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Former BHS owner Dominic Chappell had 'fingers in the till' – live updates
Former BHS owner Dominic Chappell had 'fingers in the till' – live updates
(35 minutes later)
9.51am BST
09:51
Chappell promised to bring in "big hitting" chairman for BHS. They didnt. At time of deal they were briefing it could be Harriet Green
9.49am BST
09:49
Q: Were you aware of Dominic Chappell’s lack of retail experience?
CEO Darren Topp explains that it was blatantly obvious. So the BHS board needed to be shaken up, with new directors with solid experience.
Chappell kept promising to bring in some heavy-hitters, but...
There was always a reason why it didn’t happen. And it never did.
Chappell argued that his expertise was in property, and in deals -- to raise the finance that BHS needed, explains Topp.
Former CFO Michael Hitchcock then chips in - saying that he believes there was enough value on the BHS balance to raise the funds needed to turn it around, if handled properly.
Updated
at 9.51am BST
9.46am BST
09:46
Chappell accused of being "mythomanic", "fantasist', "Premier League liar" and "Sunday league retailer" - and we're only 40mins in. #BHS
9.46am BST
09:46
Former CEO Richard Price, who resigned just after BHS was sold for £1, is explaining that the company had struggled despite close attention from Sir Phillip Green.
Thus the need for a turnaround plan.
Q: So how much fresh capital money did the turnaround plan show was needed?
It didn’t, Price explains, as we only had a week to draw it up (before the sale to Chappell)
9.41am BST
09:41
Michael Hitchcock is now explaining that BHS managed to cut £12m in costs once it was split away from Sir Philip Green’s Arcadia Group (which had supplied various services to BHS).
The point being; a turnaround plan could have been possible, under a competent owner.
9.41am BST
09:41
Accountancy group Grant Thornton have some questions to answer - they advised Chappell on this secret plan to split off BHS’s assets.....
Grant Thornton advised Chappell on plan to take best bits of BHS out of company, then was paid more than £300k by BHS for plan
9.37am BST
09:37
The committee are now hearing that Dominic Chappell had a secret plan to hive off profitable parts of BHS, rather than engaging with the Company Voluntary Arrangement drawn up to save the company.
Former cfo says Chappell sought to separate the international business and the online operation from BHS without management's knowledge.
Q: Is that typical of a company trying to restructure itself?
It’s typical about conditions at the time, frowns Michael Hitchcock (who was effectively working as BHS’s finance director).
Hitchcock also says that he sniffed out Chappell as a fantasist within two weeks.
9.32am BST
09:32
Another damning assessment from Michael Hitchcock:
BHS FD says Dominic Chappell's actions were "purely for his own benefit" and people around him "not fit for purpose"
9.30am BST
09:30
Financial advisor: Chappell was a Premier League liar
Michael Hitchcock, former financial advisor to BHS, is being absolutely scathing about Dominic Chappell.
Hitchcock is explaining how Chappell’s claims steadily unravelled, calling him:
A Premier League liar, and a Sunday Pub League retailer, at best.....
Then he adds, sorrowfully:
So many people believed him, but he was a liar.
Michael Hitchcock adviser to BHS on Chappell: "A premier league liar and a sunday pub league retailer"
Hitchcock then explains that Chappell’s Retail Acquisitions had proposed taking profitable assets out of BHS, at a time when it desperately needed support.
Q: Why on earth would you do that?
Hitchcock replies:
I question his intelligence. He wasn’t a retailer.
But he also suggests that the motivation could have been to use BHS has a “lifeboat”.
Holy Christ-Chappell had tried to extract profitable bits of BhS & take it out of the business and flow £ straight into Retail Acquisitions
Updated
at 9.37am BST
9.28am BST
09:28
Updated
at 9.29am BST
9.25am BST
09:25
If £7m of sale of North West House went to Retail Acquisitions instead of BHS, that looks to be a breach of sales agreement with Arcadia
9.24am BST
09:24
The committee are seeking more details about the £7m which Chappell’s Retail Acquisition (RA) took from a property deal.
They hear that North West House, the property next to BHS’s HQ, was sold for £32m. But only £25m went into BHS, with £7m going to RA in a loan.
