:00:10. > :00:12.Tonight on Newsnight Scotland: The BBC has evidence that the
:00:12. > :00:17.Rangers administrators knew the club's takeover was funded by
:00:17. > :00:19.future ticket sales. So why did they deny it?
:00:19. > :00:23.Also tonight: the row over the Scottish
:00:23. > :00:26.government and Europe continues. The First Minister says he is
:00:26. > :00:29.thinking about referring himself under the ministerial code. We will
:00:29. > :00:32.ask the leader of the Liberal Democrats, who raised a point of
:00:32. > :00:35.order on the issue yesterday, how he intends to pursue Alex Salmond
:00:35. > :00:39.tomorrow. Good evening. Tonight, new
:00:39. > :00:42.revelations in the Rangers case. The BBC has learnt that Duff and
:00:42. > :00:45.Phelps, the Rangers administrators, knew that Craig Whyte's purchase of
:00:45. > :00:49.the club was funded by future ticket sales. Duff and Phelps have
:00:49. > :00:51.repeatedly denied that they knew this. The evidence comes in a taped
:00:51. > :00:55.conversation between Craig Whyte and a senior Duff and Phelps
:00:55. > :01:05.partner, David Grier. I am joined now by our investigations
:01:05. > :01:07.
:01:07. > :01:11.correspondent. Three what is going on? Back in May, we revealed
:01:11. > :01:14.allegations that Duff and Phelps, the administrators of Rangers, had
:01:14. > :01:17.been involved potentially in a conflict of interest so serious
:01:18. > :01:21.that they should not have accepted the appointment as administrators
:01:21. > :01:25.in the first place. This involved a series of e-mails between the
:01:25. > :01:34.takeover team have, of which Duff and Phelps were a key part, which
:01:34. > :01:38.appeared to show that they had intimate knowledge of the hated
:01:38. > :01:42.Ticketus deal. Their senior partner, David Grier, categorically denied
:01:42. > :01:47.that at the time of the Craig Whyte takeover of Rangers, he had any
:01:47. > :01:51.knowledge that funds from Ticketus were being used to acquire the club.
:01:51. > :01:55.He said the accusation was wrong and defamatory. But the secret
:01:55. > :02:00.recording you are about to hear not only shows that David Kirov Gough
:02:00. > :02:02.and Phelps knew all about the Ticketus arrangements, but that
:02:02. > :02:12.they were rigorously pursuing a line of denial because they thought
:02:12. > :02:47.
:02:47. > :02:54.This was in a restaurant. Where does the take come from? This
:02:54. > :02:59.conversation was recorded by Craig Whyte with David Grier on 31st May
:02:59. > :03:03.this year, just a week after the BBC broadcast its programme. This
:03:03. > :03:11.tape will form part of an upcoming case, ironically brought by Duff
:03:12. > :03:16.and Phelps on behalf of a Rangers creditor. We have taken two steps
:03:16. > :03:21.to ensure its provenance, and we have had a voice recognition expert
:03:21. > :03:26.confirm that the voice is indeed that of David Grier. And you will
:03:26. > :03:30.presumably be passing this on to the various Lordships and
:03:30. > :03:34.institutions who are investigating this? There are two investigations
:03:34. > :03:40.currently running into Duff and Phelps. The first is by the
:03:40. > :03:45.industry regulator. The second is by Lord hotch, Scotland's most
:03:45. > :03:48.senior insolvency judge. They are both looking into the BBC's
:03:48. > :03:55.allegations on whether or not the appointment was excepted correctly
:03:55. > :03:59.by Duff and Phelps. We are aware that both ignored Hodge and the
:04:00. > :04:05.others are aware of tonight's broadcast. This gets terribly
:04:05. > :04:09.complicated. The basic issue here is that Duff and Phelps, the
:04:09. > :04:13.argument goes, should not have been the Rangers administrators if they
:04:14. > :04:18.were involved with Craig Whyte prior to the company going into
:04:18. > :04:23.administration. This means that not only they were involved with Craig
:04:23. > :04:28.White, but they knew about the structure of the takeover, despite
:04:28. > :04:34.denying previously that they knew anything about it? The Ticketus
:04:35. > :04:39.deal effectively allowed Craig Whyte to buy Rangers, which is now
:04:39. > :04:49.facing liquidation. The company will be liquidated within a
:04:49. > :04:49.
