Rangers - The Inside Story BBC Scotland Investigates

In May this year, the new owner of Rangers Football Club walked into

Ibrox to a heroes' welcome. Scots businessman Craig Whyte pledged a

bright future for Rangers, but just six months later, the club faces

insolvency. That was a big concern to us, that maybe he wasn't going

to have the money to pay our bills. Mr Whyte's business history has

been shrouded in mystery until now. This is an investigation based on

official documents unearthed by BBC Scotland which Craig Whyte might

have wished had stayed hidden forever.

Craig Whyte could have been sent to prison for this? He could have been

Rangers - from humble beginnings and proud traditions, to European

success in 197 2 and the famous nine in a row of the '80s and '90s,

the club has enjoyed an illustrious 140-year history.

These days, 50,000 people pack into Ibrox nearly every other week, yet

speculation persists the club will go into administration.

BBC Scotland decided to investigate the inside story of the take-over

of Rangers and ask what the future holds under Craig quite. We set out

on this investigation to uncover what we could about the financial

plight of Rangers which led us inevitably to ask questions about

the man who'd be its saviour and to some startling revelations. There

are two stories here, running in parallel. The fortunes of Rangers

under Sir David Murray and the rise to prominence of Craig Whyte. The

story begins at Ibrox in 1988. After meeting Graham, we came up

with an idea of approaching Lawrence. And he was willing to

sell us the club. Murray's purchase of Rangers signalled a

transformation on and off-the-field. He bankrolled a series of signings

and was not afraid to tackle the most controversial of Old Firm

issues by signing a Catholic. The club's ambition appeared to no no

bounds. We see ourselves as one of the biggest clubs in Europe. Unless

we sign players like this, we can't move forward. I remember at the

time thinking, Paul Gascoigne won't sign for Rangers. For Thunderball

they've got ambition and for all that David Murray is giving the

club, this means and this ability, surely they can't land Gascoigne.

But they did, and it summed up David Murray, felt he could do

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anything. Rangers' domination of At 16 or 17, he's already a man

with secrets. He told me he wanted to have a personal fortune of �100

million and, you know, an entrepreneur of international

standards. By his late 20s, he was well on his

way. In 1997, he was already a millionaire. And being quoted in

the Daily Record's Scotland's hottest hunks list. He was a very

large player in the security and plant hire business. He'd

consolidated it under a company called Vital Holdings. At that time,

its turnover was probably about �2.5 million. In the late 1990s,

Craig Whyte embarked on a series of act Which?isations, both north and

south of the border. These markers each represent a

company that he either owned or was involved with.

Whilst Craig Whyte was accumulating companies, over at Ibrox, Rangers

were racking up trophies just as COMMENTATOR: Champions again, ninth

time in a row. Walter Smith there. Won the Championship...

But it couldn't last for ever. Rangers lost the league title the

Apology for the loss of subtitles for 53 seconds

These are the companies he was involved with through this period

that ended up dissolved or By 2,000, Craig White's business

empire is on the verge of collapse. Over at Ibrox, Rangers were still

splashing out, but without the same level of success on the field. The

club broke the Scottish transfer record by signing this player for

�12 million. Rangers introduced tax avoidance schemes to support their

big-money contracts, the employee benefit trust. This involved a

plane part of the players' wages into an offshore account, and this

would come back to haunt Rangers. It seemed legitimate but was

presented as a bit dodgy. Not tax- evasion, they said, but tax-

Despite this, the Rangers' debt seemed to be spiralling out of

control. But the point came when the small

print on the balance sheet became very worrying and I remember round

about 01, 02, maybe 02, 03, when the Rangers financial report came

round, net debt, �82 million. �82 million net debt! For a club in the

SPL. And it was when seeing that net debt of �82 million that I

guessed David Murray's been overly reckless, overly cavalier with

Rangers and this club is in real trouble, dire trouble.

Monaco. The ultimate playground for the rich. And for several years, Mr

Whyte appears to have based himself here.

Craig Whyte's UK business history seems to stop around 2000 when he

arrives in Monaco, and I've come to see if I can find out why that is.

Monaco is not the kind of place you can afford to live if you are

strapped for cash. And it apears Craig Whyte wasn't.

