When is a regulator not a regulator?

Okay let’s start with a conundrum:

 

How can Rangers Charity Foundation state on their website that “it is regrettable that the Foundation was never party to the premise or nature of the original complaints made to OSCR” yet Tinfoil Graham can state that the club are well aware of my accusations and my identity?  Now I know that Tinfoil has less credibility than even Snakeoil Charlie but still…

 

It is also strange that the Foundation has forgotten the investigation by Third Sector magazine from March 2012 as well as 8 telephone conversations between myself and staff there (including Connal Cochrane and Jacqueline Gourlay) not to mention copious e-mails from me to them in which the allegations were clearly and explicitly set out as far back as March 2012.  Do Mr Cochrane or Carol Patton not recall demanding to know my real identity and address way back then (a curious trait, but rather common amongst Sevconians I have found)?

 

Surely not another untruth to emerge from Ibrox?

 

It is also surely ironic that on the day that OSCR publish a report into a charity explicitly criticising the links between and the control held over the charity by the football club, the CEO of an entirely new football club should come out with a statement on the matter postulating that it vindicated his club and charity?

 

But, to more serious matters…

 

OSCR has finally published its long-awaited report into the Rangers Charity Foundation; an 11-page, 4,000 word report which can be condensed into 4 meaningful pages.  Or, better still, condensed to an executive summary which it is worth reproducing here:

 

  • OSCR has concluded its inquiry into the actions of Rangers Charity Foundation (‘the Charity’) in agreeing to forego most of its share of the proceeds of a fundraising event in favour of The Rangers Football Club plc (in Administration).
  • OSCR found that the Charity’s decision-making process which allowed important decisions to be made by one trustee acting alone was in breach of trustees’ duties and constituted misconduct on the part of the charity trustees as a whole.
  • OSCR also found that the way the decision regarding the fundraising event was taken did not comply with the requirements of the Charity’s Trust Deed.
  • OSCR identified that issues of conflict of interest inherent in the Charity’s structure had not been appropriately dealt with.
  • OSCR found that although the decision was a breach of legal duties, it was made in good faith and in the interests of the charity given the risk that otherwise the fundraising event might not have taken place.
  • Having looked carefully at the whole situation, OSCR has not found that the ongoing risks to charitable assets or to the reputation of the sector justify OSCR taking action against any of the trustees.
  • The inquiry has taken some time to complete, partly due to the difficulty of obtaining information from some of the parties involved in a complex and fluid situation.
  • This inquiry identified a number of learning points relevant to the wider charitable sector.

 

So let us be absolutely crystal clear: the Scottish charity regulator found a conflict of interest and none of the trustee duties relating to conflicts of interest set out in charity law were recognised or managed appropriately.  Not only that but they also found that the way in which the decision on the proceeds of the fundraising event was taken breached charity trustee duties and contravened the requirements of the charity’s governing document.

 

How did the charity fall foul of OSCR?  Let me remind you that at the time The Rangers Football Club went into liquidation, the Rangers Charity Foundation had three trustees:

 

  • Craig Whyte
  • Martin Bain
  • Jacqueline Gourlay

 

Or, to use OSCR’s terminology:

 

  • Trustee A
  • Trustee B
  • Trustee C

 

However, no trustee meetings had been held since May 2011 and Ms Gourlay and Mr Whyte (alongside Rangers FC staff) had conspired to remove Mr Bain as a trustee from at least October 2011.  According to the Rangers Charity Foundation, Mr Whyte was “removed” as a Trustee on 13 May 2012 although OSCR reports this as:

 

“Trustee A was removed as a director of The Rangers Football Club plc with effect from 1 June 2012. This ended Trustee A’s connection with the Charity.”

 

Eagle-eyed readers will note that – unlike Mr Whyte – Mr Bain’s removal as Chief Executive of Rangers Football Club and the termination of Ms Gourlay’s employment with Rangers Football Club in order to TUPE to Sevco appear to not have ended their connection with the charity (nor does Ms Gourlay’s departure from Sevco).

 

The common theme of course is that all three trustees of Rangers Charity Foundation were employees or directors of Rangers Football Club at one time.

 

So we have a situation where one trustee – Ms Gourlay – was still in post on 15 February 2012 and this sole trustee was also the only effective trustee and had been such since May 2011.

 

Now would it interest you to know that Ms Gourlay worked in the Finance Department at Rangers Football Club?  Would it also interest you to know that Ms Gourlay was also on a hitlist for the sack produced by Mr Whyte for the benefit of the Administrators if we are to believe the revelations of @CharlotteFakes?

 

Would it also interest you to know that Ms Gourlay – and Ms Gourlay alone – took the decision to assign the rights for the AC Milan game to the football club?  In other words, Ms Gourlay – an employee of Rangers FC, under pressure and fearing for her job – assigned over to The Rangers Football Club plc the rights to all profits less 10% without actually seeking the prior agreement of the other Trustees.  Conflict of interest?  You bet your arse it is!

