Rangers paying Bribes!

Why would Rangers pay players of other clubs?

Following last weeks blog about Rangers paying Loan players Gregory Vignal and Federico Nieto I thought it only right to do a follow up this week.

The reason for this is I was contacted by someone who has vast experience and knowledge in the field of employing 3rd party staff which in effect Loan players are and he explained that Rangers paying Loan players they could be seen as Bribery.




We will use Gregory Vignal as an example as he was employed in the UK at the time.


Now lets look at why he would have received a payment from Rangers.

Potential Scenarios for the Payment

1. Signing-on Fee
2. Performance Bonuses
3. Bribery to agree to move
4. AWR style Employee Benefit (Benefit Being the EBT Loan)

1. Signing-on Fee: Such signing on fee's are often used in business transactions however, they should be declared as a term of the agreement and referenced in the contract between LFC and RFC. This would normally be a one-off payment to LFC who would invoice RFC for such a payment then pass this onto their employee. If this was to be paid from RFC directly to the employee, this would be a side contract with Vignal. Rangers have paid the employee directly but, have denied any EBT as contractual payments to staff so this is unlikely to be the reason.                   

                  
2. Performance Bonus: Identical to the above. Performance bonus can take place in very rare occasion's, I have seen them for before added for expedition of work against severe deadlines though detailed as contractual terms with the company offering the service. In this case Liverpool may have decided that the match participation bonus (goal bonus, etc..) was not going to be paid by them but by Rangers instead under the terms of the contract this may well have been correct. As the contract is held by Liverpool they should have invoiced Rangers for such a payment. If this was to be paid from RFC directly to the employee, this would be a side contract with Vignal. Rangers have paid the employee directly but, have denied any EBT as contractual payments to staff so this is unlikely to be the reason

3. Bribery to Agree to Move Rangers make a loan offer to Liverpool and Liverpool have said ok but, "let's see if Vignal agrees to the move". Vignal tells Rangers that he is opposed to the move and either Vignal or Rangers make the £173K offer to agree the deal without, Liverpool involved in this transaction (therefore not a signing bonus). As Vignal is the KEY decision maker of the award in this scenario, this would be seen as case worthy of merit for the improper transaction review, if true.

Reviewing the Bribery Scenario against the UK law.
http://www.justice.gov.uk/downloads/legislation/bribery-act-2010-guidance.pdf

General bribery offences.

1 Offences of bribing another person
(1) A person (“P”) is guilty of an offence if either of the following cases applies.
(2) Case 1 is where—

• (a) P offers, promises or gives a financial or other advantage to another

person, and

• (b) P intends the advantage—
• (i) to induce a person to perform improperly a relevant function or

activity, or

• (ii) to reward a person for the improper performance of such a

function or activity.

(3) Case 2 is where—
(a) P offers, promises or gives a financial or other advantage to another
person, and
(b) P knows or believes that the acceptance of the advantage would itself
constitute the improper performance of a relevant function or activity.

• (4) In case 1 it does not matter whether the person to whom the advantage is

offered, promised or given is the same person as the person who is to perform,
or has performed, the function or activity concerned.

• 2 (a): Promise of Financial advantage - See payment of £173K to Vignal directly and non-contractually
• 2 (b): Advantage in (a) to induce improper performance - Agreement to loan move as a result of 2 (a)
• 4: Bribery case even if the it is the person who will perform the service. - Gregory Vignal as Key decision maker and person carrying out the service.
• 
  

4. AWR (Agency Workers Regulations) style Employee Benefit (Benefit Being the EBT Loan): AWR is a government legislation which was put into effect in January 2012 to safeguard a sub-contracted / temp employee's rights. One of those rights includes the right to the same conditions as any direct employee of the company after completing 12 weeks of work on site. This rule was not in place in 2004 and 2005 when Vignal was at Rangers. If it was, Vignal could have been eligible for all benefits available to Rangers employee's and I believe this would include EBTs (only after the completion of 12 weeks of service) even though he was a Liverpool employee. I have also seen companies pass over their benefits to sub-contracted employee's as a term of the contract between two companies. EBT laws may supersede this style of agreement but I am unsure.  Rangers have offered an EBT, as Vignal was eligible to receive employee benefits from Rangers.

