:00:11. > :00:17.In May this year, the new owner of Rangers Football Club walked into
:00:17. > :00:21.Ibrox to a heroes' welcome. Scots businessman Craig Whyte pledged a
:00:21. > :00:28.bright future for Rangers, but just six months later, the club faces
:00:28. > :00:33.insolvency. That was a big concern to us, that maybe he wasn't going
:00:33. > :00:39.to have the money to pay our bills. Mr Whyte's business history has
:00:39. > :00:43.been shrouded in mystery until now. This is an investigation based on
:00:43. > :00:47.official documents unearthed by BBC Scotland which Craig Whyte might
:00:47. > :00:50.have wished had stayed hidden forever.
:00:50. > :01:00.Craig Whyte could have been sent to prison for this? He could have been
:01:00. > :01:20.
:01:20. > :01:26.Rangers - from humble beginnings and proud traditions, to European
:01:26. > :01:31.success in 197 2 and the famous nine in a row of the '80s and '90s,
:01:31. > :01:36.the club has enjoyed an illustrious 140-year history.
:01:36. > :01:40.These days, 50,000 people pack into Ibrox nearly every other week, yet
:01:40. > :01:46.speculation persists the club will go into administration.
:01:46. > :01:52.BBC Scotland decided to investigate the inside story of the take-over
:01:52. > :01:56.of Rangers and ask what the future holds under Craig quite. We set out
:01:56. > :01:59.on this investigation to uncover what we could about the financial
:01:59. > :02:05.plight of Rangers which led us inevitably to ask questions about
:02:05. > :02:09.the man who'd be its saviour and to some startling revelations. There
:02:09. > :02:13.are two stories here, running in parallel. The fortunes of Rangers
:02:13. > :02:17.under Sir David Murray and the rise to prominence of Craig Whyte. The
:02:17. > :02:21.story begins at Ibrox in 1988. After meeting Graham, we came up
:02:21. > :02:28.with an idea of approaching Lawrence. And he was willing to
:02:28. > :02:31.sell us the club. Murray's purchase of Rangers signalled a
:02:31. > :02:35.transformation on and off-the-field. He bankrolled a series of signings
:02:35. > :02:41.and was not afraid to tackle the most controversial of Old Firm
:02:41. > :02:44.issues by signing a Catholic. The club's ambition appeared to no no
:02:44. > :02:54.bounds. We see ourselves as one of the biggest clubs in Europe. Unless
:02:54. > :02:57.we sign players like this, we can't move forward. I remember at the
:02:57. > :02:59.time thinking, Paul Gascoigne won't sign for Rangers. For Thunderball
:02:59. > :03:03.they've got ambition and for all that David Murray is giving the
:03:03. > :03:07.club, this means and this ability, surely they can't land Gascoigne.
:03:07. > :03:17.But they did, and it summed up David Murray, felt he could do
:03:17. > :03:17.
:03:17. > :04:11.Apology for the loss of subtitles for 53 seconds
:04:11. > :04:20.anything. Rangers' domination of At 16 or 17, he's already a man
:04:20. > :04:27.with secrets. He told me he wanted to have a personal fortune of �100
:04:27. > :04:34.million and, you know, an entrepreneur of international
:04:34. > :04:40.standards. By his late 20s, he was well on his
:04:40. > :04:45.way. In 1997, he was already a millionaire. And being quoted in
:04:45. > :04:52.the Daily Record's Scotland's hottest hunks list. He was a very
:04:52. > :04:58.large player in the security and plant hire business. He'd
:04:58. > :05:04.consolidated it under a company called Vital Holdings. At that time,
:05:04. > :05:08.its turnover was probably about �2.5 million. In the late 1990s,
:05:08. > :05:13.Craig Whyte embarked on a series of act Which?isations, both north and
:05:13. > :05:17.south of the border. These markers each represent a
:05:17. > :05:22.company that he either owned or was involved with.
:05:22. > :05:32.Whilst Craig Whyte was accumulating companies, over at Ibrox, Rangers
:05:32. > :05:32.
:05:32. > :05:37.were racking up trophies just as COMMENTATOR: Champions again, ninth
:05:37. > :05:43.time in a row. Walter Smith there. Won the Championship...
