He had duty to protect his workers
AMong the most baffling aspects of the whole BHS scandal is how Sir Philip green could have thought it fitting to allow a company of such size and importance to be sold to unscrupulous former bankrupt Dominic Chappell for just one pound.
Discarding and selling companies is the right of any private sector owner in a free market economy. But the owners have a broader moral responsibility to make sure the workforce, suppliers and the pension funds are properly protected before signing on the dotted line.
We have, of course, been here before. In 2000, BMW sold Mg Rover, two of Britain’s most famous car marques, to the ‘Phoenix Four’, seeding the new owners with an endowment of £75million.
The new owners went on to loot the company, leaving the taxpayer to cover a large redundancy bill for 6,500 workers and a hole in the pension fund. The four owners were subsequently banned as company directors after an excoriating Department of Business report.
The issue of the credentials of buyers has been brought into sharp relief by the BHS fiasco. But is highly relevant in the far more strategically important steel industry where Mumbai-based own- ers Tata Steel are seeking to sell Port Talbot and other facilities possibly with the help of government loans and a share stake – potentially placing taxpayer cash at stake.
Very little is known about the bona fides and longer term prospects of several of the buyers queuing up to buy all or parts of Britain’s remaining steel industry.
When BHS was sold to Retail Acquisitions 13 months ago the least that could been expected from Sir Philip, regarded as one of the shrewdest deal makers in Britain, was to make sure that he was negotiating with a serious buyer rather than a commercial fantasist.
This was especially true for a tycoon who has desperately sought recognition from successive governments and is highly protective of his reputation. His pride in the knighthood, that may now be in jeopardy, knows no bounds. He was also ebullient when the Tory-led Coalition government asked him to conduct a preliminary report into government efficiency in 2010.
now Sir Philip is being blamed widely for BHS’s failure and faced summons before a Commons committee to testify on what he plans to do to plug the £571million hole in the BHS pension fund. The transaction which saw BHS sold to a former racing driver and group of unknowns could not have happened without proper professional advice.
It is my understanding that a team of experts from blue chip auditors grant Thornton and top City lawyers olswang were camped out at Sir Philip’s Marylebone Road headquarters in central London for days trying to put the deal together for Chappell.
WHYthese financial guns for hire felt it appropriate to work for Chappell, given his history of being a double bankrupt, also needs examining. For his part Sir Philip ‘ informally’ called on the services of top investment banker goldman Sachs to provide advice.
What is most shocking is that amid all the evidence that Chappell and company were unsuitable owners neither Sir Philip nor any of the advisers involved blew the whistle. nor apparently did they fully address the half a billion pound hole in the pension fund. It is no wonder the whole sordid affair has attracted such public anger.