BHS: Philip Green fights back against pensions regulator

The retail tycoon has contradicted claims from the regulator this week about how much advance warning was given of his sale of the ailing department store chain in March 2015

Ben Chu@Benchu_
Wednesday 11 May 2016 18:42
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Sir Philip Green will be quizzed in Parliament about the BHS pension scheme
Sir Philip Green will be quizzed in Parliament about the BHS pension scheme

Sir Philip Green has launched a public relations fight-back over his controversial stewardship of BHS by getting his company secretary to write to a committee of MPs to defend his conduct and contradict the evidence of the Pensions Regulator.

The letter from Adam Goldman, company secretary to Sir Philip’s Arcadia group, contradicts the evidence given earlier in the week to a committee of MPs by the head of the Pensions Regulator and the boss of the Pension Protection Fund (PPF) in relation the BHS sale.

Lesley Titcomb, the chief executive of the Pensions Regulator, told the committee that the agency had only learned of the sale of BHS for £1 by Sir Philip to the little-known Retail Acquisitions after reading about the conclusion of the deal in the press in March 2015. Ms Titcomb said if she had been warned earlier the regulator would have taken steps to ensure provisions were made for the scheme, which has now fallen into the PPF lifeboat.

But in the letter Arcadia says the regulator was given notice of a possible sale of BHS as early as July 2014 and was given concrete guidance in February 2015, which led to a detailed discussion of the state of the BHS’s pension scheme.

The Arcadia letter also says that Alan Rubenstein, the chief executive of the Pension Protection Fund, had incorrectly told MPs an outpost of Sir Philip’s group, Davenbush, had withdrawn a guarantee for the BHS pension scheme.

“The guarantee remained effective and was not withdrawn. It was simply not certified for the purposes of the PPF levy calculation in respect of the BHS pension scheme for the levy year 2012/2013” the letter says.

In a response to claims Sir Philip’s extracted hundreds of millions of dividends from BHS and under-invested in the department store chain, the letter claims that between 2000 and 2009 there was £325m in capital investment by the management.

It also states that after BHS was formally folded into Arcadia in 2009 the department store chain was given a £256m interest free loan, of which £216m, was written off when in the March 2015 sale.

The chair of the Commons Work and Pensions Committee Frank Field said the letter was an “an important intervention” from Sir Philip. He added: “Its central message is disturbing and does nothing to change my view of the adequacy or otherwise of pension regulation. The Committee has sent a copy of the letter to the Pensions Regulator. We urgently await their response.”

BHS collapsed into administration last month. Its pension fund, which has a deficit on a buyout basis by an insurance company of £571m, is being supported by the PPF. The Pensions Regulator has launched an “anti-avoidance” investigation and may compel Sir Philip to pledge a large sum to the scheme under the provisions of the 2004 Pensions Act, which is designed to prevent company owners dumping their responsibilities to final salary pension schemes. Sir Philip has reportedly offered a contribution of £80m.

An angry row erupted between Sir Philip and Mr Field last week after the MP suggested the retail tycoon should be stripped of his knighthood if he did not pay more into the BHS pension scheme. In turn Sir Philip said he was “horrified” by Mr Field’s “prejudiced” comments and said that he should stand down.

Sir Philip has said he will give evidence personally to MPs on the issue, and the session is expected to take place in June.

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