Sir Philip Green must now dig deep into his pockets in order to satisfy both the Pensions Regulator and save his reputation, MPs Iain Wright and Frank Field said earlier today following the Topshop tycoon’s appearance at the joint select committee hearing into the sale and subsequent collapse of BHS.
Iain Wright MP
While Wright, chair of the business, innovation and skills committee, and Field, chair of the work and pensions committee, welcomed Green’s commitment that he is working on a better deal for BHS pensioners, they added: “Much of his reputation now depends on how generously he responds.”
He is “before the bar of public opinion”, they pointed out.
Wright and Frank spoke to journalists following the six-hour evidence session, during which they quizzed Green on his tenure as owner of BHS, his decision to sell the struggling chain to Retail Acquisitions last year and his handling of its pension scheme.
BHS’s pension deficit dominated the first two and a half hours of the session. Green repeatedly insisted that no one from the board of pension trustees brought the growing deficit to his attention until 2012.
“If I wanted to pass the blame I could blame a lot of other people,” he said. “But I am here, I’m happy to be accountable and I’m not a liar … but you’re asking me questions that it’s impossible to answer.”
He told the MPs a team of representatives from Deloitte, the Pensions Regulator and members of the Arcadia board are working on a rescue plan for the pension.
But Field said afterwards: “We are writing a huge follow-up on the amount of questions that were not answered.” The MPs will seek more detail on the structure of various companies, particularly those owned by Green’s wife Lady Cristina, the profits they have made and the tax they have paid.
They will also schedule a fresh programme of witnesses for the end of June.
Wright said he found it odd that a deal on the pension deficit has not been completed earlier and that both committees want to see it resolved as quickly as possible.
“Towards the end [Green] said he felt hounded and that people were ganging up on him, but I think the 11,000 people who are losing their jobs and the 20,000 pensioners feel a bit hounded and they want to see this matter closed and for justice to be given to them as quickly as possible,” he said.
When pushed on exactly how much he thought Sir Philip Green and his family should pay towards the pension deficit, Field said: “Sir Philip is a very rich man, he’s gone through the worst period of his life and if I was in his position, I would think £571m [the deficit as measured on a buyout valuation] was quite cheap.”
He added: “[Green] has no obligation to the pension fund but I think you were witnessing someone today who is very concerned about how the world views him.”
One of the many deals the MPs attempted to unpick was the sale of BHS’s offices at North West House in Marylebone for £32m.
Green said only £25m showed up in BHS’s accounts and he was told the remaining £7m been transferred to the Bank of China, to help set up a £100m loan. But the money later turned up in the bank accounts of Olswang, the law firm advising Retail Acquisitions’ majority shareholder Dominic Chappell.
“One of the things that really struck us was the ability for him to have quite vivid recollection of detail on where that £7m went but in terms of the pension scheme when it went from surplus to deficit, he didn’t know anything,” said Wright. “That contradiction between knowing the detail and knowing nothing at all is something we really want to push.”
Wright said today’s hearings raised questions about corporate governance in businesses.
“What was very clear is [Green] is not used to being questioned, which is why I made the comment about being thin skinned,” he said. “Quite reasonable and obvious questions said with some courtesy, he took offence at. From my committee’s point of view, what does this mean for British corporate life and corporate governance?
“Did the non-executive directors really challenge him? We need to identify what are the systems we need to put in place to minimise the risk of this ever happening again,” he added.
Wright maintained that the question he asked on the day BHS collapsed into administration, April 26, still stands: “How can someone extract hundreds of millions of pounds from a business and then sell it to someone who is not putting in any equity of his own and it crashes within 13 months - how is that allowed to happen?
“What are the changes that we need to put in place in terms of better checks on due diligence, on advisers and in terms of corporate governance regime to make sure this doesn’t happen again?”
The committees expect to publish an initial report before parliament’s summer recess.