In May 2000, not long after the collapse of Craig Whyte's business

empire under a flurry of debt, he gave an interview to a newspaper

from his new home here in Monaco. He told the journalist that "I

don't owe anyone any money, least of all the taxman." he said he had

a clear conscience and nothing to hide. Just five weeks after the

publication of the interview, we can reveal that Craig Whyte was

disqualified under companies law and banned from being a director

for seven years. We understand this disqualification

came after prosecutions were launched against two of his

companies for failing to produce satisfactory accounts. And we've

learned that HMRC was chasing one of them for unpaid taxes.

We know that whilst here in Monaco Craig Whyte was certainly enjoying

the high life, but business-wise, we didn't know very much about what

he was up to at all - until now that is.

It appears that despite being a disqualified director, he was

keeping himself very busy indeed. This document reveals startling new

evidence about his covert business activities which could have seen

him sent to prison for up to two years. This Treasury petition which

has remained hidden away for the past eight years relates to a

winding up order against a plastics company called Re-Tex, and provides

an unexpected insight into the man who would return from exile to buy

Rangers Football Club. Robert Burns leads the UK's

investigations unit into corrupt business practices.

There were a number of allegations we alleged against the company in

our action to wind it up. A number of them were in connection with

their attempt to sell shares to the public. Some of the statements were

misleading, some were accurate. We also took the view that the company

was being controlled, certainly had the involvement of an individual

who was disqualified. That raised concerns. And who was that?

individual I'm referring to is Mr Craig white, disqualified as a

director in June 2000 for seven So how serious is it to act as a

company director whilst disqualified? In relation to his

involvement in running the company, it's an offence and the individual

can be prosecuted. A criminal offence? A criminal offence. So he

could have been sent to prison for this? Fpblts he could have been

sent to prison for this. Clearly, there would have had to have been a

criminal investigation and trial. Mr Whyte refused to be interviewed

about the allegations, but his The insolvency investigators also

revealed claims of large amounts of cash going missing from the company,

as well as fake auditors called Mullet & co being used to sign off

misleading accounts. Can this be the same Craig Whyte now at the

helm of range erbz? How can you be so sure that Craig Whyte is

involved in a company that seems to be so embroiled in fraud? It was Mr

Whyte who appointed Mullet & co as auditors and he suggested that the

company should be offered to the public, shares in the company

should be offered to the public. All the signals were that the

financial management, control of the company, were being exercised

by Mr Whyte. For example, he was the signatory to the bank account,

in particular. He drew some money ostensibly to pay the Inland

Revenue. Craig Whyte withdrew money from the company, sums of �100,000,

it says here actually two sums of �100,000 and what, he told the

company he was going to pay the Inland Revenue with it? He told the

directors that he was going to use that money to pay the Inland

Revenue, that's right. And didn't? There's no trace of the money being

received by the Inland Revenue. So who was behind the fake

auditors? This man, Kevin Sykes. By 1998, during his association with

Craig Whyte, we can reveal he was an undischarged bankrupt,

disqualified director and convicted fraudster. Insolvency investigators

wound up 94 of his companies and in 2004, three years after his last

known association with Mr Whyte, Sykes was convicted of a multi-

million pound pension fraud and sent to prison for eight years.

When the name Sykes is mentioned, our antennae prick up. That's

obvious. We've got a responsibility for policing the corporate

framework and when we deal with an individual like Mr Sykes, we have

to be alert to what he may be up to. Re-Tex was no one-off. In the late

'90s, they were involved in several ventures together with convicted

fraudster Sykes acting as company secretary. And there's more. We've

obtained a transcript from a 2001 court appearance by Sykes. He tells

the court that he does outsourcing for companies in trouble and that

Craig Whyte is his second biggest customer. The court asks: How much

were you receiving from Mr Whyte. Probably about �5,000 a month, he

said. And how was this paid? In bundles of cash, apparently, handed

over by Craig Whyte to Kevin Sykes in Monaco. Sykes isn't the only

questionable business associate of Craig Whyte. Kenneth McLeod was an

accountant involved in more than a dozen of Craig Whyte's early

companies. He was forced to resign from the Institute of Chartered

accountants in 2004. He was effectively banned for life for

professional misconduct in relation to VH Investments, another company

linked to Craig Whyte. Over at Ibrox, around 007, trouble was

brewing. It managed to reduce the debt, but

HMRC took the view that Rangers' tax avoidance scheme was tax

evasion and the club has been put up for sale.

