Rangers administration: ‘Show us the money’

WHEN Craig Whyte, a self-made millionaire, appeared as if from nowhere with an offer to buy Rangers, he seemed like the answer to the debt-ridden club’s prayers. An avowed “lifelong fan”, he pledged not only to pay off its outstanding debt, but to invest millions in the kind of players who would help it continue its run of league wins and rekindle the days of European glory.

After three years of trying, unsuccessfully, to pass on Rangers to a worthy heir, and with his business empire stalling, it’s little wonder David Murray saw in the tycoon’s brash dynamism a younger version of himself and heralded him as a saviour.

Yet, in just nine months, all the dreams the fans had of a better future have come crashing down. With the club in administration, millions of pounds unaccounted for and a police investigation launched into the way the takeover was conducted and an SFA probe, the man once dubbed the Whyte Knight is now being vilified as a Dark Lord.

At first defensive over stories about their new owner’s business practices, now even the most loyal Gers fans have serious questions over Whyte’s decisions as the club they have supported through all its travails now faces the prospect of years in the footballing doldrums.

Even with the administrators making positive noises about its survival, and expressions of interest from parties not currently involved in Rangers, the threat of liquidation still looms large. The fans’ anger, already at fever pitch over the news that Whyte had failed to hand over £9 million in PAYE to HMRC, threatened to boil over last week when it emerged that £24m gained from the sale of season tickets to Ticketus had not passed through Rangers’ accounts and that administrators couldn’t find it.

Whyte claims to have put £33m into Rangers since he took over, yet how much the club owes and to whom is unknown.

Feelings were running so high that Whyte was told it would be dangerous for him to take his seat in the directors’ box for his team’s clash with Kilmarnock yesterday. Yet for days, he gave the impression he was determined to brazen it out.

“That’s Whyte all over – he has such a brass neck,” says one source. “I don’t get the impression he’s squirming under the table as most people would be doing in his situation.

“There is a chilling aspect to him that flies in the face of what he looks like. There’s an element of coldness to him.”

On Friday night he issued a statement saying “every penny that has come in and gone out of Rangers has been properly accounted for” and “I personally have not taken a single penny out of Rangers”.

For months now, Whyte has been under intense scrutiny. Ever since he was accused, in a BBC documentary, of being a de facto director of a company called Re-Tex during a seven-year period when he was banned from doing so, journalists have been raking through Companies House records trying to find out more. Last week Whyte launched legal action against the BBC for alleged defamation.

Despite the attention, surprisingly little is known about the man who claims to have made £20,000 playing the stock market by the age of 15, and who, in 1997, became Scotland’s youngest self-made millionaire at the age of 26.

Many feel this is no coincidence; ask anyone who has dealt with Whyte in the last year and they agree – his greatest asset is his ability to deflect awkward questions with smoke and mirrors.

In interviews, he shuns questions about his personal life and about his many other companies.

And his use of different spellings of his surname and different dates of birth on official documents has made it more difficult to keep track of his movements.

What has emerged is a complex web of companies stretching back to the early 90s, and a history of buying over failing businesses, turning them round and selling them on. This past, combined with his recent behaviour – the apparently wilful way in which he took Rangers into administration and his determination to see his favoured financial advisers Duff and Phelps appointed administrators – has led many to view him as a ruthless tactician with a masterplan which will leave the club debt-free at the expense of the taxpayer.

In his most recent statement, Whyte said: “Painful though it is for all concerned, administration now gives Rangers a fighting chance to fix major structural problems that will allow the club to grow and prosper again.”

If so, the central question remains: is Whyte an amoral megalomaniac prepared to stretch the rules to line his own pockets, or to save the club? Or both.

So what do we know about Whyte? Born in Motherwell in 1971, he started amassing his fortune before he left school. A pupil at Kelvinside Academy in Glasgow, he worked weekends at his father’s plant hire firm, using his wages to play the stockmarket. By the age of 19, he had accrued enough capital to start up his own plant hire business, which went bust in the early 90s, leaving him bankrupt. This early failure seems to have done nothing to dampen his entrepreneurial spirit. Soon he was raking in money from security, manufacturing and property ventures. After making his first million, he sold off most of his businesses and moved to Monaco, eventually reinventing himself as a venture capitalist and setting up Liberty Capital.

At some point, he met Kim Martin, from Carmunnock, whom he married in Naples, Florida, in 2000. They spent several years in the playground of the wealthy before moving back to Scotland with their three children to live in Castle Grant in Grantown-on-Spey in 2006. Whyte sank millions into the castle after picking it up for £720,000, but the couple have now separated, with Martin launching divorce proceedings.

