Rangers crisis: Crown launches criminal investigation into Whyte takeover

A criminal investigation has been launched into Craig Whyte’s takeover of Rangers last May.

On Monday the Crown Office confirmed it had ordered Strathclyde Police to investigate alleged criminality after inspecting information handed to them by administrators Duff and Phelps.

Mr Whyte purchased an 85% stake in Rangers from Sir David Murray for £1 in May 2011. He used a £25.3m deal with London firm Ticketus for future season ticket sales to effectively fund his takeover through wiping out the club's £18m debt to Lloyds Banking Group.

In a statement, the Crown confirmed the investigation was now under way after Strathclyde Police carried out enquiries into information handed to them by the administrators of Rangers FC plc. Duff and Phelps are due to be replaced in their role in the coming weeks by independent insolvency firm BDO, which will liquidate the club after being chosen by HM Revenue and Customs (HMRC) following a failure to agree the company voluntary arrangement (CVA).

The Crown stated: "The investigation into alleged criminality follows a preliminary police examination of information passed to them in February this year by the club administrators.

"The Procurator Fiscal for the West of Scotland will now work with Strathclyde Police to fully investigate the acquisition and financial management of Rangers Football Club and any related reports of alleged criminality during that process."

In its statement, the Crown confirmed it wants the police to look into the "subsequent management" of the Ibrox club following Mr Whyte's takeover.

Mr Whyte has denied he took part in any criminality in his takeover and subsequent management of Rangers. When he appointed the administrators on February 14, having made a move to do so at the Court of Session the previous day, the club was £14m in debt to HMRC having not paid any PAYE or VAT in the previous nine months.

The businessman also confirmed last year that he had previously been banned from holding a company directorship for seven years in 2000. He threatened to sue the BBC over a documentary last October that revealed the ban.

Mr Whyte was earlier this year banned for life from holding a position in Scottish football and was also fined £200,000 over various rule breaches, including bringing the game into disrepute. He claimed the punishment procedure carried out by the Scottish FA was a "farce" and that he would not pay the fine.

David Whitehouse, joint administrator, said after the announcement of the investigation on Monday: "We provided initial documentation to Strathclyde Police very shortly after our appointment as administrators on February 14 and have had a number of conversations with the police since then. Both in our role as administrators, and previously in our role as advisors, we have fulfilled all our obligations in keeping relevant authorities informed of any developments pertinent to their jurisdictions.

"As court appointed administrators, we will continue to provide our full assistance in the investigation process and welcome this development."

Ticketus cash

The Ticketus money went into an account held by Collyer Bristow, a partner of whom – Gary Withey – acted as Mr Whyte’s lawyer throughout his takeover. Mr Withey left his post with the London legal firm shortly after Rangers went into administration, citing "personal issues".

According to a report by administrators released in April, Mr Whyte’s associate Phillip Betts was paid £234,000 from the cash remaining over from Ticketus after Lloyds had been paid off. Duff and Phelps stated that they believed Mr Betts, who became a director of Rangers under Mr Whyte, is due to pay back the club for the cash.

In the same report, the administrators stated that £250,000 of the Ticketus cash went from the Collyer Bristow account to a company called Regenesis Holdings in August 2011. Duff and Phelps stated that their solicitors had contacted the firm demanding repayment.

The majority shareholder of Regenesis is Wulstan Earley, a business associate of Mr Whyte.

Both Mr Whyte, through his British Virgin Islands-registered Liberty Capital Ltd, and Wulstan Earley, through Regenesis, own shares in the Wothington Group plc, the parent company of the Jerome Group Pension fund that was one time involved in a court dispute over £3.6m with Rangers administrators.

In the SFA findings released earlier this year, it was noted that Ken Olverman, finance officer at Rangers, had his bank authority reduced under Mr Whyte, who would not allow him to sign cheques for more than £100.

In August 2011 he was contacted by HMRC officials regarding invoices "for many millions of pounds" it had found relating to Rangers FC on the books at Ticketus. He claimed to have "no knowledge" of the invoices raised by the club in relation to the deal with the branch of venture capitalist firm Octopus Investments.

The following month he saw the invoices and felt "the nature and format of the invoices was entirely different to that of invoices raised within the finance office of Rangers FC. He was of the view that it appeared as though ‘Clip Art’ computer processes had been involved in their creation. They did not appear to him to resemble any invoices he had ever seen issued by Rangers FC. Having sight of the invoices confirmed his view even further that they had not been created within the finance office of Rangers FC."

According to the SFA panel, the invoices from Rangers to Ticketus for the season ticket deals "related to sums of many millions of pounds and the VAT element in each of them had been the subject of offset by Ticketus in the submission of its VAT returns for the last period. Such was the size and impact of this offset of VAT which had been paid by Ticketus in respect of these invoices, that Ticketus had made a claim for payment of a substantial sum to it by HMRC by way of recovery of VAT paid."

'Conflict of interest'

The Ticketus deal had prompted claims of a "conflict of interest" of administrators Duff and Phelps in their appointment at Ibrox. A partner at the insolvency firm, David Grier, advised Mr Whyte from January 2011 in relation to his takeover plans. Once the buyout was complete, he remained part of Mr Whyte’s team dealing with the outstanding £3m ‘wee’ tax case with HMRC.

Duff and Phelps subsequently took Ticketus to court over the season ticket deal, which Lord Hodge found could be breached if it was in the best interests of the creditors overall, a move the administrators took. Mr Grier was accused, in a BBC documentary, of being privy to the original Ticketus deal as well as the subsequent move to tear it up.

He denied this and claimed he was aware of talks between Mr Whyte and the firm, but thought they were for short-term funding arrangements, as had been the case since Sir David began using Ticketus for cash in exchange for future Ibrox season ticket sales in 2009.

On Friday, Lord Hodge ordered a report at the Court of Session into the claims of a "conflict of interest" in the role of Duff and Phelps, which was formerly MCR UK before being bought over by the American firm last year.

The administrators launched a £25m legal action against both Mr Whyte's parent company, Rangers FC Group, and his former lawyers Collyer Bristow over the Ticketus deal, claiming that the pair had taken part in a "conspiracy" and committed negligence.

A lawyer acting on behalf of Duff and Phelps previously told a hearing at the High Court in London that Mr Whyte's Rangers FC Group never had the money for investment it claimed to have, while he had taken part in a "deception" of others.

Ticketus is also pursuing Mr Whyte for £25m after he personally guaranteed the deal that effectively funded his takeover.

In a previous court decision over a transaction at one of Mr Whyte's other businesses, Tixway UK Ltd, a judge ruled that he had to pay an £80,000 roofing supplies bill to One Stop Roofing after he found that the Rangers owner's evidence to the court was "holly unreliable".

The man who described himself as a lifelong Rangers fan has not returned to Ibrox since administrators were appointed on February 14. On that evening, he addressed an angry crowd of Rangers fans outside the stadium, while he has not attended any of the games held since then.

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