Before the forfeiture committee is summoned to consider de-gonging Sir Philip Green, it’s probably wise to introduce some proper process into the unpicking of the BHS fiasco.
Frank Field’s work and pensions select committee can do valuable work on the narrow question of assessing the impact on the Pension Protection Fund (PPF), the lifeboat for defined-benefit schemes. It can also invite Green to give evidence – and, by the way, it should also call Lady Green, since she was the formal owner of the department store chain. And the Pensions Regulator can assess whether the Greens should be asked to contribute more to the pension scheme.
But what is really needed is an old-style Department of Trade and Industry investigation, which may even be wider than the inquiry Sir Vince Cable called for last night. Were the trustees of the BHS pension fund asleep when Green’s family was extracting dividends? Did those famous names on the BHS board – Allan Leighton, now chairman of the Co-op Group, and bankers Robin Saunders and Chris Coles – assess long-term risks to the pension fund? Did property transactions between BHS and the Green family weaken the pension fund’s covenant?
How did the trustees and Green decide in 2012 that 23 years would be a suitable period in which to attempt to close a deficit that now stands at £571m? Should the Pensions Regulator, in future, approve the sale of any business with a deficit in its pension fund? And, after the sale of BHS to Retail Acquisitions, were the “professional fees” charged by the owners justified?
Proper process these days means the administrator to BHS filing a report on the collapse, which will cover the conduct of current and former directors. The insolvency service then reads it and can make recommendations for further inquiry to the Department for Business, Innovation and Skills. Sajid Javid, the secretary of state, can then order whatever investigation he wishes.
Javid should opt for the fullest possible inquiry, assuming there are grounds to do so. In the last big collapse in the retail industry – Comet in 2012 – taxpayers were left with a bill to cover redundancy payments. Yet the insolvency service’s report was never published, despite then-business secretary Cable’s promise to share details. At BHS it is possible the PPF will have to increase levies on other defined-benefit funds. This time, let’s have the full facts on the table. If Green’s knighthood is to be removed, let everybody see why.
Barclays’ new chief needs to get tough on bonuses
Jes Staley’s pitch at Barclays is that, once he has shed the dross, the rest of the bank will finally sparkle for long-suffering shareholders. The new chief executive puts it less excitedly, of course. “The performance of the core today shows the potential power of the group once it is freed from the drag of non-core,” he said.
Up to a point, that’s a reasonable analysis, and one Barclays was keen to emphasise. The bank boasted about its 18% increase in “core” pre-tax profits in the first quarter before mentioning the all-in 25% decline to £793m. Fair enough.
But don’t run away with the impression that the core is entirely healthy. The plan to sell the African assets was not the biggest decision Staley has made since arriving last autumn. Rather, it was retention of the investment bank, which has earned its keep only about one year in every four since the financial crisis.
This year is already shaping up as yet another non-vintage offering. Underlying profits declined by almost a third in the corporate and investment bank as revenues fell. Many competitors are doing worse, but an incoming Barclays chief executive should know his duty when return on equity in investment banking is still sub-par – cut those bonuses.
The efforts of his predecessor, Antony Jenkins, were limp and he will forever be remembered for his confession that he could not be tougher for fear of a “death spiral”, a remark that encapsulated how Barclays’ high-earners have a stranglehold over the shareholders.
Staley has already added to investors’ suffering by pre-announcing a 50% dividend cut. That setback demands a stiffer response on 2016 bonuses than Wednesday’s vague promise to adjust “appropriately”. Maybe Staley’s end-of-year action will be stronger than his words – it had better be.
Amazon’s man at the DWP makes a discreet exit
How convenient. Doug Gurr, the Amazon executive whose appointment as a non-executive director at the Department for Work and Pensions caused a storm in February, has got a promotion. He has been switched from Amazon’s Chinese operations to leading the UK end.
You might think a UK posting would make it easier to rock up at the DWP occasionally, but Amazon says he needs to “focus on his new role” and thus his government job has ended almost before it began.
Take a bow Labour MP Margaret Hodge, who questioned the sense of putting an Amazon exective at the heart of government when so many web-based multinationals’ tax affairs are under the spotlight. It rather looks as if Amazon has opted for discretion.
