LONDON — A British government minister has turned up the heat on Sir Philip Green and the former owners of British Home Stores, ordering his own official inquiry into the retailer’s collapse.
Britain’s business secretary Sajid Javid is the latest official to launch a probe into the downfall of the general merchandise retailer, which was placed into administration, the U.K. equivalent of Chapter 11, last week and which has a pension fund deficit of 571 million pounds, or $822 million.
Javid’s is the fifth investigation into what went wrong with the retailer, which Green sold for a nominal one pound, or $1.50, last year to a business consortium. Green remains one of BHS’ biggest creditors, and some of his Arcadia clothing brands, such as Burton and Dorothy Perkins, sell in the BHS stores.
According to British media reports, the latest owners had extracted millions of pounds from BHS shortly before the company collapsed, with 11,000 jobs at risk.
Javid has ordered an “immediate investigation” into the circumstances surrounding BHS going into administration, and has asked the government’s insolvency service to fast-track its probe.
According to a statement from Javid’s office, the investigation will look not only at the conduct of the directors at the point of its insolvency, but also of any individuals who were previously directors, and whether their actions may have caused detriment to its creditors or any employees who are owed money.
“Any issues of misconduct will be taken very seriously,” Javid said.
The statement added that should the investigation conclude that one or more present or former directors have been involved in any misconduct, an application may be made to a court to ask that they be disqualified from acting as a director for a period of two to 15 years, depending on the nature of their misconduct.
Green has so far declined to comment on BHS.
As reported, two U.K. parliamentary committees are pushing ahead with their own inquiries into the collapse of BHS and the reasons behind its pension fund deficit. Green is set to give evidence before the committees over the next weeks.
The U.K. pensions regulator is also looking at whether Green and members of the consortium should be forced to put more money into the retailer’s pension fund. A fifth investigation, by the U.K.’s Serious Fraud Office, the government body that investigates and prosecutes serious and complex fraud, bribery and corruption, is in its early stages.
As reported, BHS was placed into administration because it could no longer run its day-to-day operations. The pension fund had been an ongoing problem, even before the company’s collapse.
It remains unclear how and why the deficit reached that level; who will be responsible ultimately for filling the gap, and how the Pension Protection Fund, an industry-backed safety net, will be impacted if it is forced to foot the bill.
Last week, Duff & Phelps, the administrators of BHS, said it has been working hard to stabilize the business and was “pleased to have received a number of expressions of interest. We continue to seek a sale as a going concern.”