:05:43. > :05:53.But it couldn't last for ever. Rangers lost the league title the
:05:53. > :05:53.
:05:53. > :06:53.Apology for the loss of subtitles for 53 seconds
:06:53. > :07:03.These are the companies he was involved with through this period
:07:03. > :07:09.that ended up dissolved or By 2,000, Craig White's business
:07:09. > :07:17.empire is on the verge of collapse. Over at Ibrox, Rangers were still
:07:18. > :07:22.splashing out, but without the same level of success on the field. The
:07:22. > :07:28.club broke the Scottish transfer record by signing this player for
:07:28. > :07:35.�12 million. Rangers introduced tax avoidance schemes to support their
:07:35. > :07:38.big-money contracts, the employee benefit trust. This involved a
:07:38. > :07:43.plane part of the players' wages into an offshore account, and this
:07:43. > :07:51.would come back to haunt Rangers. It seemed legitimate but was
:07:51. > :08:00.presented as a bit dodgy. Not tax- evasion, they said, but tax-
:08:00. > :08:03.Despite this, the Rangers' debt seemed to be spiralling out of
:08:03. > :08:07.control. But the point came when the small
:08:07. > :08:13.print on the balance sheet became very worrying and I remember round
:08:13. > :08:19.about 01, 02, maybe 02, 03, when the Rangers financial report came
:08:19. > :08:26.round, net debt, �82 million. �82 million net debt! For a club in the
:08:26. > :08:30.SPL. And it was when seeing that net debt of �82 million that I
:08:30. > :08:40.guessed David Murray's been overly reckless, overly cavalier with
:08:40. > :08:42.
:08:42. > :08:47.Rangers and this club is in real trouble, dire trouble.
:08:47. > :08:51.Monaco. The ultimate playground for the rich. And for several years, Mr
:08:51. > :08:56.Whyte appears to have based himself here.
:08:56. > :09:00.Craig Whyte's UK business history seems to stop around 2000 when he
:09:00. > :09:03.arrives in Monaco, and I've come to see if I can find out why that is.
:09:03. > :09:11.Monaco is not the kind of place you can afford to live if you are
:09:11. > :09:15.strapped for cash. And it apears Craig Whyte wasn't.
:09:15. > :09:18.In May 2000, not long after the collapse of Craig Whyte's business
:09:18. > :09:23.empire under a flurry of debt, he gave an interview to a newspaper
:09:23. > :09:28.from his new home here in Monaco. He told the journalist that "I
:09:28. > :09:32.don't owe anyone any money, least of all the taxman." he said he had
:09:32. > :09:36.a clear conscience and nothing to hide. Just five weeks after the
:09:36. > :09:39.publication of the interview, we can reveal that Craig Whyte was
:09:39. > :09:46.disqualified under companies law and banned from being a director
:09:46. > :09:49.for seven years. We understand this disqualification
:09:49. > :09:53.came after prosecutions were launched against two of his
:09:53. > :10:02.companies for failing to produce satisfactory accounts. And we've
:10:02. > :10:06.learned that HMRC was chasing one of them for unpaid taxes.
:10:06. > :10:10.We know that whilst here in Monaco Craig Whyte was certainly enjoying
:10:10. > :10:14.the high life, but business-wise, we didn't know very much about what
:10:14. > :10:18.he was up to at all - until now that is.
:10:18. > :10:23.It appears that despite being a disqualified director, he was
:10:23. > :10:26.keeping himself very busy indeed. This document reveals startling new
:10:26. > :10:32.evidence about his covert business activities which could have seen
:10:32. > :10:36.him sent to prison for up to two years. This Treasury petition which
:10:36. > :10:41.has remained hidden away for the past eight years relates to a
:10:41. > :10:46.winding up order against a plastics company called Re-Tex, and provides
:10:46. > :10:51.an unexpected insight into the man who would return from exile to buy
:10:51. > :10:55.Rangers Football Club. Robert Burns leads the UK's
:10:55. > :10:58.investigations unit into corrupt business practices.
:10:58. > :11:02.There were a number of allegations we alleged against the company in
:11:02. > :11:06.our action to wind it up. A number of them were in connection with
:11:06. > :11:10.their attempt to sell shares to the public. Some of the statements were
:11:10. > :11:17.misleading, some were accurate. We also took the view that the company
:11:17. > :11:24.was being controlled, certainly had the involvement of an individual
:11:24. > :11:29.who was disqualified. That raised concerns. And who was that?