 

Strangely, OSCR state that:

 

“Trustee B [Bain] subsequently advised OSCR that Trustee C [Gourlay] had afforded the utmost scrutiny and diligence to the Charity’s affairs and that Trustee C had acted on behalf of Trustee B throughout the process.”

Yes, that’s right: Trustee B who was being forcibly removed by Trustee C assured OSCR that Trustee C was acting on his behalf.  Silly me, I thought Trustees acted on behalf of the charity and not each other!

 

Regular readers will also spot the inconsistencies here because Ms Gourlay wrote to OSCR on 5 March 2012 asserting that she had emailed “fellow trustees advising them of [the assignation] and other administrative matters on 27 February.”  Ms Gourlay went on to state that only Mr Bain responded and he was in agreement.

 

Well that’s alright then isn’t it?  Two trustees agreed.  Case closed.

 

Except it isn’t because MS Gourlay also stated quite clearly – and this is included within the OSCR report as well as previous posts on this blog – that the decision to assign the rights was taken on or about 21 February 2012.  So our heavily-conflicted (where have we heard that phrase before?) trustee assigned rights on 21 February but did not seek to inform her fellow trustees until 27 February.

 

I am sorry but the notion that a heavily-conflicted trustee is acting on behalf of anyone else is sheer and utter rubbish.  Shove in the evidence above and it is even more preposterous.

 

Of course, Sevconians are jumping up and down with joy that OSCR has seen fit not to take further action and have stated that:

 

“although the decision was a breach of legal duties, it was made in good faith and in the interests of the charity given the risk that otherwise the fundraising event might not have taken place.”

 

For the average Sevconian bigot such as Tinfoil, this is a clear and unambiguous vindication of the Foundation and Rangers Football Club.

 

It is not a vindication of any sort.  It is the equivalent of a crime passionnel where the perpetrator has been let off because – despite clearly committing a crime – there have been extenuating circumstances.  This finding by OSCR is solely based upon evidence produced by Ms Gourlay that, in her view (ie without seeking any legal opinion or advice):

 

  • unless the Administrators had control of the income from the event they were unlikely to agree to the event going ahead;
  • assigning the Charity’s interest in the event to The Rangers Football Club plc (in Administration) would ensure the Administrators would recover costs and satisfy their duty to creditors to derive income from it;
  • the event would still be able to take place and the Charity would still receive some benefit.

 

Quite what the second bullet point had to do with the trustee of a charity is beyond me.  I would have thought that Duff & Phelps were perfectly capable (no laughing, please) of recovering costs without the assistance of the charity.  After all, all income and expenditure was going to be funnelled through the Rangers finance department which was controlled by Duff & Phelps and managed by a certain Ms Gourlay (any relation?)

 

I have posted already that there is a legal block to this little arrangement which any 1st year lawyer could have picked up:  the 1986 Insolvency Act (as amended by the 2002 Enterprise Act) which explicitly states:

 

“A payment may not be made by way of distribution under this paragraph to a creditor of the company who is neither secured nor preferential unless the court gives permission.” [Schedule B1, Paragraph 65(3)]

 

So what Ms Gourlay and OSCR have blissfully ignored is a very basic precept that would have required a visit to the courts to rectify; there was no absolutely way that Duff & Phelps could ever have distributed funding to the charity.  Duff & Phelps knew this and I strongly suspect that Ms Gourlay (as a qualified accountant) knew it too.

 

And let us be clear here, the Rangers Charity Foundation did not receive anything in relation to that match because it is writ large in the charity’s own accounts that the £25,000 management charge was written off against funds which the charity owed to the football club.

 

Nor did it actually receive the 10% profit from the AC Milan game because that is shown as outstanding in the charity’s accounts and no creditor claim was lodged by the charity with the administrators or the liquidators.

 

Those funds have therefore gone forever and will not be recovered because of the decision of one person and one person alone who also happened to be a heavily-conflicted employee of The Rangers Football Club plc (In Administration) who ultimately were the sole beneficiaries of what was meant to be a charity game.

 

That is a scandal and so is the decision by the charity regulator to ignore this and lean on “lessons for the sector” as if this is some kind of widespread but mild misbehaviour by errant children.  This is the misappropriation of over £200,000 from a charity to a private sector business which benefitted no one but the Joint Administrators.

 

Let me finish with another conundrum:

 

If I was the highly-paid CEO of a charity and decided that the charity might fold without me at the helm to bring in income, would I be justified in helping myself to a self-awarded bonus?

 

There is your precedent; OSCR have effectively stated that theft from a charity is okay provided that something goes to charity.