Johnston claims Sir David Murray allowed his ego to run riot at Rangers and made a “panicked” decision to sell the club as it teetered on the brink of ruin
Sir David Murray allowed his ego to run riot at Rangers, then made a “panicked” decision to sell the club as it teetered on the brink of ruin.
That’s the explosive verdict of former Ibrox chairman Alastair Johnston on Murray’s Ibrox “dictatorship” given in an exclusive interview with Business7.
In an unprecedented and extraordinarily detailed attack on Murray’s stewardship of the club, Johnston claims the tycoon was warned extensively about the dangers of selling to Craig Whyte.
He says Murray carried on with the deal because of “significant pressure” from the club’s bankers.
And he says a senior boss at the bank told him that Lloyds, who were owed £700million by the rest of Murray’s empire, had “incentivised” Murray to hand Rangers to Whyte.
Johnston, 63, once a close ally of Murray, now no longer speaks to him.
Johnston said: “Chairmen and chief executives are often the subject of fans’ ire for selling players, or allowing guys to leave because of unaffordable wage demands and so on. On the the other hand, you take Sir David Murray.
“He got too immersed in the fans’ perception of himself – as well as his own ego and invincibility, probably.
“In the last few years he lost his business discipline, then panicked when he saw Armageddon coming.”
Murray, who famously boasted in 2000 that Rangers would spend £10 for every £5 spent by Celtic, sold Rangers to Whyte a year ago for £1.
Our sister publication, the Daily Record has told how, before the sale, a private investigator’s report on Whyte’s business record was passed to the Ibrox board.
And Johnston, who was ousted by Whyte soon after his takeover, spoke at length about how closely Murray and his Murray Group of businesses were made aware of what the detective had discovered.
His allegations are highly significant, given Murray’s later insistence that he had been “duped” by Whyte.
The SFA disciplinary panel who slapped a transfer embargo on Rangers criticised Johnston, and other men on the Ibrox board, for not doing enough to stop the sale.
But Johnston said he and his colleagues expressed their concerns about Whyte “very vocally”. And he insisted there was only one man with the power to keep him out – Murray.
Johnston said of the detective’s report: “It was made available to us and I did see it, like I saw a lot of other information and data that was presented to us or leaked.
“But all that information was shared with the Murray Group, because there wasn’t much we could do about it other than jump up and down and scream and shout, which is what we did.
“In terms of something to do about it – that is, not consummate the transaction for these reasons – then David Murray really looks like the only person who could actually have done something.”
Johnston added: “There were a lot of inconsistencies in Whyte’s personal profile – where he lived, who he was registered with, anonymous addresses and so on.
“Liberty Capital, the ultimate guarantor of his so-called arrangement with Rangers, was formed out of a warehouse in industrial Miami where nobody had ever heard of him or the company.
“So we had a lot of due diligence and checked up on him, but that information was fed to the Murray group.”
Johnston, a Glasgow-born expert in sports accountancy, joined the Ibrox board in 2004 and became chairman in 2009.
By then, the credit crunch had hit and the fallout was still having a massive effect.
And he says Murray was under “significant pressure” from the bank, who wanted a more independent board, to get out of his day-to-day running of the club.
He said: “The bank, rightly or wrongly, thought David’s presence was so omnipotent. They thought there was really just one man, and the ruling by dictatorship had not worked.”
By this time, Rangers’ bankers were Lloyds, who took over the club’s previous bank, Bank of Scotland, at the height of the financial crisis.
Johnston said Murray had enjoyed a “very good relationship” with Bank of Scotland.
But he added that it was “probably too good”, and the bank had loaned miillions to Rangers “too easily” without proper checks and balances.
He went on: “When Lloyds came, I think they knew to some extent there was a lot of toxic debt. But I don’t think they quite realised the extent of it.
“They realised the governance and operations needed tidying up.”
When Johnston took over as chairman, he was “shocked” to find that all discussions involving the bank were dealt with personally by Murray and the Edinburgh team who helped run the rest of his empire.
He said: “Nobody at Rangers Football Club knew the bank. The bank didn’t deal with Rangers.
“It was totally incongruous in my experience that a bank that loaned a company £40million had no history in dealing with the chief executive or finance director of that company.”
In 2009, two new men were appointed to the Rangers board.
One was Murray’s right-hand man, Mike McGill. The other, financial strategist Donald Muir, was the eyes and ears of Lloyds.
Muir’s arrival was seen as a sign that Murray’s hold over the club was weakening.
Johnston said it was a condition of the bank’s renewal of the club’s credit facility.
He added: “Within two years of my chairmanship with an independent board, we reduced the debt from about £35million to £18million.
“The bank, believe it or not, at that time were very happy with us. Our arguments with them were more about reducing the debt by another £2 million to £16 million, in order for them to be totally satisfied it was a sustainable working debt.”
Then, early last year, the bank’s position appeared to change – for reasons yet to become clear.
Johnston said: “They originally didn’t believe in Craig Whyte. That’s the irony. They were as wary as we were about the fact he was one of the ‘here today, gone tomorrow’ types that didn’t have the money.
“The first time they were invited to meet with Whyte in London, he didn’t show up.
“It wasn’t until a couple of months before the transaction concluded that the bank actually started to believe the deal might be for real.
“David Murray and Craig Whyte got involved around October 2010. It wasn’t until around March 2011 when the bank turned on us very badly.
“They started talking much more seriously about Whyte. This was within four or five weeks of the transaction being concluded.
“They basically saw a chance to get all £18million back in one fell swoop.”
It was at this time, Johnston claims, that a senior bank executive told him Murray had been “incentivised” to seal the Whyte deal.
He said: “I pointed out to the banker that I felt David Murray may not want to sell.
“The reply, and this is a very key statement, was, ‘Alastair, David Murray is heavily incentivised to get rid of Rangers Football Club. Let me leave it at that.’
“I understood that to mean that certain things would then be triggered in his £700million relationship between Murray Group and the bank.”
Johnston said Murray first mentioned Whyte’s name to him in November 2010.
He recalled: “David Murray rang me on my mobile and said, ‘I think we’ve got someone and this is a really good one. Unlike any others before, he’s spent a lot up front.
“‘He’s hired some high-powered lawyers and spent some money on them, and he’s hired a high-powered PR team. He’s spent a lot of money on it so he must be serious.’”
But the sale turned out to be, as Murray now calls it, a “huge mistake”.
Johnston said: “One of the big giveaways about Craig Whyte was the fact he wasn’t worried about working capital. He didn’t care about it.
“He was much more concerned about the contracts.
“His modus operandi was, ‘How many of them can we get out of, how many of them can we deny paying until at least some of them will drop by the wayside.’”
In another withering criticism of Murray, Johnston added: “Whyte didn’t put a cent into the club, as we all know.
“That’s why I was jumping up and down and telling anyone who would listen. But there were only some people who would listen.”
Murray last night declined to respond to Johnston’s attacks. He said: “I will keep my counsel on this for a future date.”
Lloyds refused to explain why they were so keen to see Rangers sold, or to respond to the allegation that Murray was “incentivised” to do the deal.
They said: “The deal was a matter between Craig Whyte and Sir David Murray.
“The bank’s involvement was in relation to the debt owed by Rangers FC, which was repaid in full, in accordance with all required regulatory checks.”