Why the Lord Nimmo Smith Findings Deserve to Be Revisited

For the avoidance of doubt the purpose of revisiting the Lord Nimmo Smith Commission is not to demand that retrospective sanctions be imposed on Rangers.

Nor is it to allege a conspiracy involving the Scottish football authorities or to claim that we know what Lord Nimmo Smith would have decided had different evidence been placed before him.

The question is much simpler.

Can important findings in the 2013 LNS Decision still safely be relied upon if relevant DOS and HMRC information existed?  Rangers' administrators were already dealing with the DOS liability, and the Commission's record appears not to reflect the full history from July 1998.

There are good reasons for asking that question.

The Investigation Date Range Change

On 5 March 2012 the SPL announced an investigation into:

“the alleged non-disclosure to the SPL of payments made by or on behalf of Rangers FC to players since 1 July 1998.”

That starting date is important.

When the Lord Nimmo Smith Commission was subsequently established, however, the period covered by the first charge began not on 1 July 1998 but on 23 November 2000.

That happens to be the date of a side letter issued to Tore André Flo under an earlier Rangers remuneration arrangement known as the Discounted Option Scheme, or DOS.

But Flo was not the first Rangers player to have such an arrangement.

Ronald de Boer had received a DOS side letter dated 30 August 2000.

Why, therefore, did an investigation originally extending back to July 1998 eventually begin on the precise date of the second of two known DOS side letters?

Duff and Phelps Knew About the DOS Liability Before the SPL Request

By 20 February 2012, Rangers' joint administrators, Clark and Whitehouse of Duff & Phelps, knew about the DOS tax liability and were actively dealing with it.

HMRC's Re-amended Points of Claim (PoC) record that on that date the administrators withdrew Rangers' application to appeal the DOS assessments out of time and requested the money representing that liability from Collyer Bristow. The sum concerned was £2,827,801. These actions preceded Harper Macleod's request of 5 March 2012. [1]

The PoC identifies Ronald de Boer and Tore André Flo and their side letters dated 30 August and 23 November 2000. However, the available copies are re-amended pleadings. The copy carrying a 1 March 2012 notation also describes proceedings issued on 16 April. It therefore cannot establish that every passage was present on 1 March, or when the detailed player and side-letter information reached the administrators. [1]

Knowledge of the DOS liability by 20 February is therefore established by the actions recorded in the PoC. The precise date when D&P acquired the detailed information about both players and their side letters remains unresolved. That distinction matters when examining their response to the SPL request.

The eventual Commission charges themselves record what had been requested.

The SPL's lawyers sought all documentation concerning payments to Rangers players since 1 July 1998, including documents, communications, contracts, correspondence, emails, trust deeds and memoranda concerning such payments.

The request was directed at undisclosed player remuneration, particularly EBT payments and arrangements, and covered material held by Rangers or third parties on its behalf. The DOS payments and side letters warrant examination within that investigation; a difference in scheme terminology does not remove their relevance. [2]

The Commission subsequently found that Rangers had failed to provide the requested material timeously and admonished the club for that failure.

Thus the failure to provide the SPL with all the material it requested timeously is not an allegation made years afterwards by Rangers' critics.

It is itself a finding of the LNS Commission.

The Disclosure Delay Extended into May

The Commission’s Decision of 28 February 2013 (the LNS Decision) records an initial deadline of 9 March, extended to 5 pm on 14 March. Nothing arrived by then or by 20 March. Four binders promised on 12 April were not supplied. [2]

Paragraph 99 of that Decision identifies an actual disclosure on 31 May 2012: Biggart Baillie supplied 50 redacted letters, including 40 side-letters, one a duplicate. Paragraphs 100–101 describe an incomplete response and unjustified redactions, after roughly twelve weeks. This supplies a receipt date for that batch, rather than a date for complete compliance. [2]

The relevant period therefore extended well beyond the March deadline. The question is what D&P knew and disclosed while the request remained outstanding. The 31 May batch does not, by itself, establish when the de Boer material was received or whether the complete DOS history reached the SPL or Commission after 12 weeks.

Why the Earlier DOS Material Matters

This would be little more than an historical curiosity if the missing earlier material had no bearing on anything LNS subsequently decided.

But it potentially had considerable bearing.

HMRC had investigated the DOS arrangements involving De Boer and Flo.

In correspondence concerning the resulting tax assessments HMRC stated:

“I have decided to make the assessments as it is my view that the amounts reflected in the assessments arise due to the deliberate behaviour or fraudulent behaviour of the company.”

That wording must be treated carefully.

It was HMRC's view; it was not a judicial finding that Rangers had committed fraud.

