Business Secretary Sajid Javid has asked the Insolvency Service to fast-track an investigation into BHS, which collapsed into administration last week putting 11,000 jobs at risk.
In a letter to Sarah Albon, Inspector General and Chief Executive of the Insolvency Service, Javid asks that an investigation begin “without delay”, rather than waiting for the administrator’s report within 3 months as is usually the case. Javid cites “considerable public concern” for speeding up the investigation into the retailer’s collapse.
In her reply, Albon confirms an investigation will begin immediately and says that if any directors are found to be guilty of misconduct, they will apply to ban them from holding directorships for up to 15 years. This is routine for the investigation.
A ban could apply to Dominic Chappell, who bought BHS last year for £1. But, as the Times points out, it could equally apply to Sir Philip Green, the retail billionaire who sold it to him after extracting £400 million in dividends from the company. The sale has sparked outrage among MPs and the press given what happened next.
Sir Philip declined to comment on the investigation when his representative was contacted by BI through his company Arcadia Group.
Sir Philip, whose Arcadia Group owns brands like Topshop and Dorothy Perkins, bought the chain for £200 million in 2000 before taking out £400 million in dividends from the store.
While it was in a healthy state when he bought it, underinvestment and the financial crisis hit the business hard and it ran up a pension deficit of £571 million and debts of £1.3 billion. Last year Sir Philip sold the chain for £1.
It is this sale, coupled with the pension deficit, that has sparked controversy. The man heading the vehicle that bought BHS for £1, Dominic Chappell, is a former racing driver who has twice been declared bankrupt and had no former retail experience. MPs have questioned how appropriate this sale was given the state of the business and what due diligence was undertaken prior to the transaction.
Many also feel Sir Philip should be on the hook for the pension liabilities at BHS, which must now be funded through tax payer’s money.
Tory MP Richard Fuller has called Green the “unacceptable face of capitalism” in a commons debate and Green is facing calls from Labour MP John Mann to give up his Knighthood unless he pays back the £400 million in dividends to BHS.
Ian Wright, the chairman of the House of Commons Business Select Committee, summed up the anger surrounding the deal when he told Radio 4’s Today programme: “It’s a case of ‘is it right that people can buy a company, strip it, in many respects, of cash in terms of dividends without real regard to pensions or to employees and then sell it for a pound to untried and untested people who then crash it into a cliff?'”
Wright is heading up another inquiry into the collapse in his role on the Select Committee. The Business Select Committee will hold a joint session with the Work and Pensions Committee to grill Sir Philip over both the business’ collapse and the pension deficit.
Sir Philip has reportedly confirmed he will attend the session, with the Daily Mail reporting he will appear before MPs in June. But his wife Tina, who held the family shareholding in BHS through an offshore vehicle, will now not have to appear before the committees, after initially being summoned.
Alongside the two Select Committee inquiries and the Insolvency Service investigation, the pensions regulator is also looking into the collapse of BHS and The Times reports that the Serious Fraud Office is undertaking preliminary examinations.
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