Sir Philip Green sold struggling retailer BHS to avoid taking on the liability for its pension scheme, the Pensions Regulator has claimed in a new report.
Duff & Phelps was appointed as administrator to BHS in April 2016 – about a year after Arcadia Group boss Green sold it to Retail Acquisitions. At the time, it had a gaping pension deficit.
The regulator examined what happened, its own involvement in the case and the pension settlement reached with Green earlier this year.
It concluded that the “main purpose of the sale [to Retail Acquisitions] was to postpone BHS’s insolvency to prevent a liability to the schemes falling due while it was part of the Taveta group of companies [the parent company for Arcadia Group], ultimately owned by the Green family, and/or that the effect of the sale was materially detrimental to the schemes”.
The Pensions Regulator alleged that Green was personally involved in the schemes, the appointment of new trustees and advisers, and the sale of BHS itself, making him a “key decision-maker” in relation to BHS and its pension deficit.
The regulator explained that this is what led to its decision to send Green a 300-page warning notice in November 2016, which asked him to make a contribution to the pension scheme. Green made a voluntary contribution of £363m in February.
The report said Arcadia made several previous offers to settle the deficit but the amounts were deemed too low.
Three offers were made in February and March 2016, in a bid to support the BHS CVA and to help avoid a subsequent insolvency.
A further offer was made in March 2016 involving a new pension scheme being established. However, the regulator rejected it, as it “lacked sufficient detail”. Another offer was made at the end of October 2016, but that proposal was also considered insufficiently detailed.
The report concluded that BHS was a “highly significant” case, and the regulator recognised it could have” performed better” by acting sooner.
Nicola Parish, executive director of frontline regulation, said: “The report highlights the lessons we have learned from this case about how we can regulate more effectively.
“We are already acting more quickly to intervene where we consider schemes to be underfunded, or where there are indications that employers may be avoiding their responsibilities. As part of our Future programme, we are reviewing our internal processes and ways of working to be more efficient, more outcome-focused and communicate clearly to schemes what we expect from them.
“In addition, we are recruiting staff to increase proactive casework, ensure early engagement with schemes and progress investigations more efficiently.”
A spokesman for Green declined to comment.