Sir Philip has ‘moral duty’ to fill £571m pensions black hole
SIR Philip Green ‘repeatedly’ resisted requests from the trustees of the BHS pension scheme to pay more money into workers’ pots to correct the ‘massive deficit’ and now has a ‘moral duty’ to so do, the MPs’ report found.
When Sir Philip bought BHS in 2000, the company pension schemes had a healthy surplus of £43million. Within six years – the period when large dividends were paid to the Green family – it had dipped into the red.
By the time BHS was sold, in 2015, the shortfall was £350million. Now the black hole is £571million, meaning BHS’s current and future pensioners ‘face substantial cuts to their entitlements’, said the report.
‘Such contributions were not charitable donations,’ said the MPs, saying it was the employer’s legal obligation – and he knew it.
They added: ‘We reject any assertion that Sir Philip was not aware of the growth of the deficit: he had a responsibility to be aware and he was aware. Sir Philip’s failure until now to resolve the pension fund’s problems contributed substantially to the demise of BHS, along with chronic under-investment and the systematic extraction of hundreds of millions of pounds from the increasingly ailing company.’
MPs declared the billionaire had a ‘moral duty’ to help the 20,000 stricken members of the BHS company retirement schemes whose hardearned pensions he put in jeopardy.
The Pensions Regulator did not escape criticism, either, as it was found to be too slow to respond to the looming crisis. For years, Sir Philip, 64, was funnelling money out of BHS for his own family, but refusing to properly fund the pension schemes for everyone else, says the damning report.
It concluded: ‘Sir Philip gave insufficient priority to the BHS pension scheme over an extended period.
‘His failure to resolve its problems by now has contributed substantially to the demise of BHS. Sir Philip owes it to the BHS pensioners to find a resolution urgently.
‘This will undoubtedly require him to make a large financial contribution. He has a moral duty to act, a duty which he acknowledges.’
Work-based retirement schemes are overseen by a board of trustees, and chairman Dr Margaret Downes repeatedly expressed her concern to chief operating officer Paul Coackley. His response was that raising the firm’s annual £6.5million contributions could not happen in a firm that was being ‘stripped to the bone’.
Company schemes are supposedly safeguarded by the Pensions Regulator – but Sir Philip ran rings around the watchdog.
When the tycoon put forward a 23year plan to fix the deficit – described as ‘an extraordinary length of time’ – the cumbersome regulator took four months just to request more information.
In November 2013, an alternative plan codenamed Project Thor was drawn up to restructure the pensions. Even though some of its proposals were dire, requiring the pensioners themselves to bear three-quarters of the cost of the restructure, Project Thor was a ‘credible approach’, the MPs’ report said.
But Sir Philip blocked it and the reason, the MPs concluded, was because he did not want the regulator to find out how much money he had funnelled from BHS to his family.
The regulator had asked to see data on the dividends and payments between Sir Philip’s companies going back to 2000.
The tycoon, concerned about the regulator’s ‘overly keen interest’, ordered the project be ‘paused’.
Farcically, the excuses given were ‘uncertainty over Scottish independence’, ‘global tensions, referencing Ukraine’, and ‘Christmas’.
While Project Thor required the sign-off from the regulator, there was another option which did not – flogging BHS to a buyer who would inherit the pension problem.
In Dominic Chappell – a twicebankrupt chancer – and his RAL group, Sir Philip found a buyer with a ‘negligent and cavalier disregard for the risks and potential consequences’ of taking on the pension deficit, the report said.
Not that Sir Philip was taking any chances. According to the MPs: ‘Sir Philip Green acted to conceal the true state of the BHS pension problem from RAL and its advisers.’
Last night Lesley Titcomb, Pensions Regulator chief executive, promised to ‘reflect on the findings of this report,’ and said it was ‘determined to achieve the best possible outcome for members of the BHS pension scheme’.