Glasgow & West Scotland

Craig Whyte 'did not guarantee' investment in Rangers

Craig Whyte arriving at High court in Glasgow Image copyright PA
Image caption Craig Whyte bought Sir David Murray's 85% share in Rangers for £1

Former Rangers owner Craig Whyte did not guarantee to invest in the club in the lead-up to his takeover, his fraud trial has heard.

Ian Shanks, a banker who worked with the club to manage its debt, told the High Court in Glasgow that Mr Whyte said he "intended" to put cash into the club.

Mr Whyte is accused of a fraudulent acquisition of Rangers.

He denies a charge of fraud and another under the Companies Act.

An email was read to the court from March 2011 in which Mr Shanks told his boss at Lloyds Banking Group that he did not want the issue of Mr Whyte's intent to be a "stumbling block" to any agreement.

Mr Shanks said in the email: "If Craig doesn't inject the cash he will be hounded by the fans and not (Sir David) Murray."

In 2011, in the months before the takeover, the club owed Lloyds Banking Group about £23m.

Image copyright PA
Image caption Donald Findlay is defending Craig Whyte at the High Court in Glasgow

Mr Shanks, a relationship director within Lloyds, said the debt had reduced by about £10m since 2009 as the bank worked to "reduce its exposure" with both Rangers and the Murray Group.

Defence QC Donald Findlay suggested it was known there were no guarantees over future spending during the takeover, and that the situation was simply "I will if I can".

The witness agreed.

Letters sent between then-Rangers chief executive Martin Bain and Mr Shanks were also read in court in which Mr Bain discussed the prospect of "reviewing the bank's representation on (Rangers') board", referring to Murray Group directors Mike McGill and Donald Muir.

Mr Shanks said the two men were installed by the major shareholder, Murray Group, as part of a condition with the bank but that Lloyds was not controlling the club.

'Negotiation tactics'

Referring to the letter, Mr Findlay said they were "clearly seen as the bank's men".

Mr Shanks replied: "That's his view."

The court heard that both Mr McGill and Mr Muir were "incentivised" to sell the club.

Asked who was in charge of the sale of Rangers, Mr Shanks said: "The Murray Group. There was strong involvement from the bank to get our debt repaid."

Other email discussions between Mr Shanks and colleagues were read which discussed the potential of removing banking facilities to Rangers and changing the board in the run-up to the May 2011 takeover.

Image copyright PA
Image caption Former Rangers owner Sir David Murray's Murray Group was said to owe an enormous amount to the bank

Mr Findlay asked if this was intended to threaten and put pressure on the board to approve the deal.

Mr Shanks replied: "Leverage", adding that it was "negotiation tactics".

Earlier, the witness had denied applying pressure over the sale.

Mr Shanks said he first became aware of Whyte's offer for the club at the end of 2010.

When asked by Advocate Depute Alex Prentice QC if there was "something of substance" to the bid, the witness agreed.

Bank 'happy with bid'

He said he attended a meeting with Whyte's representatives and was later sent details of a bid that agreed to pay off an £18m loan to Lloyds and restructure other debt.

The bid was later revised twice, but Mr Shanks said the bank was "happy with the final bid, in the context of everything".

Prosecutors allege Whyte pretended to Sir David Murray, and others, that funds were available to make all required payments to acquire a "controlling and majority stake" in the club.

The Crown alleges Whyte had only £4m available from two sources at the time but took out a £24m loan from Ticketus against three years of future season ticket sales.

The court has heard the sale was eventually made to Whyte for £1 but came with obligations to pay an £18m bank debt, a £2.8m "small tax case" bill, £1.7m for stadium repairs, £5m for players and £5m in working capital.

The second charge under the Companies Act centres on the £18m payment between Mr Whyte's Wavetower company and Rangers to clear a bank debt.

The trial before eight men and seven women continues on Wednesday.

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