Resolution 12. UEFA Article 12. LNS Commission and Decision. 5 Way Agreement.
EBT. Oldco/Newco. Rangers FC/THE Rangers FC.
Terminology that makes the heads of the most avid of Scottish football fans spin definitely has the ability to fry the brain cells of the average American fan of Celtic trying to keep up with all these issues.
Fortunately for me, I have the chance to discuss this with the blogger known as Auldheid, of Celtic Quick News (CQN) fame, who has graced me with this very informative, albeit lengthy, interview.
Grab some coffee.
A little about the source: Auldheid was born in a tenement in the Gallowgate, Glasgow, that a Billy Connolly mural now adorns, so he was in easy walking distance of Celtic Park. He endured the losing football of the late 1950s and early 1960s, but watched the Lions show off the European Cup on the back of a green-and-white bedecked coal lorry inside Celtic Park in 1967. Family came along and he moved away, kids arrived resulting in years supporting the two boys and one of his two girls from the side of public football parks. He managed an office team from scratch and on retirement wandered into Celtic blog land, mainly CQN.
Come the season of honest mistakes 2010/11 and growing anger at referee performances, Auldheid attended an Open Meeting of CSA/CST and individual Celtic supporters at St Mary’s Calton, where his suggested resolution for accountable and transparent governance from the SFA and changes to the SFA Video Review Panel was adopted and eventually passed to Celtic. They found it useful to point out to SFA their supporters’ anger, and not long after, then-SFA CEO Gordon Smith resigned and the Review Panel process was changed.
The lesson learned here was the SFA could be made accountable via member clubs if member clubs wished to do so. Also in attendance at that Open Meeting day was another and still CQN stalwart, “Canalamar,” and therein lay the genesis – though he might say genius – of Resolution 12, subsequently augmented by Auldheid and two other CQN contributors, “Brogan Rogan Trevino and Hogan” and “Morriseythe23rd.”
In taking the opportunity to sit down with Auldheid and attempting to piece together Celtic’s role in the Resolution 12 fiasco, we are looking to answer the question regarding why Celtic has avoided pulling the trigger, so to speak, on the Resolution 12 issue, and the related issues that have led us to this point.
Larry Cafiero: To the average person – or at least to a relatively new Celtic fan writing from 5,000 miles away in the U.S. — Resolution 12 and the events that surround it are, as Shakespeare might say, “a tangled web” that Rangers/The Rangers and the Scottish Football Association have weaved, with a supporting cast of bit players like UEFA and even some on Celtic’s board and in its leadership. It may not be possible to encapsulate in a few sentences – and I understand that – but can you tell us how we’ve gotten to this point today?
Auldheid: What happened after the 2013 Celtic AGM to the 2019 AGM can be found at https://www.res12.uk/timeline-2-part-1/ from December 2013, supported by documentary evidence.
It is long read but necessary to understand how we got to where we are. It does not cover however the prequel to the 2013 AGM because in the years from the 2013 AGM to May 2018 Celtic had seemed supportive of Resolution 12 and that apparent support was necessary to give the shareholders the authority to pose questions of the SFA and UEFA and by getting answers making them accountable.
Resolution 12 began in May 2013 at a personal meeting with Celtic CEO Peter Lawwell when the matter of SFA professional governance came up after the LNS Commission Decision was announced. The CEO said that a “Dougie, Dougie” moment was needed to leverage change (a reference to an earlier event when a referee lied to a Celtic manager). Then, in June 2013, material relating to events in 2011 began appearing on social media.* (footnote appears at the end of this answer, prior to the next question)
The leaked material that suggested UEFA had been misinformed of the status of the tax liability was provided to Celtic, who requested it when told of its existence but without any response. Separately, Canalamar initiated Resolution 12, raising a number of points but focus was put on the processing of the UEFA License in 2011 and asked that UEFA investigate what took place. That was all that was asked, nothing more, nothing less. No accusations, just a clear explanation.