:11:29. > :11:39.individual I'm referring to is Mr Craig white, disqualified as a
:11:39. > :11:44.
:11:44. > :11:47.director in June 2000 for seven So how serious is it to act as a
:11:47. > :11:50.company director whilst disqualified? In relation to his
:11:50. > :11:54.involvement in running the company, it's an offence and the individual
:11:54. > :11:56.can be prosecuted. A criminal offence? A criminal offence. So he
:11:56. > :12:00.could have been sent to prison for this? Fpblts he could have been
:12:00. > :12:04.sent to prison for this. Clearly, there would have had to have been a
:12:04. > :12:14.criminal investigation and trial. Mr Whyte refused to be interviewed
:12:14. > :12:22.
:12:22. > :12:26.about the allegations, but his The insolvency investigators also
:12:26. > :12:33.revealed claims of large amounts of cash going missing from the company,
:12:33. > :12:36.as well as fake auditors called Mullet & co being used to sign off
:12:36. > :12:41.misleading accounts. Can this be the same Craig Whyte now at the
:12:41. > :12:47.helm of range erbz? How can you be so sure that Craig Whyte is
:12:47. > :12:52.involved in a company that seems to be so embroiled in fraud? It was Mr
:12:52. > :12:57.Whyte who appointed Mullet & co as auditors and he suggested that the
:12:57. > :13:07.company should be offered to the public, shares in the company
:13:07. > :13:11.
:13:12. > :13:15.should be offered to the public. All the signals were that the
:13:15. > :13:21.financial management, control of the company, were being exercised
:13:21. > :13:27.by Mr Whyte. For example, he was the signatory to the bank account,
:13:27. > :13:31.in particular. He drew some money ostensibly to pay the Inland
:13:31. > :13:36.Revenue. Craig Whyte withdrew money from the company, sums of �100,000,
:13:36. > :13:41.it says here actually two sums of �100,000 and what, he told the
:13:41. > :13:44.company he was going to pay the Inland Revenue with it? He told the
:13:44. > :13:48.directors that he was going to use that money to pay the Inland
:13:48. > :13:58.Revenue, that's right. And didn't? There's no trace of the money being
:13:58. > :14:04.
:14:04. > :14:10.received by the Inland Revenue. So who was behind the fake
:14:10. > :14:15.auditors? This man, Kevin Sykes. By 1998, during his association with
:14:15. > :14:19.Craig Whyte, we can reveal he was an undischarged bankrupt,
:14:19. > :14:25.disqualified director and convicted fraudster. Insolvency investigators
:14:25. > :14:29.wound up 94 of his companies and in 2004, three years after his last
:14:29. > :14:33.known association with Mr Whyte, Sykes was convicted of a multi-
:14:33. > :14:37.million pound pension fraud and sent to prison for eight years.
:14:37. > :14:41.When the name Sykes is mentioned, our antennae prick up. That's
:14:41. > :14:44.obvious. We've got a responsibility for policing the corporate
:14:44. > :14:50.framework and when we deal with an individual like Mr Sykes, we have
:14:50. > :14:55.to be alert to what he may be up to. Re-Tex was no one-off. In the late
:14:55. > :14:59.'90s, they were involved in several ventures together with convicted
:14:59. > :15:03.fraudster Sykes acting as company secretary. And there's more. We've
:15:03. > :15:08.obtained a transcript from a 2001 court appearance by Sykes. He tells
:15:08. > :15:13.the court that he does outsourcing for companies in trouble and that
:15:13. > :15:17.Craig Whyte is his second biggest customer. The court asks: How much
:15:18. > :15:25.were you receiving from Mr Whyte. Probably about �5,000 a month, he
:15:25. > :15:30.said. And how was this paid? In bundles of cash, apparently, handed
:15:31. > :15:35.over by Craig Whyte to Kevin Sykes in Monaco. Sykes isn't the only
:15:35. > :15:39.questionable business associate of Craig Whyte. Kenneth McLeod was an
:15:39. > :15:42.accountant involved in more than a dozen of Craig Whyte's early
:15:42. > :15:49.companies. He was forced to resign from the Institute of Chartered
:15:49. > :15:53.accountants in 2004. He was effectively banned for life for
:15:53. > :15:58.professional misconduct in relation to VH Investments, another company
:15:58. > :16:04.linked to Craig Whyte. Over at Ibrox, around 007, trouble was
:16:04. > :16:07.brewing. It managed to reduce the debt, but
:16:07. > :16:11.HMRC took the view that Rangers' tax avoidance scheme was tax
:16:11. > :16:16.evasion and the club has been put up for sale.
