Rangers' finances in perilous state at time of Whyte's takeover, court told
Rangers Football Club was in a "pretty perilous" financial state when it was taken over by Craig Whyte, a court has been told.
Jurors heard from former managers Walter Smith and Ally McCoist during the first day of evidence in the trial of the former Rangers owner.
Mr Smith (69) told the High Court in Glasgow yesterday about his first meeting with Whyte, who is accused of acquiring the club fraudulently in May 2011. The ex-manager, who was in charge of the team between 1991 and 1998, and then again from 2007 until 2011, said he had told Whyte it required investment and a "level of freshness".
Mr Smith told the court that, at the time, he was aware of a tax case relating to the use of employee benefit trusts (EBT) at Rangers but was not directly involved. He said he was also aware of an overdraft the club had, which he agreed was in the region of £18 million when he left, just days after Whyte took over.
Donald Findlay QC, representing Whyte, asked: "The finances were in a pretty perilous state it would seem, was that your impression?" "Yes," Mr Smith said. He agreed with Mr Findlay's assertion the "future was not exactly bright at that time in terms of the quality of the team" and there were "real problems" in getting the squad to a level that allowed it to compete with rivals Celtic.
The jury of eight men and seven women later heard from his successor Mr McCoist (54). Under cross-examination from Mr Findlay, Mr McCoist said he could not be sure exactly when he had signed his contract to become Rangers manager but confirmed no discussions had taken place with Whyte about the terms of that contract despite him inheriting it as the new owner.
Whyte (46) denies two charges relating to the purchase, one of fraud and another under the Companies Act. It is alleged he pretended to then-Rangers owner Sir David Murray, and others, that funds were available to make all required payments to acquire a "controlling and majority stake'' in the club - including clearing an £18m bank debt, £2.8m for the 'small tax case' liability, a £1.7m health-and-safety liability and £5m for the playing squad.
The Crown alleges Mr 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 "which was held subject to an agreement or agreements being entered into between the club and Ticketus after said acquisition''.
The second charge under the Companies Act centres on the £18m payment between Mr Whyte's Wavetower company and Rangers to clear a Bank of Scotland debt.