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10 things we learnt from Sir Philip Green’s testimony on collapse of BHS

Sir Philip Green finally took the stage before MPs investigating the collapse of BHS

Jim Armitage
Wednesday 15 June 2016 17:03 BST
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Sir Philip Green and wife Tina Green at a wedding ceremony in Monaco
Sir Philip Green and wife Tina Green at a wedding ceremony in Monaco

What happened today?

After weeks of waiting, following a flurry of support acts, Sir Philip Green finally took the stage before MPs investigating the collapse of BHS. Sir Philip had, right up until Tuesday afternoon, been threatening not to turn up after committee co-chairman Frank Field MP said at the weekend he would “laugh” if the billionaire didn’t put £600 million into the pension fund. In the event, Sir Philip turned up promptly and sat for nearly six hours of interrogation with only two 15 minute breaks.

What did the MPs glean?

The prime revelation was the rather stage managed announcement by Sir Philip that he had resumed talks with the Pensions Regulator about filling the black hole in BHS’s pension fund. Sir Philip said the regulator had, after months of silence, only got in touch with his team in the past few days, but that the talks were now taking place and that he hoped a fix would be found shortly. This holds out the prospect of a structure being created in which BHS’s pension will be ringfenced from the rest of the Pension Protection Fund rescue fund. Sir Philip would then inject his own money into the fund to bail it out. The amount is not yet known, but Sir Philip acknowledged the current deal was not good for pensioners in the scheme, particularly those in more senior positions at the organisation.

Anything else?

Not much to bring succour to employees. The committee spent a long time addressing allegations against Sir Philip by the man he sold BHS to, Dominic Chappell. Most explosive of Chappell’s claims was that Sir Philip had “railroaded” a rescue deal from Mike Ashley, owner of Sports Direct. Sir Philip refuted the allegation, saying he and Ashley were friends, and that he had offered to help a deal get done. He provided a letter from the administrators, Duff & Phelps, supporting that claim.

For the first time, he said he had even considered buying BHS from the administrator himself: “It was so cheap” he said. However, in one of the many swipes he made at his vilification in the media over the past month, he said he would not because of the “drama” that would have swamped him had he done so.

Whose fault did Sir Philip say the collapse of BHS was?

While he repeatedly said he was not there to attribute blame, he laid responsibility directly with three-times bankrupt Chappell and his team, claiming that they had taken millions of pounds out of the business in the days after taking it over and failed to deliver on their business plan. Although he denied it a few minutes later, he said Chappell lived in Fantasyland.

But isn’t it Sir Philip’s fault for selling it to him in the first place?

Not according to Sir Philip. He said checks on Chappell had only come up with one bankruptcy, and pointed out that Walt Disney and HJ Heinz had once been bankrupt. But his main defence was that Chappell seemed convincing because he was being represented by the blue chip law firm Olswang and accountants Grant Thornton. He repeatedly questioned their role in checking him out, and suggested they were on a “success fee” that would only pay out if Chappell got the deal done.

He angrily asked why David Roberts, partner at Olswang, had avoided appearing in front of the committee despite being “knee deep” in the Chappell deal. Grant Thornton senior partner Peter Martin had also “managed to escape” appearing, he said.

He also repeatedly attacked the Pension Regulator for failing to engage with him. That had meant, the all-important pensions issue had not been resolved which in turn put off lenders and potential buyers. At one stage, when questioned on whether he had done enough, he shouted: “Sir! The regulator has never found my phone number in three years!”

He also said he would “1 million percent” not have done the deal with Mr Chappell if his own advisers at Goldman Sachs had not given Chappell and his team the stamp of approval. Despite repeatedly been offered the chance to do so, he refused to blame Goldman, however. He also refused to blame his chairman Lord Grabiner QC for not being present in the key meeting when the sale was discussed and agreed. His refusal to criticise Grabiner and Goldman merited more questioning than the committee gave it.

What about tax avoidance?

The committee attacked him for structuring his ownership of BHS through complicated offshore companies, and queried why he lived in Monaco. He said he moved himself and his family there after a heart scare after being recommended to do so by a friend. He said BHS was not structured in as aggressive a manner as many other companies which license their brands in places like Dublin. Some MPs were not convinced, with one saying the complexity of the company structure meant it was not surprising the Pensions regulators were wary of dealing with him and another suggesting such “tax avoidance” structures damaged public trust in business.

What needed further interrogation?

It is still not clear how his son-in-law Brett Palos came to buy one of BHS’s big stores just days before Sir Philip sold the company for £1 to Chappell. The committee failed to dig deeper into the deal after Sir Philip said he was “not involved in the transaction”. Sir Philip’s claim that he was a passive bystander deserved more scrutiny. Ashley and the panel also shadowboxed for a long period over how much cash he actually left in the business for Chappell to run it without the committee seeming to land any actual blows. Chappell claims Sir Philip sold BHS knowing it was going to fail.

The committee also did too little on the crucial issue of credit insurance. Chappell argues Sir Philip had promised to sort it out but failed to deliver, meaning suppliers were wary of dealing with BHS. Sir Philip said he tried to negotiate with an insurer but was turned down. He also blamed media exposees of Chappell’s chequered financial history for BHS’s failure to get insurance.

On his ownership of BHS, the company spent too long focusing on the offshore structures and not enough time pursuing the question of whether the hundreds of millions of pounds of dividends taken out of the company had damaged it.

How was his famous temper?

Bar a few fiery exchanges, he kept it largely screwed down, although at times it looked like he was struggling. The committee appeared to be mollifying him much as it did with the mercurial Mike Ashley the previous week, perhaps to dissuade him from walking out (which he threatened to at one point). The effect was to give the impression Sir Philip was dominate proceedings somewhat.

Although there were none of his trademark expletive-strewn explosions, he was tetchy about pretty much every criticism of his actions the committee made. That led to a telling intervention from co-chair Iain Wright who said: “You seem a very dominant personality but extremely thin-skinned to quite courteous questioning.” Mr Wright asked if this was a reflection on how he runs his business, and whether it might have something to do with the fact that none of his non-executive directors warned him off the deal with Chappell? Sir Philip declined to comment.

He created a surge on social media when he weirdly demanded that one of the MPs stop staring at him, declaring it made him feel “uncomfortable”. Quite where committee members interrogating a witness are supposed to look was not clear. Some viewers were put in mind of the old rule in the Royal court that banned courtiers addressing the king from looking him in the eye.

Did he apologise?

Yes, he said sorry to “all the BHS people who’ve been involved in this”. He went on to say he hoped that, of the 11,000 staff, 7-8,000 were part timers who will hopefully find other work. “There are jobs out there,” he said.

What next?

In a statement after the hearing, the committee rightly said many questions remained to be answered by Sir Philip, particularly around the complicated structure of the businesses which owned BHS in his wife Tina’s name. Whether that results in Sir Philip being called to testify in person again, or his wife Tina being asked to fly in from Monaco remains to be seen. The committee said it would be particularly looking at Sir Philip’s tax arrangements, which seems something of a distraction from the matter at hand.

Most important to employees will be the negotiations with the Pensions Regulator over a deal on the deficit. The regulator issued a statement after Sir Philip’s hearing in which it denied being slow and said it had so far not received any offer from him or his team. But Sir Philip had earlier told the MPs: “ It is resolvable, sortable, and we will sort it. I want to give assurance to the 20,000 pensioners that I am there to sort it.”

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