The former BHS owner Dominic Chappell was trying to buy Austin Reed as the department store chain headed for collapse, it has emerged.
Evidence submitted to MPs by Alan Jacobs, the founder of investment company Jacobs Capital, shows that Chappell held talks about buying the menswear retailer. The talks fell apart, however, because it “became clear that Mr Chappell and Retail Acquisitions [his consortium] did not have access to sufficient funds to conclude such a transaction”.
The letter from Jacobs, a non-executive director of Austin Reed, raises further questions about Chappell’s management of BHS. During the period in which he was in talks to buy Austin Reed, BHS was working on reducing its rental payments through a company voluntary arrangement, which was vital to securing its survival.
Chappell’s consortium bought BHS for £1 from Sir Philip Green’s Arcadia Group in March 2015, but the company fell into administration 13 months later. Austin Reed collapsed last month after administrators failed to find a buyer for the chain, leading to the loss of 1,000 jobs and the closure of 120 shops.
Chappell was described as a “mythomaniac” and “Premier League liar” at a parliamentary hearing last week. In his evidence to MPs, Chappell said Jacobs, who sits on the board of a number of companies, including Iceland, Reiss and Virgin Active, had provided advice to Retail Acquisitions.
Jacobs first met Chappell in January 2015, according to his letter to MPs, and declined to join his consortium or become a non-executive director. Jacobs said he attended a meeting with BHS management at the request of Chappell and provided advice “on occasion” once the deal was completed.
“My conversations with Mr Chappell regarding BHS principally revolved around trading and working capital challenges. I was not privy to the terms of the deal to purchase BHS nor the negotiations leading up to the sale,” he said. “More recently, our conversations related to the potential acquisition by Retail Acquisitions of Austin Reed Group.”
Jacobs said he was contacted by Chappell in October 2015 about the possibility of buying Austin Reed. A “number of meetings and conversations” took place between January and March until the talks broke down.
In separate evidence to MPs, Chappell said he received £2.63m from Retail Acquisitions and BHS during the period he controlled the retailer. This included £1.6m of payments to Swiss Rock, a company he controlled, as well as £414,000 in “pre-agreed fees” and £650,000 in salary payments.
Chappell also revealed that a £1.5m loan against his father’s home, paid by Retail Acquisitions, remains outstanding in full. He told MPs last week that some of the loan had been repaid.
The former BHS owner sent a letter to MPs after promising to provide a breakdown of the payments between himself, Retail Acquisitions and BHS. However, Chappell said it will “take some time” to provide full records.
“Mr Frank Field [chairman of the work and pensions committee] requested that I confirm the actual amounts into my bank account net of taxation and expenses,” he said.
“Unfortunately obtaining full and accurate records will take some time as I am dependent upon third parties for some of that information. Therefore, I have taken the decision to provide the full gross amount of payments without delay as requested by the committee.”
Green is scheduled to appear in front of MPs on Wednesday in the latest stage of the investigation into the collapse of BHS. The tycoon has threatened to pull out of the hearing if Field does not resign from the committee, claiming that the MP is biased against him. However, Field has said he will not resign.
The MPs on the work and pensions committee, and the business, innovation and skills committee, who are conducing a joint investigation, are pressing for three senior bankers at Goldman Sachs to appear in person to answer questions about BHS.
MPs have called Michael Sherwood, the vice-chairman of Goldman and a long-time adviser to Green, and Michael Casey, also of Goldman, as well as recalling Anthony Gutman, the co-head of investment banking in Europe at Goldman, who gave evidence last month.
The investment bank wrote to MPs on Friday to say that evidence provided by Chappell about the level of Goldman’s involvement was “not correct” and that it does not believe that its employees are able to provide any new evidence.
However, Field and Iain Wright, chair of the business committee, said: “The evidence we have taken since has raised further questions on the involvement of Goldman Sachs, which we would like to explore in oral evidence. We are therefore confirming the invitation to those listed in the activity log – yourself [Sherwood], Mr Casey and Mr Gutman – to attend on the afternoon of Tuesday 28 June.”