:16:17. > :16:21.But David Murray, now Sir day mid Murray, has always said he'd pass
:16:21. > :16:25.the club on to the right man -- David Murray. If and when I leave
:16:25. > :16:29.the club I'll make sure it's left with people of a similar mind and
:16:29. > :16:32.nature. We are not talking about Russians coming in, if I move in
:16:32. > :16:36.from Rangers, I'll leave nit the hands of people that I think have
:16:36. > :16:43.the best interests of the club. was desperate to get out of the
:16:43. > :16:47.club. There was some vemen, flak flying around -- venom. The knives
:16:47. > :16:51.came out for him. He was being accused of the ruinous debt foisted
:16:51. > :16:57.on the club. The search for a football sugar
:16:57. > :17:02.daddy was on. Chelsea had Ambramovich, Manchester United had
:17:02. > :17:06.the Glaziers, Rangers were to find their man much closer to home.
:17:06. > :17:11.Craig Whyte returned from Monaco and bought a new home in Scotland
:17:11. > :17:17.and this is it. Fit for a King. Castle Grant in
:17:17. > :17:27.gran tonne on spay. It's the ancestral home of the Chief of the
:17:27. > :17:28.
:17:28. > :17:31.Grant clan -- Granton on Spey. They paid almost �7 50,000. Just six
:17:32. > :17:37.months of his UK Directorship ban to run, it seemed he was keen to
:17:37. > :17:42.get back into business and make up for lost time.
:17:42. > :17:47.He said he was now debt free and claimed to own numerous assets
:17:47. > :17:52.overseas. His new UK businesses though involved venture capitalism
:17:52. > :18:00.and turning around failing companies. We had a look at one of
:18:00. > :18:06.his to see if we could get an insight into his business strategy.
:18:06. > :18:12.The port town of Felixstowe was home to LM Logistics for the past
:18:12. > :18:18.20 years. At its height, it employed 150 people and had a
:18:18. > :18:23.turnover of �16 million. But the recession was taking its toll. The
:18:24. > :18:27.company needed investment. In the summer of 2009, myself and my
:18:27. > :18:33.colleague went to see Craig, had a very productive meeting, it
:18:33. > :18:39.culminated a few weeks later in Mr Whyte agreeing to take us under his
:18:39. > :18:44.wing for 51% of the company. Whyte, along with new venture
:18:44. > :18:49.Merchant Corporate Recovery, agreed to invect �500,000. Unfortunately
:18:49. > :18:53.in the weeks after that, the money didn't come. -- inject �500,000.
:18:53. > :18:58.The creditors asked questions. money came eventually, but by that
:18:58. > :19:01.time, the company was swamped with debt and had lost many of its
:19:01. > :19:06.customers. Was it just the money was there, they didn't want to part
:19:06. > :19:11.with it, or was the money never there in the first place? To this
:19:11. > :19:14.day, I don't know the answer to that. Within six months, the
:19:15. > :19:20.company was bust with Tony losing his business and Craig Whyte
:19:20. > :19:26.appearing to lose his investment. However, one of Mr Whyte's recent
:19:26. > :19:32.ventures has just won a contract for �5 million. So venture capital
:19:32. > :19:39.can be a risky business and in late 2010, Craig Whyte made his
:19:39. > :19:45.audacious play for Rangers. If he's a man who deals in risk, he's come
:19:45. > :19:50.to the right place. Apart from an overdraft hovering around �18
:19:50. > :19:55.million, there was also the potential �50 million tax bill. But
:19:55. > :20:01.things were still going well on the pitch with two titles back-to-back
:20:01. > :20:07.and the possibility of lucrative European football. But what would
:20:07. > :20:12.follow would be one of the most controversial periods in the club's
:20:12. > :20:18.history and we get the Inside Story on this by travelling to Cleveland,
:20:18. > :20:22.Ohio. The then chairman of Rangers had his doubts about Craig Whyte.
