Frankly the whole affair STINKS
RAreLY has there been a more depressing insight into modern-day capitalism than in the Grimond room at Westminster, where a motley crew of businessmen fought like rats in a sack over who was responsible for the collapse of BHS.
one thing is certain. However you look at this retail calamity, everything leads back to the man once dubbed the King of the High Street, Sir Philip Green.
As the proprietor of BHS from 2000 to 2015, when he sold the High Street giant to serial bankrupt and fantasist Dominic Chappell for just £1, Green had a duty of care towards BHS’s workforce of 11,000 people, as well as the 21,000 members of the two BHS pension schemes and those employed in the supply and distribution chain for BHS stores.
Yet with the connivance of some of the biggest names in the City and legal community, Green sold the company for a song, then watched it go bankrupt under its new owner with a £571 million pensions deficit.
even after BHS fell into the hands of the administrators in April of this year, it is claimed that Green actively prevented potential buyers – including two consortia, one headed by Matalan founder John Hargreaves and the other by Sports Direct boss Mike Ashley – from saving the company and with it the jobs of those 11,000 blameless employees.
THIS week, MPs heard evidence that Sir Philip, who has a history of feuds in his business dealings, went ‘insane’ with anger at the prospect of Ashley becoming BHS’s saviour, screaming that ‘he did not want to deal with Mike Ashley’. Green vehemently denies this.
The charge sheet against Green does not make pleasant reading. He bought BHS in a deal that helped make his family billionaires. Within a few years, when BHS was profitable, he had siphoned off £423million in dividends from the retailer and transferred them to offshore private companies controlled by his wife Tina, who lives in the tax-haven of Monaco on one of their three yachts.
In addition, the Greens took £12million a year in rentals from properties sold by BHS to their private companies. They also transferred part-ownership, valued by some at £40million, of the company’s London headquarters.
That was not all. The Greens levied a further £38million a year initially in ‘administrative and accounting charges’, going up to £58million in 2013. The ugly fact remains that, as BHS is wound up, Green leads the list of preferred creditors and could be in line for a £35million payment. Green’s treatment of BHS as a cash cow led the Financial Times Alphaville blog earlier this year to ask: ‘Would 11,000 BHS workers still have jobs if Tina Green hadn’t siphoned £1billion out of the business?’
Yet at every turn, Green seeks to distance himself from any suggestion of unacceptable behaviour.
Indeed, throughout this tawdry series of events, Green, who was knighted by Tony Blair’s government in June 2006 for services to retail, has used every means possible to divert the blame for the BHS scandal on to people other than himself. But anyone who has had any contact with him knows that this hyper-active, gruff, former public schoolboy could never have stood on the sidelines when financial dealings surrounding his vast retail empire were involved.
It is an empire that also encompasses Arcadia, which owns top High Street fashion names including Topshop, Miss Selfridge and Wallis. Green famously failed twice to buy M&S, the second time in 2004 when he was repulsed by then-chairman Paul Myners.
With exquisite irony, the Commons committees probing the BHS sale have now called on Lord Myners, a former City minister, to head a financial advisory group assisting them in their investigations. Green can expect no mercy from the former M&S boss.
So far, what has indisputably emerged from the MPs’ investigations is that Dominic Chappell was unsuitable to own a whelk stall let alone a department store with 163 shops across the nation.
In select committee testimony, Chappell was called a ‘fantasist’, a ‘mythomaniac’ and a ‘Premier League liar’ by his former colleague, BHS financial adviser Michael Hitchcock. And former BHS boss Darren Topp called Chappell a ‘thief’ who tried to steal £1.5million from BHS for his personal use. For good measure, Topp added that Chappell threatened to kill him.
To the layman, it seems inconceivable that Green, a ruthless and shrewd businessman with vast experience in the City, would not have seen straight away that Chappell was a wholly unsuitable candidate to own such an important retail institution as BHS.
But when Green himself appears before the select committee next week, he will as usual turn the blame on everyone but himself.
Much of his criticism will be of City accountancy and law firms that failed to stop the BHS sale to Chappell. But he cannot escape the opprobrium he deserves. Green has tried to distance himself from the problems of the BHS pension fund. Yet emails appear to show Green sought to mask the scale of the pension problem from the buyers. He was also slow to respond when asked for information by the Pensions Fund regulator.
LorD Myners, using Parliamentary privilege, has already set out his own charge sheet. He identified ‘fraudulent preference’ – the transfer of assets from one creditor to another before bankruptcy and the appropriation of company assets – as one potential charge.
He is also calling on HMrC to look into the ownership structure of Green’s empire and how it reconciles the fact that his major retail investments have been owned by Lady Green in tax-free Monaco since 2004 yet run by her husband from London. She received an eyewatering £1.2billion dividend in 2005 alone – tax-free.
Green’s failure to sort out the £571million buyout deficit in the pension fund has already led veteran Labour MP Frank Field, chairman of one of the investigating select committees, to call for the retailer’s knighthood to be revoked – something a growing number of politicians are now supporting.
Frankly, while it may be legal, all this stinks to high heaven. Apart from the outrage of BHS workers losing their jobs and pensions, the real tragedy is that this scandal shows capitalism in the worst possible light. And it reveals that, despite extensive reform of company law and the strengthening of governance in the boardrooms, scoundrels can operate at will in the City – and still get away with it.