There were side-letters which detailed monies, revealed by the FTTT and Mr Red, the man who administered the EBT scheme at Rangers, accepted and defended the fact that football’s authorities were not informed of them.

Page 70 – the minority report:

“Another strand of evidence being tested was the nature and purpose of the side-letters. Asked about the secrecy surrounding the side-letters, referring to the fact that they were not lodged with the SFA, nor disclosed in the long period of HMRC’s enquiry, Mr Red’s reply was: ‘I still say there is nothing secret about them. We have nothing to hide in these side letters’. While not denying the proposition put to him by the Respondents that ‘there’s an overarching contract with each of the footballers, consisting of the written contract and the side letters’, Mr Red maintained that ‘it’s our view that the side-letter or the letters of undertaking do not need to be registered or lodged with the SFA’ (Day 3/31-32).”

On page 71 the dissenting opinion concludes:

“It is not accepted that there had been no deliberate concealment of the side-letters”,  which is about as straightforward as you can get on this critical issue, though this is of course the minority opinion.

On page 87 of the FTTT minority report the operation and non-disclosure of the side-letters detailing payments is set out for us all to see at last:

“In cases where the Remuneration Trust arrangement was used, the agreement would have two parts: the employment contract and a letter of undertaking, usually signed on the same day. The letter of undertaking is referred internally within the group as ‘the side-letter’, and stated that the employer would undertake to contribute specified sums at specified dates into the employee’s sub-trust. The side-letter was not lodged with the SFA or SPL.”

Mr Red is the man who brought the Employee Benefit Trust Scheme to Rangers.

His evidence to the FTTT is summed up thus, page 70:

“…he was vague and evasive…”

And:

“…he was not on sure ground…”

He gave the impression that he was:

“…trying to tell a version of how the trust scheme should operate, rather than the version as it actually operated.”

He was not, however, alone: in her dissenting opinion Dr Poon concludes, on page 66:

“The overall impression created by the Witness Statements from the Murray Group senior employees…was one of guardedness and careful omission of salient facts.”

And as we have seen there is consensus over the evasiveness of key witnesses like Mr Red across both tribunal reports.

So, since by a two to one majority the club loans scheme was found to be legal – subject to possible appeal – why the institutional secrecy, obstruction and evasiveness which was found unanimously by the tribunal against the old Rangers club?

It will be for Lord Nimmo-Smith to consider what monies, what side-letters and for which players and which matches, the football authorities were kept in the dark about, come January – and if that secrecy was legit or not.

It is for him to consider therefore, whether this amounts to cheating.

For him to consider whether Mr Red, for all his evasion and secrecy is nonetheless right – the side-letters were never the SFA or SPL’s business.

But incontrovertible evidence of non-disclosure and a culture of secrecy and evasiveness about the notorious side-letters is now in the public domain, partly through the work of bloggers, some Scottish papers, Channel 4 News and BBC’s Panorama.

And all the above and much more is now in the public domain, thanks to FTTT, there to be read and reported – and there’s no possible witch-hunt for sources and leaks this time around.

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