168.The evidence we have received over the course of this inquiry has at times resembled a circular firing squad. Witnesses appeared to harbour the misconception that they could be absolved from responsibility by blaming others. The worst example was Sir Philip Green, despite his protestations to the contrary. Sir Philip adopted a scattergun approach, liberally firing blame to all angles except his own, though he began his evidence by saying he would do the opposite. The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. The tragedy is that those who have lost out are the ordinary employees and pensioners. This is the unacceptable face of capitalism.
169.The sale of BHS did not have to proceed as it did. The potential checks, however, proved to be inadequate. Regulatory concerns were circumvented. Advisers were heavily incentivised to progress the deal. Dominic Chappell, his friends and associates were enticed by the personal rewards on offer without having to take any of the personal risks. The Taveta group, run as a personal fiefdom by a single dominant individual, failed to provide a semblance of independent oversight or challenge.
170.Sir Philip Green drove the deal forward. He sought to sell a chain that had become a financial millstone and threatened his reputation. He knew that Dominic Chappell was a wholly unsuitable purchaser but overlooked or made good each of Chappell’s shortcomings and proceeded with a rushed sale regardless.
171.Dominic Chappell was out of his depth. He was over-optimistic to the point of arrogance. He failed to recruit a retail expert despite his own lack of experience; failed to secure funding on commercial terms; failed to address BHS’s property leases in a timely way; and failed to address the company’s long-term underperformance. Mr Chappell has referred to the rewards for risk that are the foundations of entrepreneurship, but he was taking no risks. The rewards that he took, on the other hand, were lavish. In putting his ‘home team’ first, he and his fellow directors were personally enriched as BHS failed around them. In effect, he had his hands in the till. His description of £2.6 million that he personally took, in addition to an outstanding £1.5 million family loan, as “a drip in the ocean” is an insult to the employees and pensioners of BHS that he let down.
172.The Green family benefited significantly from BHS. In his early years of ownership, Sir Philip cut costs, sold assets and paid substantial dividends offshore to the ultimate benefit of his wife. He failed, however, to invest sufficiently in stores or reinvent the business to beat the prevailing high street competition. We found little evidence to support the reputation for retail business acumen for which he received his knighthood.
173.It is true these are private companies holding Green family money. BHS, however, was a major employer and the sponsor of a large and ailing pension fund. Arcadia, another Green company, is in a similar position. Sir Philip gave insufficient priority to the BHS pension scheme over an extended period. His failure to resolve its problems by now has contributed substantially to the demise of BHS. Sir Philip owes it to the BHS pensioners to find a resolution urgently. This will undoubtedly require him to make a large financial contribution. He has a moral duty to act, a duty which he acknowledges. We still do not doubt that Sir Philip has heartfelt affection for BHS. To an extent it created him; it could also bring him down.
22 July 2016