was placed on the 2013 Celtic AGM agenda thanks to groundwork by
Morriseythe23rd, but surprisingly Celtic did not support the
resolution saying that it was unnecessary. They asked that it be
withdrawn on the basis SFA had confirmed all was in order, but that
was at odds with the material leaked on social media. A day later the
idea of an adjournment was mooted. It would allow further
investigation but at Celtic’s insistence confined to the SFA and
not UEFA. Whilst not ideal, it kept the resolution alive and allowed
time to explore and understand better the UEFA and Tax rules and pose
questions to the SFA from 2014 and UEFA from 2016 all of which can be
read on the Res12 link provided earlier.
up: Everyone was happy until May 2018 ,when charges were made against
Rangers Football Club (TRFC, the successor to
Rangers Football Club – RFC) that removed the grant period from
scrutiny with no explanation and when hard evidence turned up that a
payable and not a liability existed before 31st March
What changed from 15 May 2018 can be read at https://www.res12.uk/timeline-two-part-three-continued-after-the-trial-was-over-june-2017-to-date/ taking readers up to the 2019 AGM.
There had always been suspicion about the award of a UEFA License in
April 2011 when in August 2011 Sherriff Officers turned up at Ibrox
to freeze assets in pursuit of payment of an overdue tax bill of
£2.8M. This was in respect of tax unlawfully avoided using Employee
Benefit Trusts (EBTs) to pay players De Boer , Flo and Moore from
1999 to 2003 under a Discount Option scheme (DOS) know at Ibrox as
Rangers Employee Benefit Trust (REBT) . It became known as “ the
wee tax case” to distinguish it from a replacement EBT
scheme from 2003 under the Murray Group Management Remuneration Trust
(MGMRT ) known as ‘The Big Tax Case that was under appeal until
2017 when it too was found to have been used unlawfully by Rangers
LC: Clearly the fiscal malfeasance by Rangers/The Rangers has been documented and outlined in the press – whether it is documented enough is another story – and in publications like the book, “Tangled Up in Blue” by Stephen O’Donnell, among others. However, one of the mysteries that needs solving is how Rangers/The Rangers were granted a UEFA license, possibly under the most dubious circumstances, and who misplayed this, so to speak: UEFA or the SFA?
Auldheid: Before the 2019 AGM, a forensic report from a neutral professional accountant, which will be made available on social media in due course, was asked for. It finds that Rangers failed to report the £2.8 million liability properly in their accounts (a breach of FFP in itself) and that, along with the “proof” of a “liability under discussions” rather than a payable (overdue or not) provided by RFC auditors helped mislead the SFA. However, the report goes on to blame the SFA for failing to meet the requirements of scrutiny required by UEFA FFP rules. The SFA were either complicit or negligent but regardless of either it is behavior that shareholders believe Celtic should be compensated for and reflected in their shareholdings which gives us the right to ask questions, no matter how uncomfortable.
LC: One thing that would need explaining to those outside Scotland is how a club like Rangers/The Rangers could be liquidated, and yet the SFA allows them to retain their claim to honors and trophies of the liquidated club. How is that possible?
Auldheid: Commercial expediency under a 5 Way Agreement that possibly breaches UEFA Article 12, the basis on which the Head of UEFA Club Licensing called the current applicant for a UEFA license from Ibrox a NEW club/company with emphasis on NEW! (8 June 2016 Source at https://www.res12.uk/timeline-2-part-2/ )
did not recognize the discretionary transfer of SFA Membership from
RFC to Sevco/TRFC under the 5 Way Agreement as conferring continuity
which is why TRC had to wait 3 years to be considered eligible by
UEFA to apply for a UEFA License not having been a member of the SFA
for 3 consecutive years from 2012.
UEFA Article 12 is there to protect the integrity of UEFA competitions. The 5 Way Agreement arguably has destroyed the integrity of Scottish football and should be revisited for the good of the game, as should the LNS Decision that legitimizes 10 years of paying Rangers players by unlawful means not open to member clubs and at UK tax payers expense.
LC: Simply put, in the most American of terms, did the SFA, the SPL – and maybe the Old Firm partners at Celtic – think that Rangers were “too big to fail”?