Nevertheless, it demonstrates that material existed which directly raised questions about the nature of Rangers' conduct surrounding the DOS arrangements.

Of particular significance was HMRC's investigation of the side letters themselves.

HMRC had specifically sought information concerning such documentation and the existence of the agreements was denied in correspondence in 2005.

The documents nevertheless existed.

Whatever ultimate conclusion one might reach about that conduct, it was plainly material capable of raising a question about honesty.

The September 2012 Reasons by Lord Nimmo Smith himself also record that an earlier SFA Special Committee investigating Craig Whyte’s tenure at Rangers had insufficient material to reach a conclusion about the EBT issue. That observation concerned the earlier investigation; it does not itself establish a deficiency in the later Commission’s evidence. It does, however, raise a specific question: was that insufficiency remedied before the February 2013 findings? The earlier investigation is discussed below under One Question Remains. [3]

What Lord Nimmo Smith Subsequently Found

That becomes important when placed beside paragraph 108 of the eventual LNS Decision.

The Commission found that Rangers' failure to disclose the side-letter arrangements to the football authorities was deliberate.

It said:

“While there is no question of dishonesty, individual or corporate, we nevertheless take the view that the nondisclosure must be regarded as deliberate…”

The Commission explained that a decision had been taken that the side letters need not be or should not be disclosed.

There is therefore an important distinction in the LNS findings.

The non-disclosure was deliberate, but according to the Commission there was “no question of dishonesty.”

That conclusion deserves examination against the fuller documentary history.

If Lord Nimmo Smith was not provided with the DOS/HMRC material concerning De Boer and Flo, including the history of HMRC, having sought the side-letter documentation, its existence having been denied and HMRC subsequently describing the company's conduct in terms of “deliberate behaviour or fraudulent behaviour”, then evidence plainly capable of putting dishonesty in question was apparently absent when the Commission said that there was “no question” of dishonesty.

That does not prove that Lord Nimmo Smith would have found Rangers dishonest.

It does mean that the certainty of the statement deserves reconsideration.

The Significance of 23 November 2000

There remains an unanswered question about the Commission's starting date.

The SPL began by investigating payments from July 1998.

Ronald de Boer's DOS side letter was dated 30 August 2000.

Tore André Flo's DOS side letter was dated 23 November 2000.

Duff & Phelps were actively dealing with the DOS tax liability by 20 February 2012. The PoC identifies both players and their side letters, but does not establish when that detailed information reached D&P.

The SPL's lawyers requested documentation extending back to July 1998.

Yet the Commission's first period began on 23 November 2000 — Flo's date.

It is not necessary to speculate about why that happened.

Nor is it necessary to allege that somebody deliberately selected the date in order to exclude De Boer or the earlier DOS history.

The documentary facts themselves create the question:

Why did an investigation extending back to July 1998 begin its eventual examination with Flo's side-letter date, and what steps were taken to obtain and examine the earlier DOS history from administrators already dealing with its tax liability?

There may be an innocent explanation.

But the question deserves an answer.

This Is Not About Retrospective Sanctions

The argument for revisiting LNS is sometimes confused with an argument for applying sanctions to Rangers.

They are not the same thing.

The issue here is whether conclusions reached by a Commission in 2013 remain reliable when viewed against material apparently not available to it.

There is also material predating the LNS Commission which appears difficult to reconcile with its conclusion on sporting advantage. In evidence to the First-tier Tribunal on 29 October 2010, Sir David Murray described the remuneration trust as a means of acquiring “better players in a more cost-effective manner” and said Rangers had been able to attract players of a standard that “perhaps, we may not have been able to do otherwise.”

His evidence was therefore that the arrangements provided Rangers with a footballing recruitment advantage. Whether that amounted to the “unfair competitive advantage” arising from the rule contraventions considered by LNS is a separate question, but the evidence plainly appears relevant to that conclusion.

The Commission found serious and deliberate non-disclosure. It nevertheless concluded that Rangers had obtained no unfair competitive advantage from those breaches and that no sporting sanction should therefore be imposed.

The subsequent Supreme Court judgment on the tax treatment of the remuneration produced separate questions about aspects of that reasoning.

Neither the subsequent Supreme Court judgment nor Murray's earlier evidence predetermines what a reconsideration should conclude.

A revisit should be about establishing the integrity of the original findings, not selecting a desired punishment.

What Can Safely Be Said

There are several matters which can now be stated without relying upon speculation.

The SPL originally investigated undisclosed Rangers player payments from 1 July 1998.

The eventual LNS inquiry into the EBT arrangements began on 23 November 2000.

There were DOS side letters for Ronald de Boer dated 30 August 2000 and Tore André Flo dated 23 November 2000.

