Warts and all

[stewarty 1,876]

There's been a raging debate on twitter in the past day or so regarding the current investigation commissioned by the Rangers Board into the allegations made by Craig Whyte and his connection with Charles Green. Writing on ESPN, John DC Gow explained his view that the commission was ill-advised, and only invites negative attention. He argues it also negates the Board's responsibility to protect the club.

 

I can understand this viewpoint to an extent, goodness knows we've been through a lot, but I disagree for a number of reasons. Despite my barrage of tweets in John's direction, twitter is perhaps not the easiest medium to communicate why this is wrong, so here goes....

 

Given the threatened legal action, the various leaks by Whyte and the ongoing press coverage that has ensued, there is at the very least a case to be answered about whether the transfer of oldco assets to Sevco Scotland was legitimate. Various guarantees were also provided to the SFA that Green's group of investors had no other connections to Whyte, hence why Stewart Regan said yesterday that the allegations were "very serious".

 

The investigation commissioned by the Board is attempting to clear up this mess once and for all. Until this is done, we cannot move forward. Its likely that Whyte will continue in his desperate attempts to sling mud at all and sundry; there is no evidence to suggest that he would stop doing so. I've speculated before about Whyte's motives but its clear he has no regard for the consequences of his actions. He is also a proven liar.

 

But just because Whyte has been proven a liar before, doesn't mean it is also the case in this instance. For every piece of audio Whyte has released, we have a counter-argument from Green and others. Green is not normally short for words but his interview with STV had him floundering. His ego didn't help either. With his inclination towards speaking in outlandish terms, coupled with the ongoing Boardroom powerplays, its no wonder the Board was not prepared to accept Green's word at face value. An independent and objective review of all available evidence was necessary. This type of thing happens every day in business. As an Internal Auditor, I've been involved in carrying out such reviews myself, where there is a need for an organisation to seek an independent review of allegations of fraud or impropriety.

 

But lets be clear here, this isn't an abrogation of duty. Given the sheer complexity of links and allegations, not to mention the links that current Board members and investors have with Whyte and Green, the Board simply is not able to objectively review the information available to it. Unless a forensic review is undertaken, it simply would not be able to say it had taken all reasonable steps to investigate these allegations.

 

Furthermore, Rangers is a public company which is listed on AIM. With that come a number of responsibilities. These are not negotiable, and are a requirement of a company's continued registration. Of the many regulations, which you can read here, the principles of disclosure are noted on page 5, the second paragraph of which reads:

 

"An AIM company must take reasonable care to ensure that any information it notifies is not misleading, false or deceptive and does not omit anything likely to affect the import of such information."

 

All publicly listed companies must make disclosures to the market about any material information which could affect shareholders. Negative publicity, a potential legal claim and the likelihood of an regulatory interventions from the AIM or the SFA all compound to a situation that simply has to be resolved one way or the other for the company to continue its listing. It is very likely that the Board will be having a lot of concerned communications with those regulatory bodies to ask what is going on. Unless the Board can demonstrate that it is taking appropriate steps of its own accord, AIM might well impose sanctions. The SFA might well commission its own review in order to ascertain whether Green has lied to them. I don't know about you, but I'd rather not get involved in another SFA commission.

 

Also, it won’t be too long before Rangers will be carrying out their annual audit. A key risk area for an external auditor is to consider whether a company is a going concern. Whilst Whyte's allegations on the sale of assets to Sevco Scotland continue, will the club's auditor be happy to say that the club is a going concern? What evidence will be available to them to make that assessment? Can you see where I'm going with this?

 

We also need to consider the effect that such damaging allegations and publicity have on the club's ability to market itself and to attract new investment and sponsors. As a sponsor, would you be happy to be associated with a football club that is unable to satisfactorily deal with these matters?

 

I accept it is frustrating seeing the club forking out such a very high amount of money on this investigation. Especially given that we suspect it will not identify any further damaging information. But the value of this happening is our ability to put all of this stuff to bed. Only once this is done, can we say with confidence that Whyte is "at it". We suspect it, but so far cannot prove it conclusively. Even if further information does come out, as damaging as that may or may not be, it simply has to come out, and come out now. We cannot sweep this under the carpet, we must deal with it head on, warts and all.

Edited May 21, 2013 by stewarty

[Frankie 8,150]

Now online:

 

http://www.gersnet.co.uk/index.php/latest-news/139-independent-examination-a-necessity-warts-and-all

 

Many thanks mate!