Auldheid: Probably, right up to the bank crash in 2008 when banks ran out of the money loaned to bad debtors. That was the game changer. No industry can afford to lose 50,000 pay-at-the-gate customers, especially when other income from TV, etc., bears no comparison to other European leagues. In an interdependent industry which is football, Rangers going bust threatened the existence of other Scottish clubs, and even if Celtic were financially secure enough to stand the loss, they were at risk from having less opponents of reasonable quality to play if the SPL collapsed.
LC: It seems that the Resolution 12 issue was a contentious one at the 2019 AGM back in November. It appeared that Peter Lawwell tried to sweep it under the rug prior to the meeting. And in the meeting, nothing came of the issue. Lawwell said at the AGM that UEFA was not interested in pursuing licensing inconsistencies for Rangers/The Rangers from 2011. Yet Ian Bankier went on to say at the same meeting that UEFA investigated and found nothing. Many Celtic fans are seeking – and rightfully demanding – an answer. Which of these two versions of the story do you think it might be?
Auldheid: The new Resolution 12 at 2019 AGM to transfer any investigation from SFA jurisdiction to UEFA was rejected by Celtic, even although the SFA had reportedly passed their right to pursue justice to the Court of Arbitration for Sport (CAS) because of a clause in the 5 Way Agreement between The SFA, The SPL, The SFL, Sevco and Rangers FC made on 27 July 2012.
A number of shareholders who supported Resolution 12 are unhappy at the answers given to them at the AGM and have since written to Celtic seeking clarity on top table responses supported by the forensic professional accountant’s report into events during the period when the UEFA License was granted in March/April 2011. Celtic were asked to read and digest then if they agreed the conclusions to pass to the SFA to bring the matter to a close by March if not sooner. The shareholders await a response and the full 18-page report, and 65 pages of appendixes that support it, will be made available online.
LC: So let’s look at the SFA’s involvement in how we are in this situation today. UEFA has asked the SFA to “tighten their ship,” so to speak, regarding the checking of overdue payables to tax authorities. To your knowledge, or to anyone else’s, has the SFA exhibited any evidence that they have done so?
Auldheid: News that the SFA had been asked to “tighten their ship,” specifically with reference to overdue payables to players AND tax authorities, was contained in the UEFA Compliance and Investigation Activity report 2017 to 2019 that can be downloaded from https://www.uefa.com/insideuefa/about-uefa/news/newsid=2637525.html It was not publicized to my knowledge but it does beg the question, how far back does the noncompliance go and it certainly supports the findings of SFA negligence at best in the professional accountant report sent to Celtic by shareholders in early January.
LC: So to see if I understand all this – as an American witnessing this from across the ocean in a sports environment that is somewhat different that what I am accustomed to here – terms like Resolution 12, LNS, and a 5 Way Agreement are somewhat foreign. I would imagine that the best way to ask this question is in three parts. First: How could Peter Lawwell, the CEO of Scotland’s biggest club by awards won on the field and money raised through commercial operations and match play, state that pursing the club’s interests as directed by the club’s supporter/ stakeholders through Resolution 12 is not in the PLC’s interest?
Auldheid: That is a question Peter Lawwell and The Celtic Board have to satisfactorily answer to shareholders and the failure to do so combined with directing shareholder representatives down an SFA path in 2013 that has parked that supposed investigation in a CAS cul de sac, for 18 months, which was the alternative to involving UEFA, only adds to the perception that he/Celtic has/have something to hide.
LC: The second part of the question: How could Lawwell allow the LNS ruling to stand unchallenged after the HMRC victory in the Supreme Court?
