Murray culpable as club found guilty of non-compliance

The 42-page findings released by the SPL at noon yesterday made no mention of "title-stripping", though, and instead the sole punishment was a £250,000 fine. Lord Nimmo Smith, the Commission chairman, admitted that sum was probably "irrecoverable" because Oldco Rangers – after being sold by Murray to Craig Whyte – was being liquidated. Crucially, though, Nimmo Smith and the two QCs on his Commission, Nicholas Stewart and Charles Flint, concluded that Rangers had gained no significant competitive advantage from using EBTs and that the dozens of players paid via them were still correctly registered and eligible.

There have been more colourful, expressive judicial reports on Rangers in the course of their financial collapse over the past 12 months but Nimmo Smith's findings were still openly critical of Murray's former regime, including the former Rangers company secretary and now SFA president Campbell Ogilvie. The report dispelled a few popular misconceptions. First, it underlined that Rangers effectively being cleared of wrongdoing over EBT use by the First Tier Tax Tribunal was irrelevant to what the Commission was investigating, namely the specific allegation of breaking football rules by failing to disclose "side-letters" detailing EBT payments. Secondly, it dismissed the argument that because those payments were classified as loans they need not be disclosed by the club at all. Neither of those conclusions were what Rangers wished to hear.

But yesterday's verdict disarmed – or infuriated – many of their critics, too. It was clear that there was no attempt by the old Rangers board – individually or collectively – to be dishonest, said the report. The club had gained no unfair competitive advantage by withholding information on the payments. Nor did the failure to properly disclose payments mean the players' registrations were invalid. Hence stripping the club of previous titles, or any other sporting sanction, would be inappropriate. The Commission accepted the previous verdict of the "big tax case", which had slashed Rangers' potential debt to Her Majesty's Revenue & Customs. "Accordingly we proceed on the basis that the EBT arrangements were lawful. Nor is it a breach of SPL or SFA rules for a club to arrange its affairs – within the law – so as to minimise its tax liabilities."

There is no actual punishment at all for Murray or his former board given that club was sold, but the Commission was scathing about how information was withheld from the SFA and SPL, apparently so as not to prejudice the tax advantages of the EBT scheme. The Commission said there was no evidence that disclosing the payments to the football bodies would have made any difference to HMRC's view of EBTs. "The directors of Oldco must bear a heavy responsibility for this. While there is no question of dishonesty, individual or corporate, we nevertheless take the view that the nondisclosure must be regarded as deliberate. Oldco through its senior management decided that such side-letter arrangements should not be disclosed to the football authorities, and the board of directors sanctioned the making of payments under the side-letter arrangements without taking any legal or accountancy advice to justify the non-disclosure. Although the payments in this case were not themselves irregular and were not in breach of SPL or SFA rules, the scale and extent of the proven contraventions of the disclosure rules require a substantial penalty to be imposed.

"Rangers FC did not gain any unfair competitive advantage from the contraventions of the SPL Rules in failing to make proper disclosure of the side-letter arrangements, nor did the non-disclosure have the effect that any of the registered players were ineligible to play and, for this and other reasons, no sporting sanction or penalty should be imposed upon Rangers FC." Nimmo Smith stressed that at no point had the SPL applied pressure to impose any particular sanction for rule-breaking, despite months of hysteria about potential stripping of league titles won by Rangers between 2000 and 2011. The decision to impose a £250,000 fine was the Commission's own.

"We nevertheless take a serious view of a breach of rules intended to promote sporting integrity. Greater financial transparency serves to prevent financial irregularities. There is insufficient evidence before us to enable us to draw any conclusion as to exactly how the senior management of Oldco came to the conclusion that the EBT arrangements did not require to be disclosed to the SPL or the SFA. In our view, the apparent assumption both that the side-letter arrangements were entirely discretionary and that they did not form part of any player's contractual entitlement, was seriously misconceived.

"Over the years, the EBT payments disclosed in Oldco's accounts were very substantial; at their height, during the year to 30 June 2006, they amounted to more than £9m, against £16.7m being that year's figure for wages and salaries. There is no evidence that the Board of Directors of Oldco took any steps to obtain proper external legal or accountancy advice to the Board as to the risks inherent in agreeing to pay players through the EBT arrangements without disclosure to the football authorities. The directors of Oldco must bear a heavy responsibility for this. While there is no question of dishonesty, individual or corporate, we nevertheless take the view that the nondisclosure must be regarded as deliberate, in the sense that a decision was taken that the side-letters need not be or should not be disclosed. No steps were taken to check, even on a hypothetical basis, the validity of that assumption with the SPL or the SFA.

"Given the seriousness, extent and duration of the non-disclosure, we have concluded that nothing less than a substantial financial penalty on Oldco will suffice. Although we are well aware that, as Oldco is in liquidation with an apparently massive deficiency for creditors (even leaving aside a possible reversal of the Tax Tribunal decision on appeal), in practice any fine is likely to be substantially irrecoverable and to the extent that it is recovered the cost will be borne by the creditors of Oldco, we nevertheless think it essential to mark the seriousness of the contraventions with a large financial penalty."

Ogilvie was a witness to the Commission, which heard evidence over three days from January 29. His awareness of, and involvement in, the EBT scheme has dogged his SFA presidency. He told the Commission he had assumed all contributions to the EBTs were made legally and "any relevant football regulations were being complied with". Contributions had not been discussed in detail at board meetings and the EBT scheme did not fall within his remit at the club, Ogilvie claimed. But Nimmo Smith did not exonerate him. "It should be noted that Mr Ogilvie was a member of the board of directors who approved the statutory accounts of Oldco which disclosed very substantial payments made under the EBT arrangements."

It had been widely suggested that failure to disclose all payments to a player would mean he was incorrectly registered, potentially invalidating dozens or potentially hundreds of Rangers results. But the SFA head of registrations, Sandy Bryson, gave evidence to the hearing which clarified that any player, once registered with the SFA, remained so until that registration was revoked. Even if a player continued to play while payments to him were undisclosed, his registration was not regarded as invalid.

Rod McKenzie, of SPL solicitors Harper Macleod, gave evidence in which he said the SPL rules had been "understood to mean" that if a necessary document was not lodged then the consequence was that a condition of registration was broken and the player automatically became ineligible. But according to the findings there was "scope for a different construction of the rule" and McKenzie accepted that no provision of the rules enabled the board of the SPL retrospectively to terminate the registration of the player. The Commission ruled that the Rangers players' registrations remained valid. "This is an important finding, as it means that there was no instance shown of Rangers FC fielding an ineligible player."

There was no further penalty on Oldco for breaking an SPL rule by failing to comply with requests for information and documents in the early stages of the SPL's investigation. Neither administrators Duff & Phelps nor solicitors Biggart Baillie quickly complied when contacted by the SPL's solicitors. It took three months for all the information to be recovered, with much of it appearing on a BBC Scotland documentary before the SPL investigating team had seen it.

"Failure to respond timeously to legitimate requests for the provision of information is a serious breach of the rules. We have decided, however, without wishing to detract from the gravity of the breach, that no separate financial penalty should be imposed on Oldco in this regard. Instead, we shall impose an admonition."