Accountancy firm KPMG raised concerns about Retail Acquisitions before it acquired BHS last March, partner David Clarke told the work and pensions select committee today.
David Clarke, KPMG
The parliamentary committee into the collapse of BHS continued today (May 23) with a session exploring the sale of BHS to Retail Acquisitions.
Accountancy firm KPMG raised concerns over the suitability of buyer Retail Acquisitions to run the company and successfully deliver employees’ pensions, partner Clarke revealed during the session.
BHS owner Sir Philip Green sold the company to Retail Acquisitions for £1 in March 2015. It has since come to light that Retail Acquisitions director Dominic Chappell had been bankrupt three times prior to the deal.
Clarke told the committee that KPMG raised concerns over the sale as it was clear to them that Retail Acquisition was a “NewCo” – a business entity set up specifically to conduct the deal.
Clarke added that, while KPMG would have submitted questions about any potential acquirer, the firm did have specific concerns around Retail Acquisitions and was vocal in expressing them to the BHS executive team.
“We did have serious concerns because from our perspective there was no ability to look at past accounts,” he continued. “And we were particularly concerned about its ability to fund BHS, which was clearly loss-making, and the [pension] schemes. We submitted our concerns to the group in writing on February 25 .
“These included what working capital facility they would have and what security packages would be in place, a deal timetable and whether the buyer had started pensions due diligence, so they understood what they were acquiring.”
Clarke was sitting on a committee witness panel with Ian Greenstreet, partner at Nabarro; Tony Clare, partner at Deloitte; Richard Cousins partner at PwC; and Emma King, partner at Eversheds.
All other witnesses said that they did not raise concerns about Retail Acquisitions at the time as they did not believe it was within their remit or contractual obligations.