Bankrupt who paid £1 for BHS had his ‘hand in the till‘
The serial bankrupt who took over BHS enriched himself to the tune of millions of pounds during his disastrous and shortlived stewardship, MPs conclude today.
Dominic Chappell faces accusations of having ‘his hands in the till’ during his tenure and that he, friends and directors at Retail Acquisitions Limited took money out of the firm for their ‘personal gain as it crumbled around them’.
The scathing report, published today, says: ‘RAL Board members exploited BHS for their personal gain and Dominic Chappell was the worst culprit. The suspicions of BHS managers that RAL were more intent on taking money from the business than investing in it were well founded.’
The report points to £11million charged to BHS in the form of salaries and fees.
Mr Chappell, 49, controlled the doomed department store chain via his Retail Acquisitions company for just 14 months before it collapsed into administration in April.
The select committee report describes him as a ‘wholly unsuitable purchaser’ who ‘personally enriched himself’ by taking out £4.1million. This included £2.6million in salary and fees as well as a £1.5million interest free loan, secured against his father’s house. None of these sums has been repaid.
In a Newsnight interview earlier this month, Mr Chappell declared the £2.6million was a ‘drip in the ocean’ but the report attacks his comment as ‘an insult to the employees and pensioners of BHS that he let down.’
It lays bare the money that Mr Chappell and his associates took out of the high street chain including his attempt to buy flights for a family holiday in December last year on the company travel budget.
he also asked for his salary to be paid early to pay for the trip. The payment was granted on the basis of ‘hardship’.
The report goes on to say that Mr Chappell and his friends and business associates were ‘enticed by the personal rewards on offer without having to take any personal risks.
‘even when arranging loans for their struggling company on extraordinary terms they could not resist taking substantial cuts for themselves.’
During the process of trying to secure funding to buy BHS last year, Mr Chappell attempted to undertake a series of property deals involving assets he expected to acquire from BHS and Sir Philip Green’s family companies.
MPs say this ‘in no way demonstrated Dominic Chappell’s credibility as a purchaser of BHS. At best it demonstrated his capability as a would-be estate agent.’
Mr Chappell, who claims to be a former racing driver, also took a personal loan from BHS of £90,000 which was signed off by fellow director and finance boss Aidan Treacy in January – just three months before the doomed chain was put into administration.
The report says: ‘The RAL board’s plans included removing the profitable assets from BHS and placing them directly in the RAL ownership, and requiring BHS to use central services, such as property advice, provided by RAL.’ Mr Chappell’s Retail Acquisitions had also sought a £500,000 ‘success fee’ for successfully restructuring the firm when it was in crisis in a process called a CVA. The report deems this ‘essentially tantamount to paying the directors a fee for having left BHS on the verge of insolvency.’ Mr Treacy is reported to have also wanted a £250,000 bonus for the CVA.
The damning report concludes: ‘In putting his “home team” first, [Chappell] and his fellow directors were personally enriched as BHS failed around them. In effect, he had his hands in the till.’
Iain Wright MP, chairman of the business, innovation and skills select committee that jointly led the investigation with the work and pensions select committee, said: ‘Dominic Chappell cannot escape responsibility. he believed this was an opportunity to land himself in the big league but he was so far out of his depth he was paddling in the middle of the Atlantic. he was blinded by greed.’ he added: ‘Dominic Chappell wasn’t up to the job. he didn’t even see this as a job involving retail. he saw it as a property deal that he could get rich from.’
Frank Field, Labour chairman of the pensions committee, has previously described Mr Chappell as a ‘Walter Mitty’ – a reference to the fictional character who lived in a fantasy world.
Richard Graham MP, a fellow member of the pensions committee added: ‘he is a curious mixture of over-confident buccaneer and naive and blundering individual who is out of his depth. he ended up in this through his greed and naivety.
‘No individual is all evil. Ultimately he allowed himself to be manipulated, believing there was still enough gravy on the table to be enjoyed.’
It also emerged that Mr Chappell owes £75,000 of a £150,000 short-term personal loan that was due in February from property lenders ACE – run by tycoons Alex and Guy Dellal.
The BHS fiasco is now being investigated by the Financial Regulatory Council, the Insolvency Service and The Pensions Regulator. The Serious Fraud Office is also reviewing the evidence.
The MPs’ report adds: ‘We are certain the Insolvency Service will want to look closely at loans and fees removed from the company.’
Mr Chappell did not respond to a request for comment.
‘Exploited for personal gain’