:20:22. > :20:26.Alastair Johnston, who's based here, was asked to form an independent
:20:26. > :20:31.committee of the Rangers board to scrutinise the take-over on behalf
:20:31. > :20:36.of the 27,000 minority shareholders of the club.
:20:36. > :20:40.We hammered away at him, we said, tell us what you've done, I mean
:20:40. > :20:44.imagine this is your life, This Is Your Life, who do you want to come
:20:44. > :20:47.on and attest, you know, say this guy is a great guy, where's your
:20:47. > :20:51.character references, where's the people you've done business with.
:20:51. > :20:57.What kind of answers were you getting from him when you were
:20:57. > :21:05.face-to-face? Not very convincing answers. Liberty Capital was
:21:05. > :21:09.designated by Mr Whyte, as a source of funding. We couldn't find out
:21:09. > :21:14.much about Liberty Capital. He wouldn't tell us very much. We've
:21:14. > :21:17.obtain add confidential dossier on Craig Whyte which was compiled by
:21:17. > :21:22.private investigators and presented to the independent committee.
:21:22. > :21:25.There's no mention of Craig Whyte's disqualification or his previous
:21:25. > :21:30.alleged criminal conduct, but it outlines his UK business history
:21:30. > :21:36.which didn't appear to show that great wealth had been accumulated.
:21:36. > :21:40.This further intensified the board's suspicions.
:21:41. > :21:45.Craig Whyte seemed to be the white Knight fans were waiting for. He
:21:45. > :21:53.pledged an immediate �5 million for players and agreed to clear the
:21:53. > :21:57.club's �18 million bank loan and he agreed to take on the tax liability.
:21:57. > :22:02.Why were you so surprised that Craig Whyte was prepared to take on
:22:02. > :22:06.the HMRC liability? Well, it was just a matter of experience. I have
:22:06. > :22:11.literally in 25 years of buying and selling lots of companies, not seen
:22:11. > :22:13.that, it's not what you do, you don't assume an historical tax
:22:13. > :22:17.liability that's not your responsibility. There also seemed
:22:17. > :22:21.to be an unwillingness to get into the detail of the club's future
:22:21. > :22:26.cash requirements and cash flows and again, from my experience,
:22:26. > :22:31.that's something that's fundamental to buying any company. That was a
:22:31. > :22:37.big concern to us, that maybe he wasn't going to have the money to
:22:37. > :22:41.pay our bills. Whatever misgivings the board had about the bid, owning
:22:41. > :22:47.85% of the club, the decision would come down to Sir David Murray and
:22:47. > :22:53.the club had debts to settle. Did you not ask Sir David Murray not to
:22:53. > :22:59.do this deal? I asked him not to. What did he say? It's too late.
:22:59. > :23:05.I got a very heated call from a gentleman at Lloyds one time when
:23:05. > :23:08.it looked like they perceived that the board were being obstructive,
:23:08. > :23:11.the independent board were being obstructive and not letting this
:23:11. > :23:15.happen. We'll cancel your credit line tonight. That would be
:23:15. > :23:25.Rangers' credit line. The bank said to you, unless you do this deal,
:23:25. > :23:37.
:23:37. > :23:41.we're pulling the plug? Yes. In May this year, Alastair
:23:41. > :23:45.Johnston's independent committee made a statement raising serious
:23:45. > :23:53.concerns about Craig Whyte's bid. But the deal went through anyway
:23:53. > :23:56.and he paid a token �1 for the club. He swept into Ibrox with his new
:23:56. > :24:02.team. Chief Executive, Martin Bain and finance director Donald
:24:02. > :24:08.McIntyre, were suss �ed. Paul Murray and Alastair Johnston were
:24:08. > :24:11.also asked to resign -- suspended. Basically he said I'm not going to
:24:12. > :24:17.resign. And he said, we are going to tell the Stock Exchange tonight
:24:17. > :24:22.that this is what we are doing, will you reconsider now, it was a
:24:22. > :24:32.threat when I said I wasn't leaving. I said, there's a user around these
:24:32. > :24:35.