9.19am BST
9.19am BST
09:19
09:19
Darren Topp says he first met Dominic Chappell in February 2015, when the company was looking to develop its turnaround plan.
Darren Topp says he first met Dominic Chappell in February 2015, when the company was looking to develop its turnaround plan.
He explains that he met regularly with Sir Phillip Green, and flagged up his concerns about Chappell.
He explains that he met regularly with Sir Phillip Green, and flagged up his concerns about Chappell.
Darren Topp says he told Sir Philip Green that BHS had "credibility" problems with Dominic Chappell as owner
Darren Topp says he told Sir Philip Green that BHS had "credibility" problems with Dominic Chappell as owner
9.15am BST
9.15am BST
09:15
09:15
Owner of BHS, Dominic Chappell, had "his fingers in the till" says the CEO he appointed. Chappell accused of corruption and incompetence.
Owner of BHS, Dominic Chappell, had "his fingers in the till" says the CEO he appointed. Chappell accused of corruption and incompetence.
9.14am BST
09:14
Topp is explaining how Chappell took funds out of BHS, rather than putting cash in as promised.
That includes a £7m contribution from sales of BHS property, plus a £1.8m payments from the sale in 2015.
Darren Topp just revealed some new shockers on Dominic Chappell - took £1.8m payment from sale of BHS and £7m cut from sale of BHS offices
9.12am BST
09:12
BHS CEO: Chappell had his fingers in the till
Darren Topp also explains that it was hard to turn BHS around given the large rent costs. So breaking away from Sir Phillip Green’s Arcadia group could make sense.
Q: So how did conditions change after March 2015?
Chappell explained that he was a turnaround expert, and had just pulled off a deal at an oil company in Spain.
Q: And was that true?
Topp explains that Chappell had promised to bring in turnaround experts, and £10m of his own money.
But promises didn’t come to fruition.
And then Topp sums up how things unravelled:
It became clear towards the end that rather than putting money in....he’d got his fingers in the till.
"It beceame clear that rather than putting money in he had got his fingers in the till" Darren Topp of BHS on former owner Dominic Chappell
Topp on Dominjc Chappell's claims unravelling :"Rather than putting money in he got his fingers in the till"
9.12am BST
09:12
9.07am BST
09:07
The session begins, with MPs taking evidence from Darren Topp, chief executive of BHS, former CEO Richard Price, and Michael Hitchcock, former financial adviser to BHS.
Topp begins by explaining that BHS lost money during his seven years at the company.
We didn’t respond quick enough, or fast enough to the changing market place, Topp explains. When we were competing with the likes of C&A (the Dutch chain), we did well, but conditions got harder as retail changed.
9.03am BST
09:03
The hearing is underway now. You can watch it live here.
8.56am BST
08:56
DId Dominic Chappell believed he was buying BHS for just £1 without taking on the pension deficit?
That seems extraordinary. But that what investment bank RiverRock told MPs yesterday....
Joseph Dryer of River Rock, which advised Chappell prior to his takeover of BHS, said Chappell had given the impression that he had been led to the BHS deal as he knew the Greens and had attended parties on their yacht.
Chappell had told his advisers that he had agreed a deal with Green that included the settlement of the pension deficit by the billionaire. When it emerged that no such deal had been agreed and the pension was still to be resolved River Rock resigned. Dryer suggested there had been a break down in relations.
As Dryer put it:
“At that point we had been working [with Chappell] over three weeks. Normally when you work with someone you build confidence levels with them. But that wasn’t exactly the case.”
BHS buyer’s bank dropped out over pension issue - https://t.co/cDQ0dDRTVv https://t.co/W2tlHGw2EN via @FT
8.49am BST
08:49
MPs need to dig into some property transactions today.
Chappell borrowed £35m from the Dellal family, a dynasty of property developers, before the takeover of BHS was conducted. Once the deal was done, the Dellals turned a nice profit on a property deal.
My colleague Graham Ruddick explains:
Allied Commercial Exporters (Ace), which is controlled by father and son Guy and Alexander Dellal, provided £35m to Chappell, allowing him to demonstrate to Arcadia he was a credible businessman.