Below explains why it is highly unlikely that Liverpool would have allowed Gregory Vignal to accept payment from any other club, ruling out the ability of Rangers giving the same benefits that RFC employees had to any Loan player.

http://www.hmrc.gov.uk/manuals/nimmanual/NIM16353.htm 

http://www.hmrc.gov.uk/manuals/nimmanual/NIM16357.htm 

NIM16356 - Class 1A National Insurance contributions: Special Class 1A NICs cases: Third party benefits: Provision of benefits not arranged or facilitated by the employer: Payments or benefits provided except non- cash vouchers

Section 10ZA SSCBA 1992

Where the employer has neither arranged nor facilitated an award made by a third party, the class of NICs due depends on the type of award made. See NIM16353 for guidance about the meaning of “arranged” or “facilitated”. 

Where the award involves the provision of an item on which Class 1A NICs are due, section 10ZA SSCBA 92 transfers liability for Class 1A NICs to the third party. 

Where the award involves the provision of an item on which Class 1 NICs are due, the liability to pay those Class 1 NICs remains with the employer, even though the employer may not have been involved. The one exception to this rule is non-cash vouchers, see NIM16357. 

If an award by a third party, the provision of which, has not been arranged or facilitated by the employer, is made up of cash or cash vouchers, Class 1 NICs are due. Class 1 NICs remains the liability of the recipient’s employer. The third party should advise the employer of the award and its value should be added to any other earnings received by the earner in the relevant earnings period.

The above statement means that (in the case of Vignal) the payment of any cash direct to him from Rangers has to be disclosed by Rangers to Liverpool and Liverpool ARE RESPONSIBLE for paying tax. 

I wonder if this was disclosed to LFC? If not, this would mean that Rangers are at least guilty of new twist on the HMRC EBT case (assuming this wasn't a bribery pre-contract agreement). 

I doubt it was disclosed to Liverpool as they don't want to be on the hook for additional taxation. 

So what is our conclusion?

1. Signing on fee? Gregory Vignal wouldn't have received a signing on fee as he didn't sign for Rangers. If he did receive a payment for playing for Rangers, it should have came from Liverpool who would have invoiced Rangers for his services then forwarded the payment to Vignal.

2. Performance Bonus? Similar to above. The payment would have been made by Liverpool upon receipt of payment from Rangers.

3. Bribery? Which is explained above and is highly possible that this is the case. 

4. AWR? Liverpool would have to pay Class 1 NIC on Rangers payment, which is highly unlikely. Also in 2004/5 Agency Workers Regulations weren't in place, it was IR35 regulation which only covers self-employment. Knowing that Vignal wasn't self-employed IR35 doesn't effect him.



Having look at all the possibilities of why Gregory Vignal received payment via a Employee Benefit Trust I can only draw to one conclusion, Bribery.

And the last word will go to the Gentleman who helped with this piece.

I believe the Vignal and Nieto cases can be drawn on two scenario's.

Bribery to sign for Rangers and / or they were both eligible for the same benefits as RFC employee's including EBTs

The latter case in real world terms normally allows things like stock purchases at employee rates, holiday entitlements etc...

Even if there are no other scenarios bar bribery, it can be real tricky to prove it has even taken place in my experience even when there is large amounts of evidence. I work as a project manager so I don't have the legal experience to make definitive statements on this but, I would have flagged a scenario like this immediately to my company's compliance team to give guidance on how to proceed. I worked on a project abroad last year where bribery is rife and the UK law even covers foreign transactions so I have flagged many cases to our compliance team (perhaps more blatant) in the past year and had to drop out of certain contract due to potential bribery situations.