BHS collapse: Sir Philip Green may face grilling by MPs
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Version 0 of 1. Sir Philip Green and Dominic Chappell face being hauled in front of MPs to explain their management of BHS after an influential parliamentary committee launched an inquiry into the department store chain. The Commons Business, Innovation and Skills (BIS) select committee has announced it will explore the sale and acquisition of BHS, including whether the directors of Green’s Arcadia and Retail Acquisitions acted as best they could to fulfil their statutory duties. BHS called in administrators on Monday, putting almost 11,000 jobs at risk. The retailer was owned by Green for 15 years until he sold it for £1 last March to Retail Acquisitions, a consortium of little-known accountants and lawyers led by Chappell. BHS’s collapse has caused controversy because it has been saddled with a £571m pension deficit despite Green collecting more than £580m in dividends, rent and interest payments during his ownership, with Retail Acquisitions receiving payments of more than £25m from BHS over the last 13 months. Chappell, who had no experience of running a major retailer, also moved £1.5m into an overseas company last week as it became clear that BHS was heading for administration. When asked to return the cash by BHS management, Chappell paid it back £50,000 short, saying this represented the cost of transferring the money into Swedish kronor and back again. Iain Wright, the Labour MP and chairman of the BIS committee, said: “The collapse of BHS brings misery and uncertainty for thousands of workers and also places a potentially significant burden on the taxpayer in the form of pension liabilities. “The sale and acquisition of BHS raises real questions about whether directors acted in the best long-term interests of the company and their employees. “Is there too much of an incentive in the system for owners to asset-strip, take out vast sums for personal gain, and then dump and run, leaving the taxpayer to pick up the tab when the company fails, rather than create value for the long term?” Wright said that the inquiry will summon the lawyers, bankers and auditors who advised Green’s retail group Arcadia and Retail Acquisitions on the sale of BHS last year. The full witness list will be decided in due course, he added. The Work and Pensions committee has launched a separate investigation into the impact on the state-backed Pension Protection Scheme from taking on the liabilities of BHS. It has already said it will call Green as a witness. The BIS committee intends to explore whether the directors of both companies did the “best they could to fulfil their statutory duties”, and whether the regulations surrounding the statutory duties of directors and the consequences for breaching them are “sufficient” in the UK. It will ask what due diligence was carried out by Retail Acquisitions and Arcadia before the deal and examine the steps taken by Green’s company to ensure Retail Acquisitions was a responsible buyer. The administrators have confirmed they have received expressions of interest in buying the retailer, with more than 50 parties thought to have approached them. Philip Duffy, joint administrators, said: “Over the last few days, we have been working hard to stabilise the business and are pleased to have received a number of expressions of interest. “We continue to seek a sale as a going concern. We appreciate the hard work of staff that have ensured that stores have continued to trade as normal. “Staff have been paid over the course of [Wednesday and Thursday] and we want to reassure them that they will continue to be so while the group remains in administration, as a priority payment.” |