But David Murray, now Sir day mid Murray, has always said he'd pass

the club on to the right man -- David Murray. If and when I leave

the club I'll make sure it's left with people of a similar mind and

nature. We are not talking about Russians coming in, if I move in

from Rangers, I'll leave nit the hands of people that I think have

the best interests of the club. was desperate to get out of the

club. There was some vemen, flak flying around -- venom. The knives

came out for him. He was being accused of the ruinous debt foisted

on the club. The search for a football sugar

daddy was on. Chelsea had Ambramovich, Manchester United had

the Glaziers, Rangers were to find their man much closer to home.

Craig Whyte returned from Monaco and bought a new home in Scotland

and this is it. Fit for a King. Castle Grant in

gran tonne on spay. It's the ancestral home of the Chief of the

Grant clan -- Granton on Spey. They paid almost �7 50,000. Just six

months of his UK Directorship ban to run, it seemed he was keen to

get back into business and make up for lost time.

He said he was now debt free and claimed to own numerous assets

overseas. His new UK businesses though involved venture capitalism

and turning around failing companies. We had a look at one of

his to see if we could get an insight into his business strategy.

The port town of Felixstowe was home to LM Logistics for the past

20 years. At its height, it employed 150 people and had a

turnover of �16 million. But the recession was taking its toll. The

company needed investment. In the summer of 2009, myself and my

colleague went to see Craig, had a very productive meeting, it

culminated a few weeks later in Mr Whyte agreeing to take us under his

wing for 51% of the company. Whyte, along with new venture

Merchant Corporate Recovery, agreed to invect �500,000. Unfortunately

in the weeks after that, the money didn't come. -- inject �500,000.

The creditors asked questions. money came eventually, but by that

time, the company was swamped with debt and had lost many of its

customers. Was it just the money was there, they didn't want to part

with it, or was the money never there in the first place? To this

day, I don't know the answer to that. Within six months, the

company was bust with Tony losing his business and Craig Whyte

appearing to lose his investment. However, one of Mr Whyte's recent

ventures has just won a contract for �5 million. So venture capital

can be a risky business and in late 2010, Craig Whyte made his

audacious play for Rangers. If he's a man who deals in risk, he's come

to the right place. Apart from an overdraft hovering around �18

million, there was also the potential �50 million tax bill. But

things were still going well on the pitch with two titles back-to-back

and the possibility of lucrative European football. But what would

follow would be one of the most controversial periods in the club's

history and we get the Inside Story on this by travelling to Cleveland,

Ohio. The then chairman of Rangers had his doubts about Craig Whyte.

Alastair Johnston, who's based here, was asked to form an independent

committee of the Rangers board to scrutinise the take-over on behalf

of the 27,000 minority shareholders of the club.

We hammered away at him, we said, tell us what you've done, I mean

imagine this is your life, This Is Your Life, who do you want to come

on and attest, you know, say this guy is a great guy, where's your

character references, where's the people you've done business with.

What kind of answers were you getting from him when you were

face-to-face? Not very convincing answers. Liberty Capital was

designated by Mr Whyte, as a source of funding. We couldn't find out

much about Liberty Capital. He wouldn't tell us very much. We've

obtain add confidential dossier on Craig Whyte which was compiled by

private investigators and presented to the independent committee.

There's no mention of Craig Whyte's disqualification or his previous

alleged criminal conduct, but it outlines his UK business history

which didn't appear to show that great wealth had been accumulated.

This further intensified the board's suspicions.

Craig Whyte seemed to be the white Knight fans were waiting for. He

pledged an immediate �5 million for players and agreed to clear the

club's �18 million bank loan and he agreed to take on the tax liability.

