Philip Green – Maxwell II

In a remarkable article in the FT, Conservative MP for Haltemprice and Holden, David Davis brands Phil Green’s behaviour at BHS as

… the dark side of capitalism: increased borrowing and payment of ever bigger dividends; risk transferred from the private to the public when the business fails; the low paid and the taxpayer left to pick up the bill. It is all worryingly reminiscent of the 2008 banking crash.

I would go further and liken Green’s behaviour to Robert Maxwell. Instead of stealing money from the Pension Fund, he starved the pension fund of the money due to it.


Legitimised through political donations

The BHS pension fund fell from a surplus of £17m in 2002 to a potential deficit of £571m today, a sum strikingly similar to the profit taken out of the company by the Greens. BHS has not made a profit since 2008

For his work to the British retail industry, Green was knighted, like Maxwell, Green was involved in political lobbying and was a heavy donor to the power-brokers of his day.

Frankly it doesn’t matter that Maxwell funded the Labour Party and Green the Conservative party, what matters is that both were legitimised by politicians whose power bases were reinforced by the same money.


PPF not to be bought off

It now appears the PPF were twice offered the opportunity to take on the liabilities of the BHS Pension scheme within the last year. They would not be bought off

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Last night the BBC claimed that latterly, payments made to shareholders (principally Green’s wife) had not been given clearance from the Pension Regulator, It may be that Green’s activities were not only odious but criminal. This however has yet to be confirmed.

Whether Green deliberately broke the law or not, the Pension Regulator has retrospective powers in situations like this.

I hope that the PPF look through the sale of BHS to Retail Acquisitions, an organisation run by a twice bankrupt that did nothing to repair the damage and took £25m from BHS (including £11m of legal fees) in its year’s tenure.

Green might have hoped that Dominic Chappell had made a better fist of things so that the gossamer skin between the BHS that has just entered administration and the lame duck he sold for £1 had become a little tougher,

But anyone can see that the damage was done by Green and that it was done in the full view of politicians from both parties (and indeed a third coalition partner).


This is not a pension problem – it is more fundamental

In his article, Davis calls for a change in the way we govern companies

The government must review its approach to the financial engineering of businesses to eradicate tax liability and park financial risks anywhere but on the owners. It should rewrite the companies and finance acts accordingly.

It would be easy to point the finger at the PPF but I suspect it was right not to deal with the monkey but wait till they could get at the organ grinder. If there is a failure of Government, it is – as Davis argues, it is in the approach to business practice.

Alan Rubenstein at the PPF and Lesley Titcomb at the Pension Regulator are formidable figures.

Philip Green will not be able to buy them off. Unlike Chappell, Green has money. It may be in Monaco but it is big money.

There is no better time to test the transparency of offshore banking than now.

Let us find that money, repatriate it and use it to pay the pensioners and future pensioners of those who work and worked at BHS.

 

About henry tapper

Founder of the Pension PlayPen, Director of First Actuarial, partner of Stella, father of Olly . I am the Pension Plowman
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3 Responses to Philip Green – Maxwell II

  1. Phil Castle says:

    Well said Henry. This one isn’t going to go away. We are all a lot wiser now than we were when the Maxwell affair occurred and lets not give the establishment 27 years to get to the truth as happened to Liverpool fans.

  2. Darren Masters says:

    Henry, Some good points in here, but also some woeful misconceptions. The supposed clearance of the dividends by the Pensions Regulator would have been a challenge given that the dividends to Tina Green were paid in 2002 and 2004, before TPR was formally established.

    That said TPR will do its utmost to follow the money, including establishing any other commercial links to companies under the common control in the Arcadia group.

    There are flaws in both companies legislation and in pensions legislation that do need addressing here, including the woeful under capitalisation of businesses and the ease with which profits can be distributed without considering future funding needs. A recent survey also suggests between 700 and 1,000 companies may never be able to fund their schemes, but many of these adopt the approach of BHS – hang on while you can, fund as little as you can convince the trustees to keep quiet, and hope the day of the grim reaper doesn’t arrive any time soon!

  3. henry tapper says:

    I say it as I see it Darren. I know you have an accounting role and so see these things through a very precise lens, I appreciate that precision in your response. But there’s also an argument that trumps the pure financials, Green had a duty of care and so did the trustees and something went seriously wrong in 2002-4.

    We can leave it to the laywers, the tax experts and other advisers to argue pros and cons. I hope that Green forfeits any rights he may think he has in the UK and that we do everything we can to recover his assets from abroad. For the sake of the BHS pensioners and future pensioners.

    That there are many other Philip Greens, I have no doubt

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