Hartlepool MP to probe sale and collapse of BHS

Hartlepool's BHS store.
Hartlepool's BHS store.
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Hartlepool MP Iain Wright will challenge former BHS boss Sir Philip Green over the "enormous sums" taken out of the firm in dividend payments while it was heading towards a crash.

The retail tycoon and wife Tina have been asked to give evidence to Commons committees investigating the collapse of the high street chain.

Dominic Chappell, who has also been called to give evidence by MPs, acquired BHS for £1 from Sir Philip in 2015, taking on a £571 million pension deficit and the firm went into administration in April.

Mr Wright, chairman of the business select commitee, said there were "enormous questions" that had to be answered.

The panel would ask Sir Philip whether his stewardship of the firm and the sale to Mr Chappell had been "appropriate": "We are keen to find out who knew what, when. This issue over the sale and acquisition of BHS raises enormous questions."

He told BBC Radio 4's Today programme: "Something like £414million was taken out of BHS in dividends over a four-year period and that's when the pension scheme was slipping into deficit.

"So 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?'

"The question that we want to ask Sir Philip Green is 'you bought BHS, took enormous sums out of the business, the pension scheme went from surplus to deficit and then you sold it for a pound to somebody who was twice bankrupt and who had no experience whatsoever of the retail sector - is that appropriate stewardship of a big, important company?'."

The MPs would also consider whether the regulatory system was working effectively.

Mr Wright said: "Does the system put in place a system of asset stripping rather than long-term value for a company?

"When you sell a business do you have any further responsibility or do you start to crash it into the cliff and then bail out just before it does crash?

"Those are things we want to look at on the Business Select Committee and we also want to see whether the system is fit for purpose in making sure we can create long-term value rather than making sure that people can extract value out of businesses to the detriment of employees and to the detriment, ultimately, potentially, of the taxpayer."

Mr Wright's committee and the Work and Pensions Select Committee will hold joint hearings into the collapse of BHS.

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"The collapse of BHS brings misery and uncertainty for thousands of workers and also places a potentially significant burden on the taxpayer in the form of pension liabilities," said Mr Wright.

"The sale and acquisition of BHS raises real questions about whether directors acted in the best long-term interests of the company and their employees. Is there too much of an incentive in the system for owners to asset-strip, take out vast sums for personal gain, and then dump and run leaving the taxpayer to pick up the tab when the company fails, rather than create value for the long-term?

"In this inquiry we’ll want to question the role of advisers – the lawyers, bankers, auditors and others who advised on the sale and purchase of BHS – and examine the legal obligations of company directors in this process".