:04:49. > :04:54.fortnight. This was the deal that helped collapse Rangers. There is a
:04:54. > :04:58.hearing coming up on 31st October. This is a crucial hearing. It is
:04:58. > :05:03.Before Lord Hodge. At the hearing, Rangers will be officially
:05:03. > :05:08.liquidated. The administration will end and will be passed on to the
:05:09. > :05:15.liquidators. This is when Duff and Phelps' fees can be discussed.
:05:15. > :05:20.Their fees could you stand at �3.1 million, but that has to be
:05:20. > :05:26.ratified by the court. Hovering over all of this are these two
:05:26. > :05:30.investigations. So there is still a long way to go in this story.
:05:30. > :05:36.it the case that the fund Phelps may have more to worry about Dan
:05:36. > :05:41.Money? Only a week or so ago, when we ran the interview with Craig
:05:41. > :05:45.Whyte, they reacted at that time by saying that any allegations against
:05:45. > :05:50.them were not just allegations against the company, but they are
:05:50. > :05:54.acting as administrators in a sort of quasi judicial capacity?
:05:54. > :05:58.Administrators of a failing company are agents of the court. They have
:05:58. > :06:03.a code of conduct they must appear to. There are two interesting
:06:03. > :06:07.things about this. We don't know what Duff and Phelps told Lord Hogg
:06:07. > :06:11.at the time of their appointment about their prior involvement with
:06:11. > :06:15.Craig Whyte and whether they knew about the hated Ticketus deal.
:06:15. > :06:21.Secondly, after the BBC's allegations, Lord hotch
:06:21. > :06:24.specifically asked Duff and Phelps for a report about the allegations
:06:24. > :06:30.and whether there was a conflict of interest and they did know about
:06:30. > :06:34.the Ticketus deal. We don't know what Duff and Phelps told Lord a
:06:34. > :06:39.haunch, but I am very curious about what they did tell him at that time
:06:39. > :06:43.and whether that ties in with what we have heard on this recording.
:06:43. > :06:48.What are Duff and Phelps a saying about all this? They released a
:06:48. > :06:54.statement just over an hour ago. It runs like this. "as we have
:06:54. > :06:57.previously stated, Duff and Phelps maintain that our conduct of the
:06:57. > :07:01.administration was carried out to the highest standards. We do not
:07:01. > :07:05.respond information taken out of context, as we believe it is the
:07:06. > :07:15.case in this BBC story. We welcome the opportunity to review a
:07:15. > :07:17.complete copy of the information Now, the First Minister is
:07:17. > :07:20.considering reporting himself under the ministerial code, amid
:07:20. > :07:23.accusations of lying, misspending public money and misleading the
:07:23. > :07:25.public, all in connection with the issue of law officers' advice on
:07:25. > :07:28.the place in the EU of an independent Scotland. Mr Salmond
:07:28. > :07:31.denies any wrongdoing, and his office reminds callers that he has
:07:31. > :07:34.been reported five times already under the ministerial code, and
:07:34. > :07:40.exonerated five times. In a moment, we will hear from the leader of the
:07:40. > :07:44.Liberal Democrats, after this report.
:07:44. > :07:47.We were told by the First Minister that he had legal advice about
:07:48. > :07:53.Scotland's place in the European Union in the event of independence.
:07:53. > :07:57.It turns out they didn't have any legal advice at all. This shows
:07:57. > :08:00.that when you'd shine the spotlight on the case of full -- case for
:08:00. > :08:05.separation, it falls apart. The a maybe smiling through the pain, but
:08:05. > :08:10.even the SNP would be hard pushed to say that yesterday was a good
:08:10. > :08:13.day for the Government. In the afternoon, Nicola Sturgeon had
:08:13. > :08:19.stood up in the chamber and said the Government would be seeking
:08:19. > :08:23.legal advice from the law officers on the EU membership issue.
:08:23. > :08:28.Scottish government has previously cited opinions from a number of
:08:28. > :08:33.eminent legal authorities, past and present, in support of the
:08:33. > :08:36.independent Scotland. Or there! support of its view that an
:08:36. > :08:42.independent Scotland will continue in membership of the European Union,
:08:42. > :08:46.but has not sought specific legal advice. However, as the Edinburgh
:08:46. > :08:51.agreement provides the exact context of the process of obtaining
:08:51. > :08:59.independence, we now have the basis on which specifically device can be
:08:59. > :09:06.sought. Is this a point of order, Mr Martin? For some MSPs, eyebrows
:09:06. > :09:09.were raised. They thought they had heard something else in the past.
