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Philip Green may be forced to pay into BHS pension scheme Philip Green may be forced to pay into BHS pension scheme
(about 1 hour later)
Philip Green faces being made to pay money into the BHS pension scheme to help plug a black hole of hundreds of millions of pounds left when the firm went under, the pensions watchdog has announced. The Pensions Regulator has begun formal legal proceedings against Sir Philip Green and Dominic Chappell that could force them to fill the £571m deficit in the BHS pension scheme, marking a dramatic escalation of the scandal surrounding the demise of the high street chain.
The regulator said it had begun formal enforcement action on Wednesday against Green and the man to whom he sold BHS in 2015 for £1, Dominic Chappell, to seek redress on behalf of 20,000 pension scheme members. The regulator said that after a “complex investigation” and months of talks with Green about a rescue deal for the pension scheme it was sending warning notices to the billionaire tycoon, Chappell and their companies.
“Our decision to launch enforcement action is an important milestone in our work to attain redress for the thousands of members of BHS schemes who have been placed in this position through no fault of their own,” Lesley Titcomb, the Pensions Regulator’s chief executive, said on Wednesday. Lesley Titcomb, chief executive of TPR, said it was yet to receive “sufficiently credible and comprehensive offer” to bail out the BHS pension scheme, which has more than 20,000 members, despite Green pledging to fix the problems facing it.
The regulator has issued warning notices to Green and Chappell, as well as companies owned by the men and their families. The 300-page documents set out the evidence the watchdog believes will demonstrate why they are liable to cover the deficit, which stood at £571m when BHS went bust earlier this year. The tycoon has rebutted TPR’s claim, saying he had made a “credible and substantial proposal” and shown he had cash available to support the pension scheme. Green said that his proposal would mean the BHS scheme avoids entering the Pension Protection Fund and be a “ better outcome” for pensioners.
“We have been clear in our public commitment to make significant progress by the end of 2016 and the issue of these notices meets that commitment. The warning notices run to more than 300 pages and explain why TPR believes the parties are liable to make a financial contribution to the pension scheme and provide ongoing support. The notices mark the start of a so-called enforcement action against Green and his investment company Taveta, and Chappell and his consortium Retail Acquisitions. The action could end in a legal battle if Green and Chappell do not agree to TPR’s demands.
Frank Field, the Labour MP, said TPR had “lost patience with Sir Philip Green’s excuses and empty promises”. Field was the joint chair of the parliamentary committee that investigated the collapse of BHS, which concluded the department store chain had been systematically plundered by its former owners.
BHS collapsed into administration in April, leading the loss of 11,000 jobs and leaving a pension deficit of £571m. Green controlled BHS between 2000 and 2015, during which time his family and other shareholders collected more than £580m. Green sold BHS in March 2015 to Chappell, a serial bankrupt with no retail experience, for just £1. Retail Acquisitions collected an estimated £17m from BHS despite owning it for just 13 months until it fell into administration.
Green told Field’s parliamentary committee that he would “sort” the problems facing the BHS pension scheme in June when he appeared in front of MPs to answer questions about the collapse of the department store chain. However, no deal has been forthcoming and the billionaire tycoon was photographed on his new yacht throughout the summer.
Last month the House of Commons voted unanimously to strip Green of his knighthood, which was awarded a decade ago for services to retail. During a fiery debate in parliament, Green was lambasted and described as a “billionaire spiv”.
TPR launched an anti-avoidance investigation into BHS in March 2015 after Green sold it to Chappell. It has trawled through nearly 100,000 documents and held talks with the parties involved. The warning notices sent to Green and Chappell are different, TPR confirmed.
“We have been clear in our public commitment to make significant progress by the end of 2016 and the issue of these notices meets that commitment,” Titcomb said.
“Our decision to launch enforcement action is an important milestone in our work to attain redress for the thousands of members of BHS schemes who have been placed in this position through no fault of their own.
“Issuing warning notices at this time reflects the outcome of our investigations and that we are yet to receive a sufficiently credible and comprehensive offer in respect of the BHS schemes.“Issuing warning notices at this time reflects the outcome of our investigations and that we are yet to receive a sufficiently credible and comprehensive offer in respect of the BHS schemes.
