LONDON — U.K. parliamentarians are pushing ahead with their inquiries into the collapse of British Home Stores and the reasons behind its pension fund deficit. A second parliamentary inquiry, by the Business, Innovation and Skills Committee, has been revealed.
The Work and Pensions Committee and the Business, Innovation and Skills Committee have written a letter to Sir Philip Green asking him to give oral evidence in relation to the two inquiries. The first relates to the Pension Protection Fund, an industry-backed pensions safety net, and the government’s pensions regulator.
The second inquiry was opened late last week by the Business, Innovation and Skills Committee about the sale and acquisition of BHS, the retailer formerly owned by Green that was placed into administration, the U.K. equivalent of Chapter 11, last Monday.
The letter was posted on the Work and Pensions Committee web site and was signed by the chairs of both committees. The parliamentarians said they were planning to hold a joint session in Westminster over the coming weeks, although no date was specified.
In a statement, business committee chair Iain Wright said the collapse of BHS brings “misery and uncertainty for thousands of workers” and also places a “potentially significant burden” on the U.K. taxpayer in the form of pension liabilities.
“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…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.”
Separately, The Sunday Times of London reported that both committees also intend to invite Lady Green, Green’s wife and a shareholder in his Arcadia retail group, to give evidence.
Green was unavailable for comment on Sunday, and parliament is shut for the long bank holiday weekend.
As reported, BHS was placed into administration because it could no longer run its day-to-day operations. The retailer’s pension fund is also suffering from a 571 million pound, or $822 million, deficit.
It remains unclear how and why the deficit reached that level; who will ultimately be responsible for filling the gap, and how the Pension Protection Fund will be impacted if it is forced to foot the bill.
The protection fund was established to pay compensation to members of eligible, defined benefit pension schemes when employers declare insolvency or where there are insufficient assets in the pension scheme.
Green sold the loss-making BHS last year to a business consortium for a nominal 1 pound, or $1.50. He remains one of its biggest creditors. According to British media reports, the new owners extracted millions of pounds from BHS shortly before the company collapsed.
Last week, Duff & Phelps, the administrators of BHS, said they had been “working hard to stabilize the business and are pleased to have received a number of expressions of interest. We continue to seek a sale as a going concern.”