The head of the Institute of Directors has accused Sir Philip Green of a “lamentable failure of behaviour” that risked “deeply damaging” the British business world as a whole, following the collapse of the high street chain BHS.
The administrators, Duff & Phelps, decided to wind down the business with the loss of 11,000 jobs and the closure of all 163 stores after a last-minute rescue deal fell apart. Stores may be sold off individually, but staff do not know whether their jobs will go or not.
Green and Dominic Chappell, the former owners, left the company, which was founded in 1928, with a £571m pension deficit. Topshop boss Green owned BHS for 15 years and sold it to former bankrupt Chappell and his Retail Acquisitions consortium for £1 last year.
The IOD chief, Simon Walker, told BBC Radio 4: “Sir Philip Green is a very high-profile business leader. He is the person who is on the frontpage with Kate Moss on his arm and who has a £100m superyacht and so on. When someone like this ends up behaving like this, people think that’s how business is, and it’s not. The majority of business leaders are people who are more likely to have mortgaged their homes to keep their company going than to own this kind of lavish thing.”
Asked about the calls for Green to help shore up the pension fund, Walker said: “He certainly has moral responsibilities and we need a proper investigation.
“You can’t just get yourself off the hook by selling the business to someone who has been bankrupt three times and is a former racing driver with no retail experience. BHS was probably going to fail anyway. But it is the manner of its failure and the fact that it ends up dumping huge liabilities on to the taxpayer that is a problem.”
Lord Myners, the former chairman of Marks & Spencer, also called on Green to take some responsibility for the collapse of BHS, by forgoing his position at the front of the creditors’ queue.
The former City minister told the BBC: “It’s pretty indisputable that Sir Philip must take some of the responsibility for what happened here, not least of all selling the business to Mr Dominic Chappell, which was rather like giving the keys of your car to a five-year-old and allowing the five-year-old to go off and crash the car.
“It’s a great shame that Sir Philip didn’t seek to rectify that by retaking control of the company from Mr Chappell.”
He said that Green, who has lent money to BHS, could give up his position at the front of the creditors’ queue so that the money goes to employees and pensioners instead.
There are several inquiries into BHS’s demise, one of the biggest collapses in UK retail history: the House of Commons’ business committee; the Commons’ work and pensions committee; the pensions regulator; and the insolvency service. MPs are scheduled to quiz both Green and Chappell over their roles in coming weeks.
“On the face of it a huge amount of money has been taken out of BHS over recent years, not invested into the business, not paid into the pension fund and the company has run into the wall. We must get to the bottom of why that happened because we have tens of thousands of innocent victims – employees, suppliers and pensioners.”
Green and other investors collected more than £580m in dividends, rent and interest payments during his ownership of BHS, while Chappell’s consortium Retail Acquisitions was paid millions in salaries and management fees.
Myners insisted: “I don’t think you can wash your hands of the company after you sold it … I think you do have a responsibility as a steward to make sure the company is in safe hands.”
The taxpayer will pick up the bill for redundancy payments and other pension funds will have to pick up the tab for the huge pension deficit, he said. “Innocent small suppliers” to BHS could see their business collapse, he added.
Lord Grabiner, the chairman of Green’s Arcadia group, will also be questioned by MPs. He has said he was not present at the meeting that discussed the sale of BHS. Myners described this as “extraordinary”, adding: “My suspicion is that we’ll find that BHS had a very informal governance structure built around the court of Philip Green.”