:24:35. > :24:45.parts, the second word is surrender and the first is no. No surrender?
:24:45. > :24:48.
:24:48. > :24:52.I'm not resigning. Six months have passed since Craig Whyte took over
:24:52. > :24:58.at Rangers. The club has been knocked out of both European
:24:58. > :25:05.competitions. Around �3 million of Rangers' funds has been frozen by
:25:05. > :25:08.Martin Bain, Donald MacIntyre and the taxman. On Monday, Rangers
:25:08. > :25:18.legend John Gregg and John McClelland resigned from the board,
:25:18. > :25:23.claiming they'd been isolated by It may not be obvious from the
:25:23. > :25:29.plaque on the wall, but this London solicitors is actually the
:25:29. > :25:34.registered home of Rangers FC Group Ltd. That's the company which
:25:34. > :25:37.incorporates caig Craig Whyte's 85% stake in the club and which is also
:25:37. > :25:42.wholly owned and controlled by Liberty Capital, the Craig Whyte
:25:42. > :25:52.company which is becauseed in the British Virgin Islands.
:25:52. > :25:55.There is no suggestion that Craig Whyte was associating with the
:25:55. > :25:59.British fraudster Kevin Sykes past 2001, but the court transcript from
:25:59. > :26:03.that same year is worth another look. Psyches is asked by the court
:26:03. > :26:08.what he did for Mr Whyte. What Whyte will do, said Sykes, is buy a
:26:08. > :26:12.stake in a failing UK business and it will be up to me to assist him
:26:12. > :26:19.in restructuring the business. To be blunt, to be able to leave the
:26:19. > :26:22.unsecured creditors behind. Legally, of course. If Mr Whyte does call in
:26:22. > :26:27.the administrators and assets had to be sold, he'd be the first in
:26:27. > :26:32.line to be paid as he's the only secure creditor having cleared the
:26:32. > :26:37.�18 million bank loan. So if he walked away, he'd lose nothing. But
:26:37. > :26:43.he says he's committed to Rangers. So it could be a clever strategy to
:26:43. > :26:46.leave the club debt free with creditors including HMRC empty
:26:46. > :26:51.handed. Craig Whyte could manoeuvre Rangers into administration and it
:26:52. > :26:54.might work fout for the better. In terms of Rangers' history, culture
:26:54. > :26:57.and prestige, I don't think administration would be for the
:26:57. > :27:01.better. What anyone who loves Rangers do not want to happen is,
:27:01. > :27:06.they don't want the Rangers time line to be broken. They don't want
:27:06. > :27:12.10 or 130 years of history or whatever it is to be broken -- 120
:27:12. > :27:18.oh 130 years of history to be broken. They don't want Rangers FC
:27:18. > :27:23.to cease and for it to become Rangers 2012FR or Rangers United FC
:27:23. > :27:26.or some ludicrous name. We first asked Mr Whyte to participate in
:27:26. > :27:30.this programme five weeks ago and several times since. On Tuesday,
:27:30. > :27:34.five days after submitting the allegations to raungerz, the club
:27:34. > :27:44.severed all ties with the BBC. Mr Whyte refused to be interviewed,
:27:44. > :27:52.
:27:52. > :27:57.but his lawyers provided a If as a result of these allegations
:27:57. > :28:02.is that he is somebody that other people don't want to do business
:28:02. > :28:07.with, that impacts Rangers' ability, you know, to deal in the world of
:28:07. > :28:13.operating the club, that's serious. Clearly, it's a matter of concern.
:28:13. > :28:18.Clearly it's a matter of concern. I don't know whether I can respond to
:28:18. > :28:24.that. Clearly, I don't think we, when reraised our concerned,
:28:24. > :28:29.expected anything like this. Craig Whyte Rangers marriage has to
:28:29. > :28:33.work. Murray can't have been seen to have handed the torch over to a
:28:33. > :28:36.dud. We asked Sir David Murray for an interview. He also declined.
:28:36. > :28:41.Rangers are seven points clear at the top of the Scottish Premier
:28:41. > :28:45.League. But board room unrest and the threat of administration casts
:28:45. > :28:50.a long shadow over Ibrox. Just six months ago, caig Whyte was heralded
:28:50. > :28:54.as the club's saviour -- Craig Whyte. The BBC investigation raises