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Key points from Lord Nimmo Smith’s ruling on Rangers

Lord Nimmo Smith has published the decision of his Independent Commission investigating Rangers and alleged breach of SPL rules.

Rangers Ibrox sign
SNS Group

An independent commission, chaired by Lord Nimmo Smith, has ruled that Rangers breached SPL rules by failing to disclose to the league all payments made to players for playing activities.

The oldco have been fined around £250,000 by the Scottish Premier League after being found guilty of failing to correctly register players.

Lord Nimmo Smith has published his full decision, which runs to 42 pages. The key points from the ruling will be outlined below.


Section 1 outlines the reason and decision.

"Between the years 2000 and 2011 The Rangers Football Club Plc (now known as RFC 2012 Plc (in liquidation) and referred to in the decision as “Oldco”), the owner and operator of Rangers Football Club (“Rangers FC”), entered into side-letter arrangements with a large number of its professional players under which Oldco undertook to make very substantial payments to an offshore employee benefit remuneration trust, with the intent that such payments should be used to fund payments to be made to such players in the form of loans." (p1)

  • Rangers should have disclosed details of the arrangements.

"Those side-letter arrangements were required to be disclosed under the Rules of the Scottish Premier League (“SPL”) and the Scottish Football Association (“SFA”)." (p1)

  • Rangers Oldco did not seek any advice.

"Oldco through its senior management decided that such side-letter arrangements should not be disclosed to the football authorities, and the Board of Directors sanctioned the making of payments under the side-letter arrangements without taking any legal or accountancy advice to justify the non-disclosure." (p1)

"Although the payments in this case were not themselves irregular and were not in breach of SPL or SFA Rules, the scale and extent of the proven contraventions of the disclosure rules require a substantial penalty to be imposed." (p1)

  • Rangers were not judged to have gained any sporting advantage. None of the players were ineligible to play.

"Rangers FC did not gain any unfair competitive advantage from the contraventions of the SPL Rules in failing to make proper disclosure of the side-letter arrangements, nor did the non-disclosure have the effect that any of the registered players were ineligible to play, and for this and other reasons no sporting sanction or penalty should be imposed upon Rangers FC." (p1)

  • Newco bears no responsibility for the rule breaches.

"There is no allegation that the current owner and operator of the club, The Rangers Football Club Limited (“Newco”), contravened the SPL Rules or could be held responsible for any breach by Oldco." (p1)

  • A fine has been imposed on Oldco covering all rule breaches.

"In all the circumstances the Commission has imposed a fine of £250,000 on Oldco." (p1)

  • The ruling explains the terms of its remit and the history surrounding the case. (p2-6)

  • Oldco and newco declined the invitation to appear at preliminary hearings but Oldco, following a decision by the liquidators, sent representation to the main hearing. Newco then reconsidered its decision and was represented by the same lawyer as oldco. (p7)

*The ruling explains its own process and details the relevant rules of the SPL and SFA.

  • Evidence on how the EBT scheme was implemented at Rangers is detailed. (p12-18)

  • Consideration is given to whether or not EBTs are payments in regards to the SPL and SFA rules.

"The expressions “financial entitlement” and “payment” must be construed in the context of the relevant Articles and Rules; but in our opinion they also require to be interpreted in the wider context in order to establish their purpose and to be applied in such a way as to fulfil that purpose." (p22)

  • EBT benefits were considered by the tribunal to be payments.

"Each side-letter issued to a Specified Player clearly constituted a contractual agreement: the unanimous view of the Tax Tribunal also was that it was an “obligation”.

"Accordingly, in the case of each of the Specified Players in lists 1A and 1B, the EBT arrangements were an essential element of “the Player’s full financial entitlement” within the meaning of Rule 10.2.3." (p23)

"If it had not been intended that the player would directly benefit from the EBT arrangements then there is no reason to believe that the player would have agreed to accept the overall financial package offered by Oldco." (p24)

*On the eligibility of players: The SPL alleges “such that Rangers FC was in breach of a condition of the registration of such players and such players were ineligible to play in official matches for Rangers FC” (p26)

  • Sandy Bryson, Head of Registrations at the Scottish FA, gives evidence that registrations remain unless revoked and are not automatically invalid due to rule breaches.

  • The SPL explain a different take on registration.

"[SPL lawyer] Mr McKenzie explained to us that SPL Rule D1.13 had hitherto been understood to mean that if, at the time of registration, a document was not lodged as required, the consequence was that a condition of registration was broken and the player automatically became ineligible to play in terms of SPL Rule D1.11." (p26)

  • Mr McKenzie then accepts that the rules could not allow a player to be automatically ineligible.

"'He accepted that no provision of the Rules enabled the Board of the SPL retrospectively to terminate the registration of the player." (p26)

  • The tribunal states that the Scottish FA approach to the rules is clear and the SPL should apply their rules in the same manner.

"We are satisfied that the registration of the Specified Players with the SPL was valid from the outset, and accordingly that they were eligible to play in official matches." (p27)

"This is an important finding, as it means that there was no instance shown of Rangers FC fielding an ineligible player. "

  • Report then details delays in receiving relevant information from Rangers oldco.

  • Lord Nimmo Smith describes the sanctions available to the Commission.

"We wish to emphasise, that the SPL did not seek the imposition by us of any specific sanction". (p30)

  • Report states it is not a breach of SPL rules to minimise tax liability and it accepts Tax tribunal ruling that EBTs are lawful.

"What we are concerned with is the fact that the side-letters issued to the Specified Players, in the course of the operation of the EBT scheme, were not disclosed to the SPL and the SFA as required by their respective Rules" (p31)

"Oldco’s failure to disclose the side-letters to the SPL and the SFA was at least partly motivated by a wish not to risk prejudicing the tax advantages of the EBT scheme, we are unable to reach the conclusion that this led to any competitive advantage." (p31)

  • No sporting advantage means the Commission did not consider any sport-related punishment.

"We therefore proceed on the basis that the breach of the rules relating to disclosure did not give rise to any sporting advantage, direct or indirect. We do not therefore propose to consider those sanctions which are of a sporting nature." (p31)

  • The directors of Oldco are criticised for failing to follow rules on disclosing payments.

"The directors of Oldco must bear a heavy responsibility for this. While there is no question of dishonesty, individual or corporate, we nevertheless take the view that the nondisclosure must be regarded as deliberate, in the sense that a decision was taken that the sideletters need not be or should not be disclosed."

*A heavy financial penalty is deemed to be appropriate but the Commission recognises that it may never be recovered from Oldco.

"Although we are well aware that, as Oldco is in liquidation with an apparently massive deficiency for creditors (even leaving aside a possible reversal of the Tax Tribunal decision on appeal), in practice any fine is likely to be substantially irrecoverable and to the extent that it is recovered the cost will be borne by the creditors of Oldco, we nevertheless think it essential to mark the seriousness of the contraventions with a large financial penalty." (p33)

  • Final result

" In the result, therefore, and for all the foregoing reasons:

(1) We find the breaches in Issue 1, Issue 2, Issue 3 (except Issue 3(c) and the concluding passage of Issue 3(b)starting with “such that Rangers FC . . . .”) and Issue 4 proved against RFC 2012 Plc (in liquidation), formerly The Rangers Football Club Plc.(2) We fine RFC 2012 Plc (in liquidation) £250,000 in respect of Issues 1 to 3, and admonish it in respect of Issue 4.(3) We make no separate finding of breach by Rangers FC and impose no penalty on it.

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