Jeremy Quin, MP, asked Green if corporate governance was important to his business and when Green replied, “Absolutely” Quin asked why this was the case.
Green said, “Because we have lots of responsibilities to ensure that we run the business in a responsible way.” Responding to this Quin asked Green if he felt that good corporate governance had been applied in the case of the sale when the sub-group charged with the sale contained three executive directors without any real recourse to a non-executive director. Green replied that it was up to the MPs – which include members of the Work & Pensions and Business, Innovation and Skills Committees – to decide.
Quin also asked for Green’s opinion of Lord Grabiner, chairman of Taveta Investments, the holding company which sold BHS. Grabiner was not at the meeting which approved the sale of BHS. Green said, “As far as I am concerned, he sits on our board. He is exceptionally sensible, a very knowledgeable man. I feel it pretty cruel that you don’t attend a board meeting and the world’s changed. I find that pretty sad.”
Green suggested that checks were made into Chappell by Goldman Sachs and that the sale to him his Retail Acquisitions consortium was a mistake but others were taken in by Chappell. “Unfortunately there seems to be a lot of people that accepted this guy at face value. Right? Lawyers, accountants, all sorts of other people—happy to take shares in his company. Banks prepared to write letters, whether they’re good or not. Right? These are the facts.
“Now, unfortunately, sadly, it was the wrong owner. … Would I do that deal again? No. Are we sorry we did it? Yes.”
The MPs tried to persuade Green to consider whether the corporate governance arrangements and practices may have contributed to poor oversight which made the sale to the wrong owner – who ultimately has taken the business into administration after a year of ownership – more likely. But Green resisted their attempts to make these connections.
Richard Fuller MP said, “You are the face of British Home Stores and Arcadia Group, and what we have is that you have placed, I think, a lot of reliance on Goldman Sachs, as an unpaid adviser, to pass a sniff test. We have a term sheet that looks like it was masquerading as £120 million but was actually £40 million, which Goldman Sachs said was okay and everyone thought was okay. We have a chairman of the board of your company who was not at the meeting where this asset got transferred. We have an offshore shareholder in the business. The question has to be that there didn’t seem to be any brakes on this process that anyone is owning up to where it could be said, “Hold on a minute, this doesn’t seem right.” The systems available to yourself and others in the City to work through these transactions to stop a wrong ‘un making their way through did not work. Is that a fair observation?”
Green replied, “That is your observation.”
The former BHS owner, while criticising the pensions regulator and suggesting the trustees did not bring the pensions deficit to this attention early enough, has said that he would be looking into providing better benefits for them that what they would get if it becomes within the remit of the Pensions Protection Fund.
Following the evidence session Iain Wright MP, Chair of the Business, Innovation and Skills Committee, and Rt Hon Frank Field MP, Chair of the Work and Pensions Committee, said, “We were pleased to hear that he is still trying to put together a better deal for the BHS pensioners. We hope he will come up with an offer that is satisfactory to The Pension Regulator. However, he doesn’t only have to satisfy The Pensions Regulator, today he is before the bar of public opinion. Much of his reputation now depends on how generously he responds.
Today’s evidence raised host of further questions and we first want to get much more detail on the structure of various companies, particularly those owned by Lady Cristina Green, the profits they have made and the tax they have paid. We have more witnesses scheduled at the end of June and in the last few days we have received a huge amount of further evidence. We have many further questions for Sir Philip, particularly the big questions on the pension fund that he was unable to answer today.”
John Hannett, general secretary of the shopworkers union, USDAW commented, ”
“Saying sorry about the demise of BHS is simply not good enough for the hardworking staff about to be made redundant, many of whom have given their whole working lives to BHS. There are still serious questions that need to be answered and we hope the select committees take up Sir Phillip’s offer to scrutinise his finance team.
“Repeatedly Sir Phillip said ‘we cannot trade backwards, we can only trade forwards’ and that is exactly what the staff need, a future. So we are urging the administrators and all concerned to redouble their efforts to find a buyer, it’s the very least that the long-serving and loyal BHS staff deserve. In the meantime we continue to provide the support and advice our members in BHS require at this very difficult time.”
The parliamentary inquiry is ongoing and will hear from further witnesses on 28th and 29th June – including hearing more evidence from Lord Grabiner.