Auldheid: The appearance of challenging LNS and being refused by the SFA is contained in a series of letters between the SFA and SPFL released in September 2017 http://cdn.celticfc.net/assets/downloads/SFA_Correspondence.pdf
SFA did recognize that the Craig Whyte court testimony justified
investigating the UEFA 2011 license issue but not LNS. The SFA did
suggest the SPFL present Lord Nimmo Smith with the Tax Tribunal
testimony of Sir David Murray that EBTs were used by Rangers to
secure wage competitive advantage, but it is not clear if this was
followed up along with the details of the unlawful DOS EBTs
kept from LNS scrutiny that had been provided to Eric Riley in 2014
as a member of the SPFL Board.
detail of that saga can be read at
The latter concealment of significant evidence should have overruled any legal advice the SFA sought in 2017 and in any case the LNS Commission was a then SPL-led investigation, so why could the SPFL in 2017 not ignore the SFA and conduct a review? They instigated LNS and if that Commission had been misled by non-disclosure of unlawful EBTs with side letter with related HMRC correspondence surely they could shout “red card, red card” (foul!)
LC: And the third: How could Lawwell claim at the AGM that as Celtic CEO, he had never seen the hugely important change to the rule book that is the 5 Way Agreement. Did he mislead the AGM or is he negligent in his duties to shareholders in not having made sure he had seen this document and had a say in what it said before it become part and parcel of the Scottish game?
Auldheid: Again, that is for Peter Lawwell to explain. It is simply not credible and would be bordering on total negligence not to have been involved, but the 5 Way Agreement final draft was attached to an email from Neil Doncaster dated 26 July 2012 to then SPL Board members including Celtic Director Eric Riley and to Peter Lawwell. No reply or challenge by next day would be taken as agreement, so even if at that late stage the contents of the attachment were not known, simply by not opening it Celtic gave the SPL their approval to its contents.
LC: We in the U.S. are not strangers to controversy in our sports governing bodies and some of our teams. Our list is long: Incidents like the USC student scholarship scandal and the National Football League’s slow response to both drug abuse and spouse abuse among its players (to say nothing of Major League Baseball’s mishandling of the steroids epidemic) come immediately to mind. So far be it from me, an American, to throw stones at glass houses, so to speak. But we like to think that elsewhere – particularly Scotland – sports governing bodies would be held to a higher level of scrutiny by the public, by the media, and most of all by the member clubs and the bodies themselves. Ideally we like to think that these governing bodies, particularly the SFA, live up to the task of honesty and doing what’s best for football. So how, in your opinion, does this all play out for the best outcome? What is your ideal endgame?
Auldheid: Truth followed by reconciliation. The commercial pressures put on the SPL/SFA as a result of Rangers FC dishonesty over ten years from 2000 as result of unlawful use of EBTs and reckless bank borrowing is understandable, but fear of Rangers disappearing off the football landscape and consequent loss of income to the industry gave those wishing to take the place of Rangers a strong negotiating hand, which led to concessions that have all but destroyed the integrity of the sport and the credibility of the SFA as fit and proper to run Scottish football.
Additionally had the degree of dishonesty been known in 2012 then it is doubtful if any form of Rangers could have been allowed to continue in Scottish football at all, so the charges made had to be of lesser seriousness than blatant dishonesty. For example.
The charges against Craig Whyte of bringing the game into disrepute omitted reference to the unpaid wee tax bill of £2.8 million that he undertook to repay.
LNS Commission was premature, and in pursuing registration failures
found Rangers guilty of a lesser breach than acting in bad faith to
fellow member clubs over ten years by paying players by a means other
clubs could not lawfully adopt. The registration failures attracted a
fine of £250,000. What would the sanction for ten years of bad faith
to fellow members been?
UEFA licence issue that caused Resolution 12 and has dragged on since
2013 that has uncovered not just dishonesty in 2011, but ongoing
dishonesty in terms of covering up the true seriousness of Rangers
and The SFA’s behavior over the EBT years.
time has passed, a form of Rangers with 50,000 customers is still in
the game although it is foolish to ignore the risk of repeating the
2012 insolvency posed by their dependency on unsustainable debt
currently standing at £10 million with high litigation costs to
come. So before that happens causing a collapse from which Scottish
football might never recover I believe is time to face the truth and
look at reforming the SFA. These ideas from 2011 stand the test of
Juice sum it all up in the title of their song: