A paraphrase of Frank Field’s advice to (Sir) Philip Green, after the publication of a damning report into the failure of governance that Green created in his 15 years in charge of BHS.
Here is his press comment
“One person, and one person alone, is really responsible for the BHS disaster. 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 reputation as the king of retail lies in the ruins of BHS. 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. What kind of man is it who can count his fortune in billions but does not know what decent behaviour is?”
The 60 page report published today by the joint DWP and BIS committees is not going to be the end of the matter. But painful as it sounds, about all that we as a nation can do to restitute the 11,000 jobholders and the 20,0000 in the BHS pension scheme, is take away Green’s knighthood.
Such is the danger of running business on trust and through trusts. The Pension Fund trust that Green sponsored is short a minimum of £570m and by 20th August all BHS stores will be standing empty. The cost of Green’s actions will be felt by those who have least while the boats keep coming, a new one only this month.
This is the first big test for Theresa May’s social justice agenda. If this is not social justice writ large accross the July sky – what is?
A failure of regulation?
Green was able legitimately to flout good corporate governance in return for an easy life in the South of France. He handed over BHS to Chappell with a minimum of fuss for the consequences and was able to do so without the Pension Regulator even knowing. This came as a surprise to me as I had assumed that I’d supposed the company needed to get “clearance” for such a major change , apparently not.
The report criticises tPR for being slow (it took them four months to respond to BHS proposal for a 23 recovery period. But the report does not blame tPR for the mess nor its clear up. It points out
TPR is, however, yet to receive a single detailed proposal for resolution or an adequate offer to the schemes
Or a failure of corporate governance?
To my mind, the Pensions Regulator stood in a queue waiting her turn to speak. The rules that control the transfer of ownership to fit and proper people did not work. The damage was done well before we got to the pension scheme. Green and his lawyers had found a way to offload BHS and its debts and the law was his friend.
A failure of trust?
The actions of our corporate leaders are governed by an ancient system of trust law that assumes that businessmen will not behave like medieval robber barons. By and large it works and Britain benefits from the light touch.
However, when a Green or a Maxwell takes it in their mind to ignore fiduciary duties, it is dependent on those who are expert and can see what is going on to cry foul.
I know, from writing this blog, that should you point fingers at bad governance, you will get little praise and plenty of dirty looks. You do not get the help of the authorities, you get the attention of lawyers.
A need for a more open and transparent way of doing business.
I do not want to see Britain abandon its finely honed and well balanced system of corporate and pension governance. I want to see it strengthened by ensuring that more people can see what is going on and that bad actions can be exposed without the fear of threats.
We are a civilised country, we should be proud of it. Our country has no place for the vulgar and morally bankrupt Green. He and his Topshop models can pedaloo around the Med, but no decent British person will wish him luck.
We can look to Scandinavia to see better governance at work. We can look to some of our close neighbours in Europe, especially Germany and the Netherlands. Whether we are in the EU or not, we can work to bring our standards of transparent good governance to the standards of these countries.
We cannot and should not abandon the Greens. Field is right, this is not the end of the story. The consequences of their actions are felt by the ordinary people who were “getting by” and now are struggling.
I hope that we will see social justice at work and firm and decisive action taken from the top down. Over to you Theresa.