Sir Philip Green has set out a robust defence of his stewardship of BHS, claiming that he put £421m into the group during his 15 years at the helm.
In a letter to MPs investigating the demise of the retailer, which is being wound down after falling into administration with a £571m pension fund deficit, Green said “it is clear that we invested substantially in the business”.
The amount of capital investment highlighted by Green during his tenure almost exactly matches the £423m paid in dividends to his family and other BHS shareholders between 2000 and 2004. It is part of the more than £580m, including rental payments and interest, extracted from the company under his control.
MPs are expected to heavily criticise the actions of Green, who sold BHS for £1 to the serial bankrupt Dominic Chappell in March 2015, in a report scheduled to be published in the next two weeks.
The Labour MP Frank Field, who chairs the work and pensions select committee, one of the two parliamentary groups investigating BHS, has said Green’s credibility rests on coming up with a generous settlement for pensioners, following a bad-tempered evidence session with the retail tycoon last month.
Green has been accused of offloading BHS to the inexperienced and underfunded Chappell as a way to avoid dealing with the company’s pension problems.
He previously admitted mistakes in the handling of the pension fund, but has pledged to “sort it”. When giving evidence to MPs, Green said he had not been sufficiently involved in the fund’s dealings, but letters from the former chair of the BHS pension fund trustees indicate that Green was involved in meetings as early as 2002.
Chappell told MPs that he began talks about taking over BHS after working on an earlier bid led by Paul Sutton, a convicted fraudster, which was thrown out by Green.
In the letter, Green repeated his assertion that he was not aware that Chappell was part of Sutton’s team. “It is clear that we invested substantially in the business, we lent substantial sums to the business and we gave Retail Acquisitions [Chappell’s consortium] every chance with a solid platform to take the business forward,” he said.
Letters from Green’s legal advisers, Linklaters, claim Chappell broke the terms of a sale agreement by failing to invest his own money in BHS, and paying out proceeds from property sales to fund loans, and payments to himself and advisers.
Retail Acquisitions group borrowed £5m, secured against BHS’s warehouse in Atherstone, Warwickshire, to provide half a promised equity investment agreed as part of his deal with Green.
Linklaters wrote to law firm Olswang in June, saying that raising the money against BHS’s Atherstone warehouse was “contrary to the clear commercial understanding” that a £5m upfront investment should be new equity.
Evidence from Eddie Parladorio, one of Chappell’s key lieutenants, indicated that Chappell was still trying to raise a personal loan to fund his promised investment in the retailer 48 hours before he agreed a takeover deal.
Parladorio said a loan was agreed with Retail Acquisitions, rather than Chappell personally, at the very last moment.
He also told MPs that he had voted against a plan for Retail Acquisitions to lend £1.5m to the company that owns Chappell’s father’s house, as “I did not consider this loan to be the business of RAL”.
