Prem Sikka (Opinion, 26 April) is right that BHS is a victim, but not of shareholder greed – rather director greed and flawed legislation. In the early 1980s most corporate pension funds had sizeable surpluses. As an accountant at the time, I argued that pension funds should be ringfenced, but I lost the argument on the grounds that companies had a liability to pay their defined pensions. So companies took “holidays” and in some cases raided the pension pot, and we all know what happened.
But it is getting worse; corporate greed is becoming out of control. For example, BP has awarded its CEO a huge amount despite incurring huge losses. Then to get shareholders off the scent it maintained the dividend (this strategy didn’t work), but had to borrow more money to pay it.
A simple corporate governance strategy would be to make it illegal to pay directors’ bonuses unless the company pays a dividend, and to make it illegal to pay a dividend unless the company makes a profit or has the cash to pay out of reserves.
Malcolm Howard
Banstead, Surrey
• Company law does indeed need urgent reform. Plc shareholders have a massive advantage over other business models – they can walk away from their creditors virtually unscathed. This privilege should bear a price and should come only with responsibilities to a wider audience than shareholders themselves, including the public. The early debates about limited liability in the 19th century were concerned about the possibilities that this opened up for fraud and other shady business practices. This highly privileged status should only be granted to companies that display the highest ethical standards and the law should reflect this. This is even more urgent given the emergence of flash trading and the increase in insider dealing over recent years.
Roy Boffy
Walsall, West Midlands
• I am reminded by Professor Sikka’s article of a final interview I had in 1961 when I applied for a management traineeship with the then Imperial Tobacco Company (Imps). I was told by its deputy chairman that if I were offered a job I should not accept it if I believed that the company was beholden only to its shareholders. Imps had obligations to the wholesalers and retailers that sold its goods, to its customers, to the local communities in which it had factories, offices and depots and to its employees.
To this last body of stakeholders, as they would now be called, it had a duty of care that extended into retirement. For that reason it maintained one of the soundest pension funds in Britain. On top of that, in the WD & HO Wills branch of Imps, we employed full-time liaison officers who visited pensioners wherever they lived in the UK and were empowered to offer immediate assistance if it were needed.
Hanson Trust, focused exclusively on shareholder value, acquired Imperial Group plc in 1986 with consequences for the pension fund which took legal action to resolve. Its view of employing people to watch over our pensioners can be guessed at.
John Smith
Lindfield, West Sussex
• In your coverage of the collapse of BHS you refer to the pension scheme potentially being rescued by the government-sponsored Pension Protection Fund (Downfall of the high-street king, G2, 27 April). The Pension Protection Fund, while set up by statute under the Pensions Act of 2004, does not derive funding from government. It is supported via levy-raising powers with the levy payable by all the other eligible pension schemes.
So if the BHS scheme is taken into the protection fund, and after the wind-up there is a deficit, this will be funded by all the other protection-scheme eligible pension funds in the UK.
Mark Austin
Horsmonden, Kent
• I read your article in G2 about Philip Green without any surprise. His modus operandi is well established. Robert Peston, in his book Who Runs Britain? (published in 2008) devoted a chapter to Green entitled The King of Jackpot Capitalism. The chapter analyses the effect such predatory business practices have, not just on employees, but also on the rest of us.
Suggested reading for the select committee, perhaps? Or, indeed, the business secretary, when he has a spare moment.
Veronica Puddicombe
Plymouth
• On the day that we read that Philip Green’s family “banked monster cheques, including £1.2bn from Topshop owner Arcadia” and that because Green’s wife, Tina, “is a Monaco resident, no UK income tax was due on the £1.2bn payout”; we also read that “more than a million people in Britain are so poor that they could not afford to eat properly, keep clean or stay warm” (Study says more than 1m people destitute, 27 April).
Might these two events be linked in any way?
Cathy Wood
Chiselborough, Somerset
• I would like to explain the main reason for the sad downfall of BHS. As one who feels responsible for this disaster, I should explain that I was an enthusiastic customer for a variety of needs for 70 years. When I read about the financial arrangements made by Philip Green to channel his profits to his wife living overseas I decided I would no longer patronise his business.
The calamitous situation for the 11,000 employees may have been brought about, not just because of online shopping, but through other long-term customers making the same decision as me. I am hoping that the right thing will be done to restore the pension funds.
Mollie Holden
Westgate-on-Sea, Kent
• The main lesson to be learned from BHS is that all workers should be able to pay into a national pension scheme underwritten by the government just as MPs, civil servants, doctors and teachers do, rather than have to rely on employer schemes which can evidently collapse at any time. This is by no means the first time it has happened.
Dr Richard Turner
Harrogate, North Yorkshire
• In the 2011 riots, a young man with no criminal record was jailed for six months for stealing bottles of water worth £3.50 from a shop. Philip Green and Dominic Chappell have taken hundreds of millions from BHS (How Philip Green’s family emerged as £580m winners, 26 April).
Andrew Sayer
(Author of Why We Can’t Afford the Rich), Lancaster
• £571m hole in BHS pension fund. £586m banked by “Sir” Philip Green and family in dividends etc. There you go. Sorted.
Jenny Moir
Chelmsford, Essex
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