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Judge rules Craig Whyte 'presented false informati
Quote15.04.2013 10:110 people like thisLike
 

Judge rules Craig Whyte 'presented false information' to Ticketus

128929-quality-shot-of-craig-whyte-forme Craig Whyte: The former Rangers owner claimed he suffered a 'substantial injustice'.SNS Group

Former Rangers owner Craig Whyte presented false information to Ticketus regarding his director disqualification, a court has found.

In a judgment delivered at the Chancery Division of the High Court in London earlier this month, it was found that the businessman had failed to disclose the ban to the firm.

Ticketus were awarded damages of £17.7m and expenses of £680,000 in the case after Master Marsh ruled in favour of the company, an investee of Octopus Investments.

Mr Whyte has previously stated that he is appealing the judgment after claiming during the trial that he faced a "substantial injustice" by not being allowed to cross-examine Ticketus witnesses.

In the findings, released to STV on Monday, the Master found that Mr Whyte’s associate Phil Betts had entered into negotiations with Octopus in October 2010, eight months before the takeover of Rangers was completed in May 2011.

Investment manager Ross Bryan held discussions with Mr Whyte over striking a deal for Ibrox season tickets between 2011/12 and 2014/15, which was crucial to the takeover from Sir David Murray.

Master Marsh stated in his judgment that Mr Bryan emailed Mr Whyte on February 28, 2011, asking for his response to a director’s questionnaire, which his company’s investment committee would consider as it had "reservations about the individuals concerned" in the takeover.

Mr Bryan highlighted the "most relevant" parts of the questionnaire being "(a) Have you ever been disqualified as a director? (b) Has a company you were involved with been investigated or inspected by the LSC, FSA or other financial regulatory body?"

Later that day Mr Whyte responded to the email, with the questionnaire response attached, which he said he had not signed as he was "not near a scanner right now". In his response, Mr Whyte stated "no" to the previous disqualification question and "no" to whether he had been involved in a company "accused of any fraud, deception, misfeasance, breach of trust or other misconduct or impropriety".

However, Mr Whyte agreed with the court that he had been disqualified from holding a directorship for seven years in 2000 after being accused of having misapplied assets of two firms. He also admitted having settled a £150,000 claim with liquidators of one of his firms, Vital UK Limited, after being accused of "misfeasance, breach of duty and negligence".

Master Marsh stated: "Ticketus says they were induced to enter into the Ticket Sale Agreements relying upon the representations and, but for the representations Ticketus, would have not entered into those agreements."

Private Eye

He wrote that the ticketing firm was unaware of Mr Whyte’s disqualification and the misfeasance claim until June 2012 when Private Eye obtained and published the transcript of High Court proceedings in relation to it, although it was initially made aware of the order through the BBC Scotland documentary on Mr Whyte that was broadcast in October 2011.

Master Marsh found that Mr Whyte claimed his response to the questionnaire was prepared by his solicitors, while it was also a "travelling" or "rough draft" of his response. The businessman, who acquired Sir David Murray’s 85% stake in Rangers for £1, told the court that it would have been "absurd" for him to mislead Ticketus as "his disqualification was a matter of public record which could have been revealed by a simple search at Companies House. He would have expected due diligence carried out by Ticketus to reveal it."

However, Master Marsh stated that because his director ban had been served by the time negotiations began, it was no longer a matter of public record and "was not in the public domain".

Mr Whyte claimed that the questionnaire did not relate to the final deal as it stated the Ticketus cash would pass through his parent company, The Rangers FC Group Ltd, as opposed to the oldco, which was then called The Rangers Football Club plc. The transaction, which Master Marsh stated "indirectly funded" the takeover, saw the cash go directly to oldco, before it was used to pay off the club’s £18m debt to Lloyds Banking Group.

In his defence, Mr Whyte also stated that Mr Betts put "N/A rather than Yes or No to some of the questions" in his directors questionnaire. The former Rangers owner stated that Ticketus made "no complaint" about this and "therefore suggests that the answers were unimportant".

He argued that Ticketus and Octopus have "dealt with individuals with worse business records than his" and cited "one individual who had a conviction for a criminal offence in the past." The court heard that following the BBC documentary, Mr Bryan and Mr Betts had conversations, although the Ticketus investment manager "did not seem unduly concerned about the position."

Master Marsh did not find "these arguments to be at all persuasive" as the director disqualification was of "real significance in a substantial transaction of this type, particularly given the public profile of a transaction with a football club such as Rangers."

False answer

He stated that the "inescapable conclusion" of his findings was that Mr Whyte’s answer to the Ticketus questionnaire was "false". Master Marsh added: "First, I have concluded that the representations were fraudulent in this case. Secondly, even if that is wrong, it was simply impossible for Ticketus to check the accuracy of the answer to questions" sent to Mr Whyte.

Mr Whyte has a counter-claim against Ticketus, where he alleges that the firm had agreed, in a meeting on May 9, 2011, to "support and assist" him in retaining "and/or recover[ing] control of the ownership and/or management of Rangers" should it be placed into administration.

Master Marsh stated that Mr Whyte claimed "he has lost the opportunity to profit from control of Rangers" and "suffered foreseeable reputational harm" while he believed spearheading "the rescue and retention of control of Rangers would have enhanced his reputation."

But, the Chancery Division Master found that Ticketus deny any meeting took place on the date alleged, while they also reject Mr Whyte’s claim of a warranties regarding his control of Rangers. Master Marsh added: "On this basis alone I do not consider that there is a real prospect of successfully arguing that a collateral warranty was provided."

Mr Whyte claimed that failure to allow his legal team to cross-examine Ticketus witnesses would "cause him substantial injustice" as such a process "might be illuminating". However, Master Marsh stated: "In my judgment, it would not be right to require this claim to go to a full trial when Mr Whyte has no real prospect of success simply to permit him the luxury of cross examining Ticketus’ witnesses in the hope that ‘something will turn up’. I do not consider that there is a real prospect of that happening. Mr Whyte has had a more than adequate period of time in which to prepare his case and the material he has placed before the court is wholly unconvincing."

Mr Whyte has previously confirmed he will be applying to the Chancery Division to give him permission to appeal the judgment. It is unclear whether his legal team has lodged an application to appeal yet.





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