Leadership failures and personal greed led to the collapse of retail chain British Home Stores and its enlarged pension fund deficit, members of parliament have concluded in a damning report published today (25 July).
In April this year, BHS went into administration after 88 years of business, putting 11,000 jobs and 20,000 people’s pensions at risk.
At that time the Pensions Regulator had been reviewing whether former owner Sir Philip Green would have to plug holes in the retail chain’s pension fund.
In today’s report, the Work and Pensions and Business, Innovation and Skills Committees concluded Mr Green chose to rush through a sale of the high street institution, which was losing money and had a very large pension deficit, to a buyer who he was aware was “manifestly unsuitable”.
According to the report, Sir Philip Green, current BHS owner Dominic Chappell and the respective directors, advisers and ‘hangers-on’ all got rich or richer are all culpable, with the only losers the ordinary employees and pensioners.
The Committees branded their actions “the unacceptable face of capitalism” which posed wider questions about the gaps in company law and pension regulation that must be addressed, through new inquiries.
Sir Philip Green must act now to find a resolution for the BHS pensioners, which will require him to make a large financial contribution, the MPs demanded,
His failure to resolve the pension fund’s problems contributed susbtantially to the demise of BHS, according to the report, along with other factors.
The report concluded that the sale of BHS did not have to proceed as it did, and that he knew that Dominic Chappell was an unsuitable purchaser but overlooked his shortcomings.
It also concluded the Green family benefited significantly from BHS, and found little evidence to support the reputation for retail business acumen for which Sir Green received his knighthood.
Chair of the Business, Innovation and Skills Committee and member of parliament Iain Wright said: “While BHS staff face uncertain job prospects and pensioners worry about their future entitlements, it’s clear that a large cast of directors, advisers, and hangers-on enriched themselves off the back of BHS, including Dominic Chappell and his fellow RAL directors.
“Chappell took no risk and put no money into the venture and yet gained huge rewards as BHS crumbled around him. His failure is bad enough but that he effectively had his hands in the till is an insult to the employees and pensioners of BHS that he let down so badly.”
Steve Webb, director of policy at Royal London said: “Whether Philip Green has a legal duty to top up the BHS pension scheme will be decided by the Pensions Regulator. But this report shows that he has a clear moral duty to do so.
“The very BHS workers whose efforts produced the profits for BHS’s owners in the good years are the same people whose pensions are now at risk of being cut. Sir Philip Green has no excuse for being so apparently unaware of his responsibliities towards the company pension scheme and it is now time for action to deal with the problem.”
ruth.gillbe@ft.com
