The Offshore Game’s new report into the Rangers tax affair shows just how a badly-run football association can undermine a level playing field - and what needs to be done about it. Here’s the short version…
In 2012 Rangers were put into liquidation. One of the contributing factors to this was an offshore tax avoidance scheme that went (comprehensively and predictably) wrong.
This new report looks at two questions that confronted Scottish football regulators, connected to the attempt by Rangers to escape from paying taxes on players wages. In both these questions we have found serious evidence of impropriety by the Scottish Football Association (SFA), which brings into question their ability to fairly manage competition in Scotland’s game.
The analysis is based on multiple documents which we also republish here: those fully in the public domain such as court records, and a set of documents which had been leaked from Rangers over a period of time.
The full report can be downloaded here.
The annexes, which contain the documents used as the basis of our analysis, can be found here.
Issue 1 – The SPL inquiry into rule breaking at Rangers
The first concerns the judge-led Commission set up by the Scottish Premier League (SPL) into alleged rule breaking by Rangers in the run up to their collapse.
The Commission considered whether Rangers should be stripped of a series of league and cup titles. It is clear from the documents that the then President of the SFA, Campbell Ogilvie, misled the public and the judge presiding over the inquiry, which led them to make a material error of fact in their judgement.
Specifically, Mr Ogilvie told the public and the inquiry that nothing to do with the payments to players through Employee Benefits Trusts fell within his role at Rangers.
However, documentary evidence is clear that in fact Mr Ogilvie was a central figure in the establishment of the Discounted Options Scheme, which was a tax avoidance scheme that was part of the Rangers Employee Benefit Trust.
The fact that Mr Ogilvie had previously been one of the longest serving officials in the history of Rangers Football Club clearly raises questions as to the motive behind his statements – since the inquiry’s own findings imply that, in full possession of the facts, they would have to have reached a different decision.
Mr Ogilvie and the SFA did not respond to our requests for comment.
Issue 2 – Rangers’ licence to play in Europe 2011/2012
The second issue concerns the grant and retention of a licence to play in Europe to Rangers in the 2011/12 season, when the finances of the club suggested it was on the verge of imminent collapse.
UEFA rules are clear that in order to get a licence to play European football a club must prove that it has no overdue payables to tax authorities. Our analysis of the evidence shows that Rangers clearly had an overdue payable as defined in the UEFA rules and could not have met that test.
However, regardless of this, the SFA did grant Rangers a licence. Although the SFA were informed by Rangers of an on-going issue concerning a large tax bill, they accepted Ranger’s erroneous argument that this did not break any UEFA rules.
It appears that the SFA did little to test the explanation regarding the status of the bill given by Rangers, and subsequent correspondence reveals an unhealthy degree of co-ordination between Rangers and the SFA over the PR around the decision.
As history unfolded, Rangers were knocked out before reaching the group stages of the Champion’s League. Had they managed to achieve victory in the qualifying rounds, they might well have gained the resources they needed to keep the club afloat and to pay the overdue tax bill based on Champions League income, thwarting the very purpose of UEFA FFP Articles in respect of overdue tax.
Again, the fact that the SFA had done nothing to question the obvious issues in Rangers’ financial returns calls into question their effectiveness as a regulator.
The crucial role of sport regulators
In sports, regulators have a particular responsibility. Although legally football clubs are structured as any other business, football clubs have a far greater significance and meaning to most people than any other business. It therefore must be a priority for football regulators to make sure that football clubs are well managed and financially sound, so that they continue to provide joy and disappointment (in unequal measure) to their fans.
Regulators also have a duty to ensure fair play, over and above the usual rules that govern competition between companies. To ensure that competition stays on the pitch and doesn’t retreat behind the closed doors of the boardroom, regulators must make rules to ensure clubs do not gain unfair and unsporting advantages over others.
Finally, and perhaps most importantly, in order to execute these functions, a regulator must itself be fair. To preserve the integrity of the system, the regulator must be beyond reproach, and behave in a way which does not produce any suspicion that that they might be exercising their power unfairly, in favour of one team over another.
The Scottish Football Associaton: not fit for fair play
Ongoing court cases prevent comment on a number of aspects of Rangers’ liquidation, and the subsequent sale of the assets which allowed a team to play again at Ibrox. It may well be that the current criminal trial concerning some of the former directors of Rangers may bring out more regulatory failings.
The two cases that are dealt with in the Offshore Game’s report however, which have nothing to do with the matter under consideration by the criminal court, call into question whether the SFA can be considered a fair and impartial regulator of Scottish football.
This is a question that the SFA has, thus far, flatly refused to answer. And that itself points to a much bigger question: is the SFA an organisation capable of fixing itself and adopting the required standards of transparency, accountability and fairness that fans of Scottish football deserve?
The evidence presented in this report does not amount to proof of corruption, and we do not allege corruption at the SFA. But the evidence does strongly suggest that the SFA is unable, if not actively unwilling, to ensure fair play. Major changes in personnel and governance structures will be necessary if the SFA is to show itself fit for purpose.
The first step to restoring confidence would be for the SFA to engage with UEFA over the clearly misleading returns that Rangers submitted to them, in order to get a licence to play European football in 2011. Secondly there needs to be a fully independent inquiry, including substantial fan representation, to assess the role of the SFA and the actions of key, senior staff in respect of each issue outlined in this report; and with a mandate to learn from more accountable sports authorities in other fields and to recommend sweeping governance changes to the SFA if deemed necessary.
Picture Credit StehLiverpool on Flickr