By 20 February 2012, Duff & Phelps had withdrawn Rangers' application to appeal the DOS assessments out of time and requested the £2.827m representing that liability. The available copies of the PoC do not establish the date when D&P received the detailed player and side-letter information.

In evidence to the First-tier Tribunal on 29 October 2010, Sir David Murray said that the remuneration trust enabled Rangers to acquire better players more cost-effectively and to attract players of a standard they might otherwise have been unable to attract.

The SPL sought all material concerning Rangers player payments extending back to July 1998.

HMRC possessed information concerning the DOS arrangements which caused it to describe the relevant tax failures as arising from “deliberate behaviour or fraudulent behaviour of the company.”

And LNS subsequently concluded that, although Rangers' nondisclosure to the football authorities was deliberate, there was “no question of dishonesty, individual or corporate.”

Those facts do not establish a conspiracy.

They do not establish why the Commission's starting date changed.

They do not establish that Lord Nimmo Smith was deliberately misled.

And they do not establish what sporting sanction, if any, would have resulted from a different evidential picture.

They establish something considerably narrower — but important.

There is a reasonable basis for questioning whether material findings in the LNS Decision were reached upon a sufficiently complete evidential record.

That alone provides grounds for revisiting them.

One Question Remains

There is a further strand concerning Lord Nimmo Smith's earlier involvement in the SFA investigation into Craig Whyte.

In paragraph 14 of the Commission’s Reasons for its decision of 12 September 2012, the Commission recorded that the EBT issue had been touched upon in only two paragraphs of the earlier SFA Special Committee report. No recommendation had been made because the EBT pre-dated the period being investigated and because there was, in the Special Committee’s view, “no sufficiently clear evidence of a breach of SFA Article 12.3 to justify any further action at that stage.” [3]

Lord Nimmo Smith was therefore aware of an earlier EBT issue. The Reasons refer to “the EBT” without setting out the distinct characteristics of DOS and MGMRT. They establish prior awareness of the EBT issue, but do not establish precisely what he knew about DOS or which DOS documents he had seen.

In paragraph 17 of the same Reasons, the Commission said that the Special Committee had reached no conclusion about the EBT because “there was insufficient material to enable it to reach any conclusion.” [3]

What has not yet been established sufficiently clearly from primary documentation is precisely what information concerning the DOS arrangements, the HMRC correspondence and the earlier side letters was put before Lord Nimmo Smith at that stage, or whether that acknowledged insufficiency of material was subsequently remedied before the Commission reached its February 2013 Decision.

Until that documentary trail is established, it cannot be concluded that the SFA possessed particular material and withheld it from him.

It remains a legitimate question justifying an investigation, rather than a conclusion.

The position regarding Duff & Phelps can be stated more precisely.

The actions recorded for 20 February establish their knowledge of the DOS liability before the SPL's request. The LNS Decision establishes prolonged delay and incomplete disclosure in response to that request. The PoC identifies de Boer, Flo and their side letters, but the available copies do not establish when that detail reached D&P. Nor does the disclosure chronology alone prove precisely which DOS documents were ultimately supplied to Harper Macleod. [1] [2]

That is sufficient to raise a question about the completeness of the investigation. It does not establish deliberate concealment by the administrators.

The lasting question surrounding the LNS Decision therefore need not be:

Should Rangers have been sanctioned?

It is a more fundamental question about the integrity of the decision-making process:

Would Lord Nimmo Smith have expressed the same findings—particularly that there was “no question of dishonesty”—had the Commission been provided with the complete DOS and HMRC documentary history which existed at the time?

We cannot know the answer.

But that is precisely why the findings deserve to be revisited.

Sources

[1] HMRC Re-amended Points of Claim, High Court, No 2003 of 2012, paragraphs 7–8 and 23–25. Available copy headed 1 March 2012, supplied as Points of Claim BDO Enc 2 Res12 Lawyers Ltr 25 June 2108.docx. The heading date is not proof of the text or service date of the original pleading. This is HMRC’s pleading, not the administrators’ own Points of Claim.

[2] Lord Nimmo Smith Commission Decision of 28 February 2013, paragraphs 92–101. Reproduced in The Offshore Game annexes, PDF pages 35–37, printed decision pages 27–29. https://www.sportsintegrityinitiative.com/wp-content/uploads/2018/06/TOGannexes.compressed.pdf

[3] SPL Commission Reasons for its decision of 12 September 2012, paragraphs 14 and 17, as reproduced in the supplied blog SPL LNS Commssion Reasons 12 Sep2012 Blog (1).docx. The quoted passages are distinguished here from the blog author’s commentary. The HMRC wording above also follows the extract reproduced in that blog; the original correspondence remains the authoritative source.