Trial hears Rangers finances in ‘pretty perilous’ state when Whyte bought club
Former manager Walter Smith gives evidence
RANGERS Football Club was in a ‘pretty perilous’ financial state when it was taken over by Craig Whyte, a court has been told.
Jurors heard from former managers Walter Smith and Ally McCoist during the first day of evidence in the trial of the former Rangers owner.
Mr Smith, 69, told the High Court in Glasgow about his first meeting with Whyte, who is accused of acquiring the club fraudulently in May 2011.
Mr Smith, who was in charge of the team between 1991 and 1998 and again from 2007 until 2011, said he had told Whyte it required investment and a ‘level of freshness’.
He told the court that, at the time, he was aware of a tax case relating to the use of employee benefit trusts (EBT) at Rangers but was not directly involved.
He said he was also aware of an overdraft the club had, which he agreed was in the region of £18million when he left, just days after Whyte took over.
Donald Findlay, QC, representing Whyte, asked: ‘The finances were in a pretty perilous state it would seem, was that your impression?’ ‘Yes,’ Mr Smith said. Mr Findlay continued: ‘For someone like yourself with your experience and affection for the football club, it must have been very distressing to see it, the club, in a state like that.’
Mr Smith replied: ‘Yes, it was but we had been trying our best to handle the situation while it was there.’
He agreed with Mr Findlay’s assertion the ‘future was not exactly bright at that time in terms of the quality of the team’ and there were ‘real problems’ in getting the squad to a level that allowed it to compete with Celtic. The jury of eight men and seven women later heard from his successor Mr McCoist, 54. He said he had a ‘very positive’ response from Whyte in relation to the need to refresh the playing squad.
Questioned by advocate depute Alex Prentice, QC, he said: ‘There was a number of players which I would have liked to have signed.
‘I just felt that the offers that were being made for these players were certainly, just in my opinion, not realistic for us to have any chance of getting the players.’
Under cross-examination from Mr Findlay, Mr McCoist said he could not be sure exactly when he had signed his contract to become Rangers manager but confirmed no discussions had taken place with Whyte about the terms of that contract, despite him inheriting it as the new owner.
He acknowledged a number of signings took place after Whyte had taken over, including now captain Lee Wallace.
Mr Findlay said: ‘More was being spent on your squad in terms of player salary than had been spent on the previous squad on which you were assistant manager. You may or may not have known that.’ ‘No,’ Mr McCoist replied. Whyte, 46, denies two charges relating to the purchase of the club, one of fraud and another under the Companies Act.
It is alleged he pretended to then Rangers owner Sir David Murray, and others, that funds were available to make all required payments to acquire a ‘controlling and majority stake’ in the club – including clearing an £18million bank debt, £2.8milfuture lion for the ‘small tax case’ liability, a £1.7million health and safety liability and £5million for the playing squad.
The Crown alleges Mr Whyte had only £4million available from two sources at the time but took out a £24million loan from Ticketus against three years of season ticket sales ‘held subject to an agreement or agreements being entered into between the club and Ticketus after said acquisition’. The second charge under the Companies Act centres on the £18million payment between Whyte’s Wavetower company and Rangers to clear a Bank of Scotland debt.
Mr Smith told the jury how he was ‘never overly burdened’ by the financial aspects of the club.
He recalled that during his second spell in the dug-out – after being re-appointed in 2007 – he became aware Sir David Murray wanted to sell his shareholding. He told Mr Prentice: ‘I cannot say I was that surprised. He had been owner since 1987 or 1988 which is a long time in charge of a football club.’
On his first meeting with Whyte, Mr Smith added: ‘Obviously Mr Whyte was more interested in the financial aspects.’
The trial continues.
‘Future was not exactly bright’