Judge orders report on Duff & Phelps Rangers role
- 22 June 2012
- From the section Glasgow & West Scotland
Rangers administrators Duff and Phelps have been ordered to prove there is no conflict of interest over their role.
The move, ordered by Lord Hodge at the Court of Session in Edinburgh, comes after a recent BBC documentary raised concerns about the issue.
Lord Hodge said he took no view about the BBC programme.
But he said Duff and Phelps should produce a report showing they had obtained and acted on legal advice on the question of conflict of interest.
Rangers was forced into administration by HM Revenue and Customs (HMRC) on 14 February over non-payment of tax totalling about £14m.
Craig Whyte, who bought the club from Sir David Murray last year, was successful in having his nominated firm, Duff and Phelps, appointed.
Following a hearing at the Court of Session, presided over by Lord Hodge, David Whitehouse and Paul Clark were appointed as joint administrators of the club.
They have since negotiated a sale of the club's assets to a consortium led by Charles Green for £5.5m after creditors rejected an agreement which would have seen Rangers repay pennies in the pound for estimated debts of about £134m.
The old company is now set to be wound up by HMRC's preferred liquidators BDO.
Mr Green has since formed a new club and is attempting to get access to the Scottish Premier League.
Last month, BBC Scotland broadcast the documentary - Rangers: The Men Who Sold The Jerseys.
The programme raised questions over a possible conflict of interest for Rangers' administrators.
David Grier, a senior partner from Duff and Phelps, had said he was unaware until August 2011 that London finance firm Ticketus had helped fund Mr Whyte's purchase of the club.
The BBC programme broadcast emails which appeared to show that he knew a deal was under way in April, before Mr Whyte's takeover was complete.
Mr Grier has denied knowing that Ticketus were funding the purchase, and his PR team has claimed he was only aware of a much smaller arrangement of around £5m with the finance firm to fund a working capital shortfall.
He said "the false allegations made by the BBC" were now in the hands of Duff and Phelps solicitors.
Duff and Phelps issued a further statement after Lord Hodge's ruling.
David Whitehouse, joint administrator, said: "We welcome the decision by Lord Hodge today.
"Producing this report for Lord Hodge will give us an opportunity to demonstrate that the allegation of conflict of interest by the BBC was wrong and grossly irresponsible.
"We have a well-established conflict checking procedure which was fully adhered to and there was no reason for us not to accept the role as administrators.
"Since the BBC documentary we have met Mr Roger Isaacs who appeared on the programme and was asked for his professional opinion as a forensic accountant.
"Mr Isaacs informed us that he was not shown relevant documentation by the BBC and now, having reviewed the documentation, has told us that he is satisfied that our firm did not have knowledge of Ticketus funding being used to acquire Rangers in 2011, prior to the transaction being completed."
BBC Scotland has said it stands by the claims made in its programme.
In a letter seen by the BBC from Roger Isaacs to Duff and Phelps following a meeting between the two parties, Mr Isaacs states: "At the meeting you made various representations and offered to send me further documents to support them.
"I have now had a chance to consider these and you should please be aware that I have not been persuaded that Duff and Phelps had no knowledge of the Ticketus deal to fund the purchase of the bank debt."
Mr Isaacs adds: "My view remains, on the basis of the information I have, that Duff and Phelps appear not to have been able to fulfil the necessary requirements of independence to allow them to act as administrators"
The issue over any possible conflict of interest was raised by Lord Hodge at a hearing about the administration process on Friday.
The judge said he took no view about what the BBC had said, but wanted to know whether Duff and Phelps had obtained and acted on legal advice on the question of conflict of interest.
Lord Hodge said he had done nothing until now because he did not want to hinder the process of Rangers seeking a creditors voluntary agreement (CVA).
But, he told the accountants' lawyers: "There is considerable public interest in this jurisdiction in relation to the administration."
Lord Hodge added: "I do not want the administration to come to an end without having received that report."
The report demanded by Lord Hodge is expected to be ready in three weeks and a further court hearing is likely to be arranged after that.