The collapse of UK High Street chain BHS and the threat to 11,000 staff and their pensions has launched no less than four enquiries. Firstly, The Government Insolvency service is investigating whether Directors acted improperly. Secondly and thirdly the House of Commons Business Committee and the Work and Pensions Committee are worried about employee rights and the Government Pensions Protection Scheme needing to fill a hole. And finally the Serious Fraud Office has launched a preliminary enquiry.
The main target for MP’s is flamboyant retailer Sir Philip Green, owner of the Arcadia fashion group (Burton, Topshop, Dotty P etc) who had sold BHS in 2015 to Retail Acquisitions, a consortium headed by Dominic Chappell – twicebankrupt former racing driver with no retail experience. Phil had bought BHS in 2000 for £200 million when it was reasonably healthy. Since then it had run up debts of £1.3 billion and a pension deficit of £571 million before selling it to Dom for £1, debts and shortfall included. What seems to grate with MP’s is Sir Philip’s lavish lifestyle part-funded by some £400 million of BHS dividends while the Pensions Protection scheme may need to step in. Suggestions have been made of asset-stripping and the ‘unacceptable face of capitalism’ etc.
But hang on a minute – wasn’t Green dubbed a hero in 2012 and ‘The King of the High Street’ by the BBC thanks to the success of Arcadia? And wasn’t anyone listening when he launched attacks on institutional landlords who demand skyhigh shop rents whilst online retailing is killing the High Street? For years anyone visiting BHS stores could see they were desperately in need of modernisation. If it had been a Market Hall kiosk I’m sure a half-competent Market manager would have spotted the warning signs.
MP’s have suggested Sir Philip should repay his dividends into the pension fund or be stripped of his knighthood. Fat hope. But some unlikely supporters have also come to his defence. BBC business editor Simon Jack said: ‘He ran BHS for 15 years, employs thousands and is a great force for UK fashion retail both here and in the USA. But it doesn’t look good when he jumps onto his yacht in Monaco leaving worried pensioners and employees behind. He is not a natural corporate raider as people have portrayed him’ Even Sir Stuart Rose who fended off a takeover bid whilst Chairman of Marks & Spencer said ‘Philip is not only a first-class retailer, he is absolutely preeminent in his generation in terms of his financial nous and ability’.
The PM is keeping well clear of this debate. In 2010 he appointed Green – an acknowledged expert in supply chain economics – to conduct a review into Government efficiency. He reported HMG consistently failed to make the most of its buying power and it’s credit rating.
So why is the Serious Fraud Office involved? Well, having paid £1 for the company and its debts and pension fund shortfall Dominic Chappell allegedly tried to transfer another few million of cash out of the company before he was blocked by the BHS board of directors. That would have been very naughty. Set your video to record the interrogation by the Select Committees of Messrs Chappell and Green. Sir Philip is without doubt one tough cookie with a short temper so it could be as entertaining as ‘The West Wing’ or ‘The Borgias’.
Meanwhile in Brussels Jyrki Katainen, EU Commission Vice-president for growth has announced plans for standardised energy usage limits on household appliances to reduce carbon emissions. Electricity-hungry appliances such as toasters and kettles are set to go the same way as incandescent lightbulbs. UKIP MEP David Coburn has publicly blamed the EU for ruining his breakfast because his toaster needs four attempts to brown his bread. UK consumption of toast and tea is six times the European average. I can see another row brewing.