Sir Philip Greens reputation as the king of retail is lying in ruins

Sir Philip Green's reputation as the 'king of retail' is lying in ruins

"What kind of man is it who can count his fortune in billions but does not know what decent behaviour is?" The words of Rt Hon Frank Field MP, chair of the Work and Pensions Committee, will be stark reading for retail tycoon Sir Philip Green after British MPs today (25 July) published a damning report into the collapse of the BHS retail chain.

Ultimately, Green's failure to resolve BHS's GBP571m (US$749.3m) pension deficit was a major factor in the retailer's demise, the report says, with his extraction of hundreds of millions of pounds from the business leaving it on "life support".

He was also found to have paid very little tax, "fantastically enriching himself and his family", leaving the company and its pension fund weakened to the point of the inevitable collapse of both. 

His wife, Lady Tina Green, is still being paid tens of millions of pounds of tax-free repayments on the loan that was engineered to sell BHS from one Green family business to another, and will be for some years to come.

Green, whose Arcadia Group retail empire includes Topshop and Dorothy Perkins, bought BHS in 2000. Nine years later, it became part of Taveta group, which is ultimately controlled by his wife.

In March last year it was sold to Dominic Chappell's Retail Acquisitions Limited (RAL) for just GBP1. BHS went into administration on 25 April 2016 and now faces being broken up: the end of a long-standing fixture on the British high street.

BHS "lacks relevance" as it files for administration

In his early years of ownership, the report revealed that Green cut costs, sold assets and paid substantial dividends offshore to the ultimate benefit of his wife. Yet the so-called 'king of the high street' failed to invest sufficiently in stores or reinvent the business to beat the prevailing high street competition.

The Committees found "little to support the reputation for retail business acumen for which he received his knighthood".

The sad demise of BHS has created many losers, not least the 11,000 employees that are now seeking work or facing unemployment, and the retailer's 20,000 current and future pensioners who face substantial cuts to their entitlements.

Its suppliers are also feeling the effects of the fall-out, with two going into administration in May, including the owner of the Pretty Polly, Gossard and Aristoc brands.

BHS supplier Courtaulds Brands in administration

Chappell failed to escape the wrath of the MPs report either, and was found to have had his hands in the till as a result of GBP2.6m he took out of the business personally, and an outstanding GBP1.5m family loan.

A "drip in the ocean" and "an insult to the employees and pensioners of BHS that he let down", MPs said of the man who "put his home team first" and who was described as "incompetent" and a "self-serving" owner who personally enriched himself as BHS failed around him.

Yet, ultimately, the report makes clear the principal character in BHS's demise is Green. His rush to drive through the sale of the chain that had become "a financial millstone and threatened his reputation" culminated in a sorry litany of failures of corporate governance and greed. 

"One person, and one person alone, is really responsible for the BHS disaster," Field says. "While Sir Philip Green signposted blame to every known player, the final responsibility for up to 11,000 job losses and a gigantic pension fund hole is his. His family took out of BHS and Arcadia a fortune beyond the dreams of avarice, and he's still to make good his boast of 'fixing' the pension fund."

The Committee describes Green as the "unacceptable face of capitalism", adding that the demise of BHS begs much wider questions about the gaps in company law and pension regulation that must be addressed.

A similar sentiment was echoed by Prime Minister Theresa May just weeks earlier. Launching her leadership campaign, she said one way "to make our economy work for everyone is by getting tough on irresponsible behaviour in big business […] we're the party of enterprise, but that does not mean we should be prepared to accept that 'anything goes'".

Following publication of the report, a spokesperson for May told the BBC the findings were "clearly concerning" and that there was a need to "reform capitalism to make sure it works for everyone not just the privileged few."

Writing on just-style, Mike Flanagan, CEO at consultancy Clothesource, also attributed the surge of resentment around prominent British apparel retailers such as Sir Philip Green and BHS as one of the contributing factors behind British voters' decision to leave the EU.

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The Committee is now calling on Green to "act now to find a resolution" for the BHS pensioners, which it says is "a moral duty", and which will undoubtedly require him to make a large financial contribution. 

So far, Green, dubbed Sir Philip Greed, has not responded to the report's devastating findings. But he will have plenty of time to ruminate over them as he soaks up the sun on the GBP100m superyacht he took ownership of at the weekend as the first 20 of BHS's 163 stores closed down.

Click below to read more of just-style's coverage of BHS: 

BHS begins UK wind-down with 20 store closures

BHS online and overseas operations sold off

BHS to be wound down with loss of 11,000 jobs

BHS receives "five bids" for majority of business