Why were you so surprised that Craig Whyte was prepared to take on

the HMRC liability? Well, it was just a matter of experience. I have

literally in 25 years of buying and selling lots of companies, not seen

that, it's not what you do, you don't assume an historical tax

liability that's not your responsibility. There also seemed

to be an unwillingness to get into the detail of the club's future

cash requirements and cash flows and again, from my experience,

that's something that's fundamental to buying any company. That was a

big concern to us, that maybe he wasn't going to have the money to

pay our bills. Whatever misgivings the board had about the bid, owning

85% of the club, the decision would come down to Sir David Murray and

the club had debts to settle. Did you not ask Sir David Murray not to

do this deal? I asked him not to. What did he say? It's too late.

I got a very heated call from a gentleman at Lloyds one time when

it looked like they perceived that the board were being obstructive,

the independent board were being obstructive and not letting this

happen. We'll cancel your credit line tonight. That would be

Rangers' credit line. The bank said to you, unless you do this deal,

we're pulling the plug? Yes. In May this year, Alastair

Johnston's independent committee made a statement raising serious

concerns about Craig Whyte's bid. But the deal went through anyway

and he paid a token �1 for the club. He swept into Ibrox with his new

team. Chief Executive, Martin Bain and finance director Donald

McIntyre, were suss �ed. Paul Murray and Alastair Johnston were

also asked to resign -- suspended. Basically he said I'm not going to

resign. And he said, we are going to tell the Stock Exchange tonight

that this is what we are doing, will you reconsider now, it was a

threat when I said I wasn't leaving. I said, there's a user around these

parts, the second word is surrender and the first is no. No surrender?

I'm not resigning. Six months have passed since Craig Whyte took over

at Rangers. The club has been knocked out of both European

competitions. Around �3 million of Rangers' funds has been frozen by

Martin Bain, Donald MacIntyre and the taxman. On Monday, Rangers

legend John Gregg and John McClelland resigned from the board,

claiming they'd been isolated by It may not be obvious from the

plaque on the wall, but this London solicitors is actually the

registered home of Rangers FC Group Ltd. That's the company which

incorporates caig Craig Whyte's 85% stake in the club and which is also

wholly owned and controlled by Liberty Capital, the Craig Whyte

company which is becauseed in the British Virgin Islands.

There is no suggestion that Craig Whyte was associating with the

British fraudster Kevin Sykes past 2001, but the court transcript from

that same year is worth another look. Psyches is asked by the court

what he did for Mr Whyte. What Whyte will do, said Sykes, is buy a

stake in a failing UK business and it will be up to me to assist him

in restructuring the business. To be blunt, to be able to leave the

unsecured creditors behind. Legally, of course. If Mr Whyte does call in

the administrators and assets had to be sold, he'd be the first in

line to be paid as he's the only secure creditor having cleared the

�18 million bank loan. So if he walked away, he'd lose nothing. But

he says he's committed to Rangers. So it could be a clever strategy to

leave the club debt free with creditors including HMRC empty

handed. Craig Whyte could manoeuvre Rangers into administration and it

might work fout for the better. In terms of Rangers' history, culture

and prestige, I don't think administration would be for the

better. What anyone who loves Rangers do not want to happen is,

they don't want the Rangers time line to be broken. They don't want

10 or 130 years of history or whatever it is to be broken -- 120

oh 130 years of history to be broken. They don't want Rangers FC

to cease and for it to become Rangers 2012FR or Rangers United FC

or some ludicrous name. We first asked Mr Whyte to participate in

this programme five weeks ago and several times since. On Tuesday,

five days after submitting the allegations to raungerz, the club

severed all ties with the BBC. Mr Whyte refused to be interviewed,

but his lawyers provided a If as a result of these allegations

is that he is somebody that other people don't want to do business

with, that impacts Rangers' ability, you know, to deal in the world of

operating the club, that's serious. Clearly, it's a matter of concern.

Clearly it's a matter of concern. I don't know whether I can respond to

that. Clearly, I don't think we, when reraised our concerned,

expected anything like this. Craig Whyte Rangers marriage has to

work. Murray can't have been seen to have handed the torch over to a

dud. We asked Sir David Murray for an interview. He also declined.

Rangers are seven points clear at the top of the Scottish Premier

League. But board room unrest and the threat of administration casts

a long shadow over Ibrox. Just six months ago, caig Whyte was heralded

as the club's saviour -- Craig Whyte. The BBC investigation raises