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Former BHS owner says he was shocked by hostility of Pensions Regulator
Former BHS owner says workers shredded bin bags of documents
(about 5 hours later)
The former BHS owner Dominic Chappell has told a court he was “devastated” by the “outrageous, aggressive and hostile” stance of the pensions watchdog after he took over the high street chain.
The former BHS owner Dominic Chappell has told a court that workers were seen shredding bin bags of documents prior to his purchase of Sir Philip Green’s doomed high street chain in 2015.
Three-times bankrupt Chappell, 51, who had no previous retail experience, bought the chain from the billionaire Sir Philip Green for just £1 in 2015.
Chappell, 51, said the staff tipped the bags into an “industrial-sized” shredder, which was located in a lorry or a van in the car park of the Arcadia-run BHS offices in London.
The company crashed 13 months later, with the loss of 11,000 jobs, leaving a pensions black hole of around £571m – though Green later agreed to pay £363m towards it.
Chappell bought BHS from Green for a nominal £1 in 2015 but it subsequently crashed, with 11,000 jobs lost, 13 months later and leaving a pensions black hole of around £571m.
Chappell is accused of failing three times to give information to the Pensions Regulator over two BHS pension schemes, which had a combined total of 19,000 members.
The claims came on the final day of Chappell’s trial for neglecting or refusing to provide information on three occasions – in April and May 2016 and February 2017 – about two BHS pension schemes with a combined total of 19,000 members.
But he told a court he was shocked to receive an official demand for documents from the regulator just six days after meeting with them to discuss a way forward.
If found guilty the former owner faces an unlimited fine.
He said: “We were devastated. We found it an outrageous act. We had given the Pensions Regulator every courtesy. This was a hostile and deliberate act and had a fundamental damaging effect on our business.”
In an August 2016 interview with the regulator – read to Brighton magistrates court – Chappell told investigators staff had been seen loading documents into the industrial shredder at the rear of the building.
Chappell told Brighton magistrates court that he was outraged because he had conducted a long meeting with the regulator during the company takeover process to help them uncover details of the massive pension deficit.
He said the shredder had been seen outside the back of the offices two days before he bought the company in March 2015. He said he didn’t know about it at the time of the sale.
Chappell told the court that Green had kept details of a huge deficit hidden for more than a decade and he had tried to work out a way that the deficit could be managed properly.
In the interview he said: “They [staff] were putting bin bags of documents into it.”
“It was a professional, cordial meeting. We made good headway. We had offered them every assistance to help them find out the true detail of what had been hidden from them for over a decade.”
It was one of a series of allegations made about Green during the hearing.
In the meeting Chappell had told the regulator: “The pension scheme was the albatross hanging over the head of the company.”
Later in the day Chappell accused the pensions regulator of keeping dozens of documents secret in order not to embarrass Green.
But he told the court that his firm, Retail Acquisitions, became embroiled in a to-and-fro relationship between Green and the regulator.
He told the court he was prepared to produce those documents in the courtroom as part of his defence but did not give further details.
He said: “We were the ping-pong ball between Arcadia and TPR [the regulator] and they were taking a particularly aggressive stance with us.”
Earlier in the hearing he said he was “devastated” by the “outrageous, aggressive and hostile” stance of the pensions watchdog after he took over the high street chain. He said he was shocked to receive a demand for documents from the regulator six days after a meeting to discuss a way forward.
After receiving the official demand, Chappell told the court, he immediately tasked a team of solicitors, accountants and executives to gather the information. He said they racked up hundreds of hours trying to gather the documents.
“This was a hostile and deliberate act and had a fundamental damaging effect on our business,” he said.
“It cost hundreds of thousands of pounds to produce the documentation. Over a thousand documents including emails were gathered and all was made available to the TPR. We provided as much as we could possibly could.”
He told the court he was outraged because he had conducted a lengthy meeting with the regulator during the company takeover process to help them uncover details of the massive pension deficit.
Chappell said BHS was forced into administration in April 2016 by Green, who threatened to exercise a charge on the business.
He said Green had kept details of a huge deficit “hidden” for more than a decade and he had tried to work out a way the deficit could be managed properly.
In a desperate bid to rescue the high street chain, Chappell said, he flew to the US to seek financial backers. However, he was unsuccessful and the firm went into administration in April 2016.
“It was a professional, cordial meeting. We made good headway. We had offered them every assistance.”
Chappell said he received a second official demand (a “Section 72 notice”) after the firm had gone into administration. He claimed he and his executives were “locked out” of the offices by the administrator and had no access to thousands of vital documents.
He told the regulator: “The pension scheme was the albatross hanging over the head of the company.”
However, he told the court, he still attempted to comply with the demands of the regulator and provide the information they required. He said: “It never crossed my mind in the slightest not to comply with the notices from the TPR.
But Chappell said his working relationship with the regulator had been good. Of the August 2016 meeting he said: “We got on so well they asked me to be a witness, presumably in the prosecution of Philip Green.”
“I can’t see how reaching out to them, trying to get as much as the paperwork and documentation as we could can be seen as neglecting them.”
But he told the court his firm, Retail Acquisitions, became embroiled in a to and fro relationship between Green and the regulator. He said: “We were the ping-pong ball between Arcadia and the [pensions regulator], and they were taking a particularly aggressive stance with us.”
He said as well as being locked out of the offices there were also huge demands on his time with ongoing investigations being carried out by the Insolvency Service and HMRC as well as being called to appear before a parliamentary sub-committee.
Chappell said he also received an 007-style attaché case from the regulator that contained a solitary “microchip” containing thousands of documents to which he had to comply.
He said the stress of the case led to him falling ill for five weeks. When he returned to work, he received an attache case that contained a single microchip. He said: “It was a remarkable piece of delivery for a microchip. It was a very encrypted, very coded chip.”
The case continues.
It contained thousands of documents relating to the warning, including 13,000 subsidiary documents. Shortly afterwards his home and offices were raised by HMRC, who took everything including electronic equipment belonging to his children.
Chappell, of Blandford Forum, Dorset, denies failing to respond to three data disclosure notices. The case continues.