Ace then bought a BHS office building next to its headquarters, called North West House, and sold it for a profit just weeks later. Ace also lent to BHS at such a fierce interest rate that it was known by the retailer’s management as the “Wonga” loan. These transactions made millions of pounds for Ace.
MPs must try to establish whether the property deals and loans were connected to Ace putting up the £35m.
Secretive dynasty helped Chappell buy BHS - then bought HQ and flipped it for a profit: https://t.co/BZdYh30hJe pic.twitter.com/u1pnl3Drn5
8.42am BST
08:42
The Labour party want Dominic Chappell to apologise for his role in BHS’s collapse.
Angela Eagle MP, shadow secretary of State for Business, Innovation and Skills, says the 11,000 workers facing likely job losses deserve answers.
“The former management of BHS have apologised to staff, blaming Chappell - a former racing driver with virtually no experience of retail - for failing to deliver on his promises. He owes staff an apology too.
“But he might owe more than that. Chappell’s company took millions of pounds out of the business as it veered into administration, leaving a huge pension deficit. He has serious questions to answer.”
8.37am BST
08:37
BHS managers blame Chappell for collapse
Nine senior managers at BHS have piled fresh pressure on Dominic Chappell before today’s hearing, by firmly blaming him for the company’s demise.
In a letter to BHS staff, they say that Chappell simply failed to deliver the financial support he promised.
They write:
“We, the management team of British Home Stores, would like to apologise to you and all our colleagues for the very sad situation we find the business in.
“The inability of RAL [Retail Acquisitions] to raise sufficient funds and dispose of key property assets, hindered the management team in delivering the turnaround plan.
“Any sums of financing raised or property disposals appeared to fall short of expectations. Under challenge, Dominic Chappell continuously assured us he would deliver on raising funds, this was not the case.”
Something for the MPs to raise this morning....
Related: BHS managers blame Dominic Chappell for company's collapse
7.58am BST
07:58
The agenda: MPs investigate BHS collapse
Good morning.
After yesterday’s unforgettable hearing with Mike Ashley, another tarnished businessman is being quizzed at parliament this morning.
Dominic Chappell, former owner of BHS, is appearing before MPs, to explain his role in the retailers’ collapse which is costing 11,000 jobs.
And he has a lot of explaining to do. How and why did Chappell pick up the chain for £1, how much money was taken out by his Retail Acquisitions during his 13 months in charge, and why he wasn’t able to prevent its collapse last month?
And why did he take on a retailer with a pension deficit that has now ballooned to £571m?
The former racing driver has a rather chequered business record – including a couple of bankruptcies – and with no obvious expertise to run such a large company. And he’s never appeared before a select committee before, so this session could be seriously interesting.
Yesterday, the BIS committee got Mike Ashley to agree that conditions at his firm were unacceptable. Today, they (in partnership with the Work and Pensions committee) need to dig into the complicated financial transactions around this deal, and try to find out how much Chappell benefitted personally.
Back in April, the Guardian reported that Retail Acquisitions took £25m out of BHS during their ownership. Chappell, though, insists that he also put £10m into the company, plus a £5m loan secured against BHS’s assets. Where did that money come from? And where did it go?....
The committee will also hear from former top executives at BHS, who will also give crucial insights into Chappell.
The session begins at 9am. Here’s the batting order.
Sports Direct was in the dock yesterday and it's BHS' turn today. Has the image of the retail industry been irreparably tarnished?
Select Committee into #BHS begins at 9amLots questions to answer https://t.co/owI8Oc3LON
Also coming up today....
Financial markets could be edgy, after new data showed Chinese exports fell by over 4% last month.
TROUBLE! #China May exports fall 4.1% as global demand remained stubbornly weak. https://t.co/cWYur9plgY pic.twitter.com/5YF23jcJbt
Supermarket chain Sainsbury is reporting results, showing total sales falling 1% in the last three months. Not great, but rather better than feared.
Sainsbury's like-for-like sales down 0.8% excl fuel in last three months, down 1% incl fuel
Advertising giant WPP is holding its AGM, where shareholders could revolt against the £70m pay deal granted to CEO Sir Martin Sorrell.
We’ll be tracking all the main events through the day...
