Sir Shifty in the bear pit
THE joint Business and Pensions Select Committee is showing admirable staying power in its determination to get to the bottom of the BHS scandal.
The highlight in the coming week will be the appearance of Sir Philip Green, which is certain to be a circus.
It will be fascinating to see if Green can suppress his tendency to curse and browbeat his critics into submission and give a credible account of his actions.
Those of us who regularly talk off-line to Green’s ‘friends’ have a clear idea of the direction in which he is heading. He will argue all proper precautions were taken in selling BHS to serial bankrupt Dominic Chappell, including obtaining the best legal and financial advice.
Green is also likely to make clear that he did his best to prevent BHS going into windup. Potential buyers including Mike Ashley’s Sports Direct and Matalan’s John Hargreaves fell away because they were unwilling to put up nearly £100m of working capital required for a viable future.
What Green cannot control is the widening nature of the probe. Among those being asked to provide evidence are his multi-millionaire stepson Brett Palos and the highprofile restaurateur and club owner Richard Caring. It has long been known that Caring played a role in helping Green establish the textile supply chain for BHS and Arcadia. The exact nature of the relationship, and the financial arrangements, are obscure because of the use of secret, offshore private entities to funnel the money.
One cannot imagine the distinguished QC Lord Grabiner will be entirely happy with the mounting requests from MPs for data on his work for Green family entities. Grabiner wasn’t present when the family firm Taveta, which he chairs, authorised the sale of BHS. He has been asked by MPs to detail his exact work for Taveta beyond ‘chairing meetings’.
This would include the hours he works for Green, the pay he receives and the exact nature of the sub-groups of Taveta Investments (No 2) involved in BHS decision making.
Green conducts much of his business using the telephone and – unlike Hillary Clinton – does not have much truck with email. The difficulty is that much of commerce is conducted in email, so his ‘informal’ advisers Goldman Sachs, the Pensions Regulator and others involved in the inquiry, including Arcadia finance director Paul Budge, have left an electronic trail. Goldman Sachs has already submitted a voluminous email file and the bank’s top British executive Michael Sherwood has been asked to appear as a witness along with his colleague Anthony Gutman – a return appearance.
One of the difficulties for Green and all his professional associates is that sleeping dogs have been woken up. It has been accepted that Arcadia properly pays its corporation taxes, business rates and other UK levies in the UK in full. But is it acceptable for Lady Tina Green – the ultimate owner of Green’s companies – to receive her dividends tax-free in Monaco where she resides?
Family firm Taveta is firmly on the horizon of Lord Myners who is advising the committee of MPs. The former M&S chairman and City minister thinks it is time for HMRC to take a new look at the family tax arrangements.
At one stage it was my assumption that Green, who regards himself as a generous philanthropist, could bring an early end to inquiries by making a hefty contribution towards filling the £571m buyout costs of the deficit in the BHS pension fund. He may still seek to do that through a restructuring, partly using Arcadia’s covenant or guarantee.
But it is by no means clear that it will halt the probe and the deluge of material being demanded by the BIS committee and also being looked at by the Insolvency Service. In the wake of the Panama papers shenanigans, the BHS affair provides a sharp remainder of the great holes in the tax code which allow income to be sheltered offshore.
It also highlights a serious shortcoming in corporate affairs: the lack of scrutiny of private companies with big workforces and pension responsibilities every bit as important as public corporations.
It is to be hoped that when the BIS has unravelled the tangled web of relationships among BHS, Taveta and Arcadia it will also come with proposals for more robust governance for privately held firms and better protections for employees – a sort of Green code.
Sheer genius
A LETTER from a departing chief executive to staff thanking them for their efforts is always a nice gesture.
John Walden of Argos has taken the exercise to a whole new level. The tone suggests that his four years at the top have been among the most transformative in human history. Over a rambling four pages we learn how Argos conquered the digital channel, developed a hub-and-spoke logistics system, turned the stores into Apple-like digital emporia, developed fast-track collection and delivery, created own brands and entered into strategic partnerships.
If this was not impressive enough, he tells us he could go on for many more pages and these changes ‘are only the tip of a massive iceberg’.
Were there only a Nobel prize for business.