Green to ‘sort’ BHS pension mess

Former BHS owner Sir Philip Green has apologised for the collapse of the retail giant, and to all employees past and present in a belligerent, sometimes bizarre hearing at Westminster.

During the six hour performance in front of a joint committee of MPs tasked with investigating BHS’s demise, Green also promised to sort out the pensions “mess” left behind by the retailer’s collapse last month.

BHS is set to be liquidated after administrators failed to find an acceptable buyer for the business, putting all of its 164 stores and 11,000 jobs at risk, and leaving a £570m black hole in the company’s pension fund.

Pension trustees ‘asleep at the wheel’

When asked about the company’s pension scheme Green admitted that “stupid, idiotic mistakes” had been made, but told MPs that his advisers were working on a “resolvable and sortable” solution for its 20,000 members. Green’s plans will apparently deliver a better result to those enrolled in the scheme than the proposed PPF plan, and could end up costing him up to £275m to implement.

When questioned about how the BHS pension scheme drifted from a £43m surplus to a huge deficit, Green stated that he “could not run a business of this size” doing everything himself, and that he was “not actively involved” in pension contributions.  He went on to blame poor two-way communication, and insinuated that pension trustees were ‘asleep at the wheel’.

‘We found the wrong buyer’

Green ran the company for 15 years before selling it last year for £1 to the Retail Acquisitions group headed by Dominic Chappell, and Green railed against the former racing driver, claiming that he broke deal covenants within 24 hours of signing them, taking £7m from a property deal to which BHS was entitled.

In hindsight, Green said, “we sold it to the wrong guy”. He added that he would ‘1,000,000%’ not have sold to Chappell if advisers told him not to, despite a Goldman Sachs ‘sniff test’ identifying that Chappell had previously been twice declared bankrupt.

Dividends ‘not excessive’

Upon being quizzed about the £400m taken out of the company in dividends between 2002 and 2004, Green stated that the financing of the company was “extremely conservative”. He added that when the dividends were extracted the business “did not have more than one times cash flow as debt”, and asked MPs to look at the dividends “in terms of cash flow, in terms of profit”.

He also stated that his Arcadia group had injected over £600m into BHS.

He did, however, acknowledge an ongoing payment of £20m a year to his wife from the purchase of BHS by Arcadia.

Chappell a ‘premier league liar’

At an explosive committee hearing last week MPs heard from Chappell and other former executives at BHS. The company’s former financial consultant Michael Hitchcock called Chappell a “premier league liar” but a “Sunday league retailer”, and accused Chappell of having his “fingers in the till” at BHS.

Chappell heavily criticised Green’s role in the collapse of the business, and told MPs that Green had blocked a rescue deal for BHS with Mike Ashley’s Sports Direct – something which Green denied in his evidence. Green told MPs that he had actually offered £5m to help Mike Ashley secure a deal.

After six hours the hearing was brought to a close, but MPs reserved the right to ask Green for further evidence. They may yet call Lady Green, in whose name the family business interests (including Arcadia) to give evidence.

Do you think that Green should bear ultimate responsibility for the downfall of the business and its pensions black hole, or are businesses like BHS just too big for one person to govern?