The former owner of BHS loaned cash to a man connected to a convicted fraudster, raising further questions about its stewardship of the department store chain.
The discovery, which contradicts statements made to the Guardian last year, follows a torrid week for the retailer which collapsed into administration on Monday, putting 11,000 jobs at risk.
The department store was owned by Retail Acquisitions – a consortium led by Dominic Chappell – which bought BHS for £1 in 2015. Retail Acquisitions lent money to Colin Sutton. Although not related, he has been a director of companies run by Paul Sutton, a convicted fraudster who introduced Chappell to Sir Philip Green.
BHS has been left with a pension deficit of £571m, with Green accused of making hundreds of millions of pounds from the retailer before selling it.
The loan is important because Retail Acquisitions received more than £25m of payments from BHS, and Chappell has previously insisted that he had cut ties with Paul Sutton. Chappell said the £1.5m loan was paid to a property company connected to Chappell’s father and used to pay off the mortgage on the older man’s house.
Land Registry documents show that the house in Sunbury-on-Thames was bought last July by a company called JDM Island Properties for £850,000, with Retail Acquisitions named as the lender.
JDM was set up last April and only has one director and shareholder – Colin Sutton. The address given for JDM is the same as B52 Investments, Paul Sutton’s private investment vehicle.
Colin Sutton served as director for a Chappell family business in the 1990s, but also as a director last year for two of Paul Sutton’s companies – Containasuite, a startup that planned to provide temporary accommodation, and B52 Investments. When contacted by the Guardian on Friday, Chappell denied that Colin Sutton and the loan was connected to Paul Sutton, but did not answer questions about why Colin Sutton had bought the property.
He said: “I have known Colin Sutton for over 30 years. He has worked with my father for most of this time. He is nothing to do with Paul Sutton, apart from doing book keeping work for him.
“JDM owns the house that my mother and father live in. RAL [Retail Acquisitions] using RAL money made a loan secured against the property.”
The Guardian first contacted Chappell about his connections to Colin Sutton in April 2015, but got a different response.
He said he had “no connection” to Colin Sutton, adding: “He’s an accountant, a local accountant. Absolutely no idea.”
When pressed on what he meant by “no idea” and on whether he knew about the connection with Paul Sutton, Chappell said: “No. He’s not on any board of my company whatsoever, nor has been for a very long period of time.”
After being pointed out that he had been on the board of family businesses in the 1990s, Chappell added: “In the 90s. End of. He’s an accountant stroke administrator – absolutely no idea.”
Just two days after the conversation between the Guardian and Chappell, JDM Island Properties was registered as a company at Companies House by Colin Sutton.
Paul Sutton is a 59-year-old once bankrupt businessman who was found guilty in absentia of embezzlement in France in 2002 and was sentenced to three years imprisonment. The case was unconnected with Chappell and Colin Sutton.
Paul Sutton was in negotiations with Green during 2013 and 2014 about acquiring BHS, with Chappell part of the talks. When Green was tipped off about Sutton’s background, the tycoon pulled out of talks.
Chappell then pressed ahead with his own deal to buy BHS. Green demanded guarantees that Sutton was not involved in the deal.
Last month, the Sunday Times revealed that Chappell and PSutton had set up a secret company in Panama less than a month after Retail Acquisitions acquired BHS. The pair owned 50% of Clarberry, which was incorporated in the tax haven on 1 April last year.
Companies House records show that in 2014 Chappell was also briefly a director of Containasuite. He was on the board for about a month, and told the Guardian last year that he was hired by Sutton to work for Containasuite.
More than 80% of Containasuite’s shares are listed at Companies House as being owned by another firm called B52 Investments, which in turn is controlled byNicola Tarrant, who is Sutton’s partner.
The Guardian has seen paperwork showing that the former name of Retail Acquisitions – Swiss Rock – was used as a code name by Sutton when he was trying to buy BHS in 2014.
Chappell could be forced to return millions of pounds that were paid to his consortium during its controversial 13-month ownership of BHS.
BHS has written to Chappell asking him to repay £50,000 that has not been repaid after he moved £1.5m from the retailer to an obscure corporate vehicle in the days before the store chain’s collapse.
Chappell moved £1.5m into BHS Sweden, an unconnected company, last week as it became clear that BHS was heading for administration. When asked to return the cash by BHS management, Chappell paid it back £50,000 short, saying this represented the cost of transferring the money into Swedish krona and back again.
Chappell has said the funds had remained in the group, were for professional fees, and “all justifiable”.
The administrators to BHS are also examining whether loans paid to Retail Acquisitions, Chappell’s consortium, can be called in.
Chappell said he “cannot comment on the £50k as this is a matter between BHS Sweden and the administrator”.
Paul Sutton and Colin Sutton could not be reached for comment.