:09:09. > :09:13.Paul Martin called Alex Salmond a bare-faced lie in a press release.
:09:13. > :09:17.He was referring to an interview earlier this year with Mr Salmond
:09:17. > :09:21.and Andrew Neil. The First Minister gave some viewers the impression
:09:21. > :09:27.that legal advice had already been sought by the Government. Have you
:09:27. > :09:30.sought advice on this matter? have, yes. What did they say?
:09:30. > :09:34.can read that in the documents we have put forward. The First
:09:34. > :09:41.Minister said he was referring to the wider debate on Scotland's
:09:41. > :09:45.future. The opposition parties and most newspapers scoffed. The deputy
:09:45. > :09:49.First Minister took up the defence. On this programme last night, he
:09:49. > :09:55.said there was no case to answer, that the Government had taken
:09:55. > :10:00.general legal advice, not specific advice on Europe. Any fair-minded
:10:00. > :10:05.person who reads the entire transcript of that interview would
:10:05. > :10:09.see that he was talking about the general debate. He cited a number
:10:09. > :10:14.of legal opinions. He was also talking about general government
:10:14. > :10:19.documents, all of which are underpinned by law officers' advice.
:10:19. > :10:23.Did Alex Salmond Pele feared, or was he just misunderstood? Maybe
:10:23. > :10:30.the real issue is, what is the government's relationship with its
:10:30. > :10:36.own lawyers? I know, I'll ask a lawyer. The ministerial code is
:10:36. > :10:43.public. That gives guidance as to when opinions should normally be
:10:43. > :10:47.sought from the law officers. But it is not especially detailed.
:10:47. > :10:50.There may be its internal practices about when legal advice should be
:10:50. > :10:54.sought. You would expect an important public statement which
:10:54. > :11:00.took a definite legal position on an important issue to have been
:11:00. > :11:04.based on legal advice. In the past few years, the government has
:11:04. > :11:08.released several documents saying that an independent Scotland would
:11:08. > :11:11.stay in the European Union. So why did Nicola Sturgeon say yesterday
:11:11. > :11:15.that the Government was still to seek legal advice on the issue?
:11:15. > :11:22.Does the signing of the Edinburgh agreement make this possible now?
:11:23. > :11:26.The statement by the deputy First Minister said that now that the
:11:26. > :11:31.agreement had been reached between the Scottish and UK governments on
:11:31. > :11:37.the referendum process, the way was now clear to seek formal legal
:11:37. > :11:43.advice from the law officers. I am not sure that is entirely
:11:43. > :11:48.convincing. If the Government had already made up its mind to prepare
:11:48. > :11:53.the path towards independence, as it obviously had done, then it was
:11:53. > :11:56.open to it to seek legal advice on the question of membership of the
:11:56. > :12:02.European Community at an earlier stage. I don't think the signing of
:12:02. > :12:07.the agreement is an important change in relation to the question
:12:07. > :12:11.of when you would seek legal advice. The Government say they never
:12:11. > :12:15.sought specific legal advice on the EU question before now, and that
:12:15. > :12:20.Alex Salmond did not say they had. And nobody outside the SNP could
:12:20. > :12:24.believed he was saying anything but the fact that he had legal advice.
:12:24. > :12:31.He kept referring to the legal advice. He had ample opportunity to
:12:31. > :12:35.say he had not asked anyone about this, but he did not. Confusion or
:12:35. > :12:44.cover up? Maybe the question should be, when his legal advice not legal
:12:44. > :12:49.I'm joined now from Edinburgh by Liberal Democrat leader Willie
:12:49. > :12:52.Rennie, and by the SNP's Stewart Maxwell. Do you accept the
:12:52. > :12:56.explanations that the Government have offered? I have tried to
:12:56. > :12:59.understand it. I have tried to put myself in the position of Alex
:12:59. > :13:04.Salmond and understand his and Nicola Sturgeon's explanation. For
:13:04. > :13:08.the life of me, I just can't. He says on one hand that he did and
:13:08. > :13:14.then he didn't receive advice, general advice - I don't understand
:13:14. > :13:23.what the point is they are trying to make. What is fundamental is
:13:23. > :13:28.that the whole basis of their case for continuing has now collapsed.
