A top banker from Goldman Sachs could be grilled by MPs over his role in the collapse of 88-year-old High Street stalwart BHS, according to reports.
The House of Commons Business, Innovation and Skills committee has launched an inquiry into the sale of BHS last year. The Telegraph reports that a senior Goldman banker could be called to give evidence to the committee on the due diligence done on Dominic Chappell, the head of a vehicle that bought BHS for £1 from billionaire Sir Philip Green last year.
BHS collapsed into administration this week, putting 11,000 jobs at risk. Sir Philip Green bought the chain in 2000 for £200 million and took £400 million of dividends out of the chain during his ownership. But BHS failed to move with the times and has struggled in recent years. By the time it was sold it had a pension plan deficit of £571 million.
Sir Philips’ inattention to the pension deficit and health of the chain has led Tory MP Richard Fuller to call him the “unacceptable face of capitalism”. Green, who owns the Arcadia group that controls shops like Dorothy Perkins and Topshop, is also facing calls from Labour MP John Mann to give up his Knighthood unless he pays back the £400 million in dividends he took out of BHS, according to the Guardian.
There are also serious questions over the sale of the chain last year. Dominic Chappell owns 90% of Retail Acquisitions, the vehicle that bought BHS last year. Chappell is a former racing car driver who has been twice bankrupt and had no former experience with retail.
The Telegraph claims that Antony Gutman, co-head of investment banking services in Europe at Goldman, met with Chappell on behalf of Sir Philip before Retail Acquisitions bought BHS.
It is not clear in what capacity, as the bank says in a statement to the paper: “Goldman Sachs had no formal role on the sale of BHS to Retail Acquisitions and was not engaged or remunerated in relation to it.” Still, Gutman is likely to be called to give evidence on his role in the sale. BI has contacted Goldman Sachs for comment and update when we hear back.
Announcing the new inquiry, Ian Wright MP, who chairs the Business, Innovation and Skills committee, says in a statement:
The collapse of BHS brings misery and uncertainty for thousands of workers and also places a potentially significant burden on the taxpayer in the form of pension liabilities. The sale and acquisition of BHS raises real questions about whether directors acted in the best long-term interests of the company and their employees.
Is there too much of an incentive in the system for owners to asset-strip, take out vast sums for personal gain, and then dump and run leaving the taxpayer to pick up the tab when the company fails, rather than create value for the long-term? In this inquiry we’ll want to question the role of advisers — the lawyers, bankers, auditors and others who advised on the sale and purchase of BHS — and examine the legal obligations of company directors in this process.