If getting a handle on Whyte’s personal life seems difficult, then it’s nothing compared to trying to untangle his complex business dealings. Those companies which have come to public attention have done so for all the wrong reasons. There was, of course, the investigation into Vital Holdings, which saw Whyte being disqualified as a director after a judge ruled he had put company assets “out of the reach of creditors”.

Then the BBC claimed that before Re-Tex (the company it says he was de facto director of while serving his ban) was wound up in 2003, the company made an offer to sell shares to potential shareholders at a price based on company statements which contained “false and misleading” information. These statements are alleged to have been formed from accounts signed off by auditors run by convicted fraudster, and former associate of Whyte’s, Kevin Sykes. Last week, Sykes, who served eight years for a £3m pension fraud, claimed he had helped Whyte in his dealings with a succession of failing businesses by setting up new companies into which he could offload liabilities to the taxman and other creditors – a move which he called “the old switcheroo”.

Whyte was also branded “wholly unreliable” earlier this month by a sheriff who ordered Whyte’s company Tixaway to pay a £82,000 bill to a roofing company.

When Whyte first entered the ring as a possible buyer for Rangers, of course, no grey cloud had been cast over his business credentials. A few people, including rival bidder Paul Murray, may have sounded a note of caution; five directors may have tried to block his bid. But when he finally bought a controlling stake for £1, most fans were cock-a-hoop.

It wasn’t long, however, before the cracks began to appear. Soon it emerged Whyte had not revealed his director ban during the acquisition, prompting an investigation by the SFA into whether or not he is “a fit and proper person.”

On Friday the SFA accused lawyers acting for Whyte of a “continued failure to share information in a timely or detailed manner”.

With criticism mounting, Whyte failed to hold an AGM or to file his annual accounts on time – and so the club’s shares were suspended.

Throughout this time, Whyte has been at best slippery. A master of obfuscation, he has failed to shine a light on Rangers’ current bank balance – which some maintain should be relatively healthy, saying only that the club operates at a loss of £10m a year. He has also tried to deflect attention from himself by blaming all of Rangers’ current woes on the profligacy of his predecessor. In particular, he implied the club had been pushed into administration by the prospect of a potential £50m to £75m bill Rangers may end up owing HMRC if it loses its case over the use of Employment Benefit Trusts set up in Murray’s era. In fact HMRC moved to put the club into liquidation over the £9m owed in PAYE since Whyte took over the club. The tax had been deducted from employees, including players, but not passsed on.

Uber-confident, Whyte has so far betrayed not the slightest hint of embarrassment or remorse. Indeed, striding along with his forced grin and his familiar grey pin-striped suit, he has the air of man who expects to be vindicated in the long-run. Is that possible? The way in which Whyte seems to have provoked HMRC into coming after him leads many to believe he has a strategy. Could it be that taking the club into administration (and possibly liquidation) was always the game-plan?

Did he hope the club’s debts would be wiped off and Rangers would be reborn with him at the helm; or did he hope that – as the only secured creditor – he would make a tidy profit by selling its assets on?

If he ever dreamed he could emerge as a hero, the chairman of a thriving phoenix club, he must have realised his mistake by now. Judging by the vitriol spewed out on fan sites, they have lost all respect for him. If he tried to hold on to the reins of a new club, they might well organise a boycott “If our assumptions are correct [Whyte], as a secured creditor, is in the prime position to get some of the assets and set up a new company which is free of previous obligations, but there is no guarantee that has to happen,” says senior lecturer in football finance at Stirling University, Stephen Morrow.

There are, says Morrow, several factors which could stand in his way. He could be found to be not a “fit and proper person” or the club could lose its SFA registration, which can be removed on grounds of insolvency.

“Whyte needs to have a business he can run. This is where the peculiarity of football comes into play,” says Morrow. “We know football fans are incredibly loyal to their club, the brand. Let’s say they interpret this as being unethical, they can withdraw their support, then you’ve got a pile of assets, but you haven’t got a business.”

As Strathclyde Police and the SFA continue their inquiries into the take-over, Whyte insists he has “nothing to fear.” But apparently there are limits to his chutzpah. On Friday he confirmed he would not be attending yesterday’s match and said he would be taking a step back from the club. That is likely to do little to assuage the wrath of the fans. The disappointment of those who have spent the last few months defending him is tangible. “I’ve been pro-Whyte from day one,” posted one. “I don’t know why, just blind loyalty and the fact I met him at Killie the day we won the league had me hoping he would be the real deal.

“After all that’s gone on, I’ve still backed him, thinking he had the master plan. But I must say I have changed my views. I can’t believe I’ve been fooled by this guy.”