:13:28. > :13:32.Just on this specific issue because you I think accused them of
:13:32. > :13:38.misleading Parliament. I did. you, in the light of their
:13:38. > :13:43.explanations, in a mood to let that rest? I think the avenues open to
:13:43. > :13:48.us are quite limited now. I think the public will clearly see who was
:13:48. > :13:54.being clear about this issue. And the SNP were certainly not clear
:13:54. > :13:57.about this. Alex Salmond's words were very clear. He said, "We have
:13:57. > :14:01.sought advice, yes." He made it clear at the time and he
:14:01. > :14:06.contradicted it. It is a muddle. I think we probably need to leave it
:14:06. > :14:10.to the public to decide who was being straight about this. Stewart
:14:10. > :14:15.Maxwell, do you think Alex Salmond should refer himself under the
:14:15. > :14:19.Ministerial Code, as he says he is thinking of doing? It is entirely a
:14:19. > :14:24.matter for the First Minister. It is not for me to say whether he
:14:24. > :14:27.should or shouldn't. I understand he has received a letter from a
:14:27. > :14:30.Labour Member of the European Parliament. He will consider the
:14:30. > :14:36.contents of that letter and then respond. That is a matter for the
:14:36. > :14:43.First Minister. Right. You are completely unconcerned about how
:14:43. > :14:53.this looks from an SNP point of view? I'm concerned about the fact
:14:53. > :14:53.
:14:53. > :15:02.the Labour Party are throwing around words "liar" and "conman".
:15:02. > :15:07.Hang on, Willie Rennie made his point in a reasonable way, he said
:15:07. > :15:10.you had been misleading the public and that the public would make up
:15:10. > :15:15.their minds? Gordon, I said it was the Labour Party had been using
:15:15. > :15:22.this kind of language. I accept that Willie Rennie has not done
:15:22. > :15:27.that. He has made accusations. It is quite clear the First Minister
:15:27. > :15:30.has at no point said there is legal advice on this matter. He has
:15:30. > :15:35.always stuck to the point of principle on the Ministerial Code
:15:35. > :15:38.which says they can neither confirm nor deny legal advice on this
:15:39. > :15:44.matter. That is the normal process for every single Government, both
:15:44. > :15:47.in Edinburgh and in London, and always has been. Which would be
:15:48. > :15:52.tremendously convincing hadn't Alex Salmond appeared to say the
:15:52. > :15:56.opposite in the interview he did with Andrew Neil? I have the
:15:56. > :16:02.transcript in front of me here. Let's not get into that again!
:16:02. > :16:08.think it is important because what Labour have done is they have made
:16:08. > :16:15.up a quote. They have accused the First Minister of lying which is
:16:15. > :16:21.disgraceful. The transcript... have missed out... They have...
:16:21. > :16:24.sounds like 27 shades of desperation? That is ridiculous.
:16:25. > :16:30.The 27 words are crucial to the context of the answers that the
:16:30. > :16:34.First Minister gave. He was talking about the - he referred to the
:16:34. > :16:42.published documents which the Government have put out. Those
:16:42. > :16:47.documents are in the normal process of events, they go through...
:16:47. > :16:52.We - you are in favour of independence, are you? Of course I
:16:52. > :16:59.am. Can we check, you are in favour of independence for Scotland. When
:16:59. > :17:09.you say you are in favour of independence, we didn't think you
:17:09. > :17:10.
:17:10. > :17:14.were in favour of independence for Finland, Latvia. What you mean is
:17:14. > :17:19.independence for Scotland? Well, of course, I mean independence for
:17:19. > :17:25.Scotland. I'm checking. That is a ridiculous statement. The First
:17:26. > :17:31.Minister didn't say yes to the question. He did actually. That's
:17:31. > :17:35.all he said, was it? What he said was - if you want me to read the
:17:35. > :17:39.transcript? Yes, in terms of the debate and he was interrupted. He
:17:39. > :17:44.went on to explain in terms of the documents published by the Scottish
:17:44. > :17:50.Government. I was interrupted again. The fact is he did not say yes, he
:17:50. > :17:54.explained the circumstances of that advice. The fact is - I can
:17:54. > :18:03.understand why opposition politicians want to make hay over
:18:04. > :18:08.this issue. What about that point - before we need a PhD to carry on
:18:08. > :18:16.this conversation, the point is, it doesn't really matter very much,
:18:16. > :18:19.does it? Sorry. It does because it is a matter of substance. This is
:18:19. > :18:24.about whether Scotland would be a new or continuing member of the EU.
:18:24. > :18:27.The SNP have just looked at whether Scotland would adopt the pound. I
:18:27. > :18:32.think they now need to set out the consequences of joining the euro.
