SHARKS WHO BLED BHS DRY
As High St icon’s collapse threatens 11,000 jobs, fat cats accused of pocketing £425m from the business
CITY fat cats have carved fortunes out of failed retailer BHS while leaving its workers in the lurch, it emerged last night. Sir Philip Green pocketed £400million from the 164-store chain before presiding over its decline and selling it for just £1.
Another £25million has gone to the new owners, led by a twice-bankrupt former racing driver. He is said to have splashed out on a yacht, ski holiday and a luxury car as BHS headed for disaster.
MPs have pledged to investigate, saying they will go after anyone guilty of impropriety. Richard Fuller, a Tory, said the collapse showed the ‘unacceptable face of capitalism’.
Labour accused Sir Philip of extracting hundreds of millions of pounds and making off ‘to his favourite tax haven’. He and his associates have taken as much as £1billion out of BHS if property deals and other transactions are included, according to the Financial Times.
A high street fixture for 88 years, BHS has gone into administration with debts of £1.3billion. A £571million deficit in the pension fund leaves 20,000 past and present staff facing 10 per cent cuts to retirement payouts. The meltdown means:
11,000 staff face the dole and a hard-up old age, some telling of betrayal by ‘thieving b******s’;
Pensions watchdogs are probing the situation and are examining Sir Philip’s role;
The owners are facing questions over where the £25million went.
Sir Philip, who has just bought a £100million megayacht, has offered £80million – half in loan
form – to help bail out the pension fund. But the Pensions Regulator is expected to push for more, perhaps several hundred million pounds.
Dominic Chappell, who bought BHS for £1 from Sir Philip, under the umbrella of a consortium called Retail Acquisitions, insists ‘no one is to blame’ for the collapse.
The 49-year-old has been made personally insolvent three times and there are serious questions as to why Sir Philip decided he was fit to buy such a major institution.
The former racing driver has been through an individual voluntary arrangement and two bankruptcies. He was probed by the Department for Business over the collapse of a holiday home development on the Isle of Wight that left business partners with losses running into the millions.
On the failure of BHS, he said: ‘No one is to blame. It was a combination of bad trading and not being able to raise enough money from the property portfolio.’
However, his team took more than £25million out of the business in the 13 months they ran it. Sources said the payments included £2.8million in management fees, £2.1million in salaries and wages, £11million in legal and professional fees and £10million in interest payments.
Former associates of Mr Chappell have described him as a ‘ great bull*******’ and questioned his ability to run a national chain.
Angela Eagle, Labour’s business spokesman, said Sir Philip had left others to plug a £571million pensions blackhole.
She said: ‘If the worst happens the liability will be covered by the pensions protection scheme and BHS staff will get only 90 per cent of the pension they’ve worked so hard for and saved for.
‘But Philip Green seems to have got much more out of BHS for himself and his family than that.
‘BHS staff and the public will understandably want to know whether the former owner who took so many millions of pounds out of the business will have to pay his fair share of the liabilities which accrued during his stewardship.’
Business minister Anna Soubry told MPs: ‘If there is any suggestion of impropriety, we will come after people.’
The Pensions Regulator has announced it will use all its powers to ensure Sir Philip, who is said to be worth £3.5billion, does not dodge his responsibilities to BHS staff.
A spokesman said: ‘We can confirm that we are undertaking an investigation into the BHS pensions scheme to determine whether it would be appropriate to use our anti-avoidance powers.’
The responsibility for paying BHS pensions goes to the Pension Protection Fund, which raises cash through levies on other company schemes.
Staff at the company’s flagship store in Oxford Street believe that both Sir Philip and Mr Chappell were at fault. One unnamed woman sales floor manager said she had cried herself sick at the prospect of losing her job. ‘Most people are blaming Philip Green for this – for the downfall of the business. We had one thieving b****** and now we’ve got another,’ she said.
Sir Philip bought BHS for £200million in 2000 and in subsequent years paid dividends to himself and colleagues estimated at more than £400million. BHS largely funded this windfall by taking out huge loans and by selling assets. Busi- ness recovery expert, Nick Hood of the Opus Group, said: ‘This is a business that has been seriously underinvested in over a long period of time. It lost £416million in the six and a half years up to the point where it was sold.
‘Retail these days is all about heavy investment in staying up with the trend, online offerings, mobile offerings. None of this happened at BHS. This is another retail business that hasn’t stayed up with the times. You have got 11,000 jobs at risk here and the pensions of 20,000 people. It is a disaster.’
He said Sir Philip, 64, would not be able to walk away unscathed.
‘Officials will be looking very closely at the situation and it is in a position to issue contribution notices to people who have been connected to that fund,’ he added.
A firm of administrators, Duff & Phelps, has been appointed to take over and the stores will remain open for now.
It is believed the chain will be broken up with some stores sold off piecemeal. Mr Chappell insists that he had a successful track record as an entrepreneur.
‘Didn’t keep up with the times’