“We continue to pursue the best deal for members of the BHS pension schemes. If parties wish to approach us with settlement offers, that course remains open to them,” Titcomb said. “We continue to pursue the best deal for members of the BHS pension schemes. If parties wish to approach us with settlement offers, that course remains open to them.”
Green had made a public commitment to “sort” the scheme out. But reports had suggested it was unlikely the billionaire retail tycoon would be made to pay any money into the ailing pension scheme because, in the view of one expert, there was little evidence of a case against him in documents made public. In response, Green said: “I have read the statement from the Pensions Regulator this evening and noted its contents. I have provided the regulator with what I believe to be a credible and substantial proposal, with evidence and bank confirmation of cash availability, which would prevent the scheme from entering the Pension Protection Fund. This is in order to achieve a better outcome for the BHS pensioners.
But the decision to issue warning notices represented a “serious escalation” in the regulator’s work, a source told Sky News.
The notices inform the men that the regulator intends to use both its contribution notice (CN) and financial support direction (FSD) powers to demand a specific sum of money towards the scheme and to require ongoing backing to the pension scheme, respectively. No details of the scale of those contributions, which must be agreed with the regulator, have been released.
Green and Chappell will now be asked to respond to the warnings with their comments and representations. The case will then be passed to the regulator’s determinations panel for a decision on how to proceed.
Responding to the pension regulator’s announcement Green said: “I have provided the regulator with what I believe to be a credible and substantial proposal, with evidence and bank confirmation of cash availability, which would prevent the scheme from entering the Pension Protection Fund. This is in order to achieve a better outcome for the BHS pensioners.
“I have also spoken to the chairman of the trustees who is supportive of the proposal on the basis that it provides members with better benefits than they would receive from the PPF.“I have also spoken to the chairman of the trustees who is supportive of the proposal on the basis that it provides members with better benefits than they would receive from the PPF.
“I believe the above statement confirms the statement of intent that I made in regard to the BHS pensioners.”“I believe the above statement confirms the statement of intent that I made in regard to the BHS pensioners.”
Frank Field, the Commons work and pensions committee chair, said: “We are not surprised that the Pensions Regulator has, like all the rest of us, lost patience with Sir Philip Green’s excuses and empty promises. His answer throughout our inquiry was always that he was going to ‘sort’ the disastrous position he left the pension fund in when he sold off BHS to Dominic Chappell for £1. However, Field said he was not surprised by TPR’s action. He said: “His answer throughout our inquiry was always that he was going to “sort” the disastrous position he left the pension fund in when he sold off BHS to Dominic Chappell for £1. We are glad to see TPR is now calling his bluff and instigating enforcement proceedings. It seems clear Sir Philip would rather kick the can down the road and avoid responsibility than come up with any fair, sustainable settlement for BHS pensioners.”
“We are glad to see TPR [the Pensions Regulator] is now calling his bluff and instigating enforcement proceedings. Business select committee chair Iain Wright said: “In June, Sir Philip told us he would sort out the pensions mess at BHS. Five months on, we’ve seen Philip Green sunning himself on his yacht – his third – but no credible plan or cash on the table.
“It seems clear Sir Philip would rather kick the can down the road and avoid responsibility than come up with any fair, sustainable settlement for BHS pensioners.” “He is meant to be able to do deals quickly but he hasn’t been keen to do a deal which would quickly end the misery for thousands of BHS pensioners. Sir Philip said he would sort it but he has not yet been true to his word. He has not come up with the money to satisfy the regulator, who has clearly and quite rightly now lost patience with his obviously empty promises.”
Clive Lewis, shadow business secretary, said: “Four months after Sir Philip Green promised to make good the pensions deficit created by his shoddy management of BHS, and weeks after MPs voted unanimously to strip Green of his knighthood, tens of thousands of pensioners are still waiting to find out the fate of their pensions.Clive Lewis, shadow business secretary, said: “Four months after Sir Philip Green promised to make good the pensions deficit created by his shoddy management of BHS, and weeks after MPs voted unanimously to strip Green of his knighthood, tens of thousands of pensioners are still waiting to find out the fate of their pensions.
“Let’s hope that, by stepping up their investigations, the Pensions Regulator will finally hold Philip Green to account and give those pensioners the security they deserve.”“Let’s hope that, by stepping up their investigations, the Pensions Regulator will finally hold Philip Green to account and give those pensioners the security they deserve.”