:18:32. > :18:42.The people when they are going to the referendum, they need to
:18:42. > :18:46.understand... Hang on. That's not fair because you can accuse the SNP
:18:46. > :18:49.of talking humbug over this interview, but the SNP have been
:18:49. > :18:56.clear, they will make this whole business - they are not saying they
:18:56. > :19:01.are not going to do that. It is not fair to say that?, They have so far
:19:01. > :19:09.set out in great deal how you would keep the pound. They have not set
:19:09. > :19:13.out in any detail at all - another real possibility that we would join
:19:13. > :19:23.the euro. Of course we wouldn't. That is nonsense. No. Stewart, what
:19:23. > :19:28.happens if you are wrong? What happens if you are... We... We...
:19:29. > :19:32.Let me give you one solid example. Can you hold on a second? If we end
:19:32. > :19:36.up as an independent nation and you are wrong, and we do not get to
:19:36. > :19:40.keep the pound because we are regarded as a new member of the
:19:40. > :19:43.European Union, we will have to adopt the euro. And the strictures
:19:43. > :19:51.for joining the euro are quite severe. You would have to reduce
:19:51. > :19:58.the deficit as a percentage of the GDP from 7.4% to 3%. That is a �5
:19:58. > :20:04.billion cut. That is a fantasy. Let's look at the... I'm sorry
:20:04. > :20:12.interrupt. For the sake of taking this somewhere different, the
:20:12. > :20:17.Herald are reporting that the Spanish Foreign Minister, they
:20:17. > :20:20.quote him about what Scotland's position would be and he says, "In
:20:20. > :20:30.the hypothetical case of independence for Scotland, Scotland
:20:30. > :20:34.
:20:34. > :20:40.would have to join the queue and ask to be admitted." Is that right?
:20:40. > :20:44.No, it's not right. Scotland... is the Spanish Foreign Minister.
:20:44. > :20:49.He's the Spanish Foreign Minister. I don't see what the relevance of
:20:49. > :20:55.that is. It is not relevant? Right, OK. There is no circumstances and
:20:55. > :21:02.no rules within the EU to expel a member state from the European
:21:02. > :21:06.Union. Sweden is in the European Union but is not adopting the euro.
:21:06. > :21:10.That is evidence that we would not be adopting the euro. We would be
:21:10. > :21:15.taking the pound. That is quite clear. We will have to leech it
:21:15. > :21:20.there. Sorry, willy -- leave it there. Sorry, Willie Rennie, we
:21:20. > :21:25.will come back to it. The NHS crisis as boards forced to take
:21:25. > :21:29.loans. Dozens of A-roads to have speed limits cut is the lead in The
:21:29. > :21:32.Scotsman. One last thing before we go. The
:21:32. > :21:34.world of folk music is poorer tonight for the death of the singer,
:21:35. > :21:38.songwriter and proud Dundonian, Michael Marra. We'll leave you with
:21:38. > :21:44.a snippet of him playing his song Farlow at the Blas Festival in 2009.
:21:44. > :21:50.Good night. # There's love in this world for
:21:50. > :21:56.everyone # Every rascal and son of a gun
:21:56. > :22:03.# It's for the many and not the few # Be sure it's out there looking
:22:03. > :22:10.for you # Every town in every state
:22:10. > :22:20.# Every house and every gate # With every precious smile you
:22:20. > :22:33.
:22:33. > :22:36.make Hello. By the end of this week, it
:22:36. > :22:42.will feel like we have slipped forward into late December.
:22:42. > :22:45.Thursday is more of a transition day.
:22:45. > :22:49.Further north, some bright spells developing through the afternoon. A
:22:49. > :22:54.little bit of patchy rain here and there. It won't amount to very much.
:22:54. > :22:58.Still on the mild side across the south. 13, 14, possibly 15 or 16
:22:58. > :23:04.degrees. Patchy rain across South West England, across South Wales
:23:04. > :23:07.through the afternoon as well. As you head further north, across
:23:07. > :23:11.North Wales, a better chance of seeing some sunny spells coming
:23:11. > :23:17.through during the afternoon. A fairly bright day all in all across
:23:17. > :23:23.Northern Ireland. Much of Scotland, some sunny spells
:23:23. > :23:33.through the course of the day. Look at that temperature in Lerwick, 2
:23:33. > :23:35.
:23:35. > :23:40.degrees. From Thursday into Friday, everywhere is turning colder.