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The Scotsman 04/03/1994
By Hugh Keevins and Audrey Gillan
DAVID SMITH, the man who was brought on to Celtic's board two years ago to transform the financial fortunes of the ailing club, was last night stripped of his executive powers.
The action was taken by the four directors – Kevin Kelly, Tom Grant, James Farrell and Jack McGinn – who were made aware by the bank of the club being ''in peril'' of receivership. Smith stands discredited along with those directors who have been responsible for turning an accumulated profit of 169,000 in 1987 into a loss of unspecified size in 1994.
Celtic's exact indebtedness can only be guessed at but all the indications last night were that the Bank of Scotland had informed the directors, who had earlier been called to a crisis meeting, of staggering figures. The legally binding voting pact, Celtic Nominees Ltd, of which Smith, Michael Kelly, Christopher White, Tom Grant and Kevin Kelly had been signatories, is now in tatters.
Last Friday it had seemed that the board was on the verge of disbandment in the face of various offers for the club. Smith, though, caught everyone on the hop by issuing a three-pronged statement on the club's future. At a hastily convened press conference he said that Celtic's move to Cambuslang was a ''reality'' and that the club would be calling for an extraordinary general meeting at which they would seek approval for the issue of 25,000 new shares. The sum raised, approximately 5million, was to be used to reduce the club's borrowings.
The move to Cambuslang was to have been the forerunner of a move to transform Celtic into a public limited company, creating one board to look after the affairs of the club and another to administer the new complex which was to include a 10,000-seater indoor arena catering for basketball and ice hockey.
As late as yesterday evening, Michael Kelly was still insisting that this scheme had the backing of a merchant bank, Gefinor, in spite of denials from it that any funding had been promised. Kelly maintained that only the naming of the construction company involved in the building of the complex was necessary for the release of 20million of backing.
Smith, who has been told that he cannot communicate with any bank employee on the club's figures, joined the board in 1992 on the casting vote of chairman Kevin Kelly. Hailed as a saviour, the vice-chairman's football plans may have come to grief but his track record in the business world speaks for itself. He was the Scot who led Isoceles in its audacious hostile 2billion takeover of Gateway supermarkets in 1989. Smith, from Brechin, trained as an accountant with Arthur Young in Glasgow and spent a time working on the liquidation of Upper Clyde Shipbuilders.
After an involvement with Apple at the time the Beatles were breaking up, he moved into management consultancy. In February 1992 he was invited to join the board by Michael Kelly and White. He was not a member of the controlling families, but an answer to the demand that a financial and business heavyweight be brought in to oversee the control of the club.
He was the architect of the Celtic Nominees pact which was signed by five of the board members agreeing not to act independently of each other and able to see of Brian Dempsey and Fergus McCann's last bid to take over the club in November 1993.
But for Smith and Christopher White, that piece of paper is now in tatters. Smith last week celebrated, if that is the right word, his second anniversary as a Celtic board member. His status now is in question along with Michael Kelly and White. The three had once been offered £300 for each of their shares by Glasgow businessman Willie Haughey who had sought to take control of the club. Today, the value of their shares is open to conjecture as the final battle for Celtic gets under way.