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BHS: “the unacceptable face of capitalism”.

26th April 2016

BHS: “the unacceptable face of capitalism”.

By Mick Brooks

11,000 completely innocent people are in danger of losing their livelihoods. Retailer BHS has gone under.

How did this come to pass? Even Tory MP Richard Fuller called management conduct “the unacceptable face of capitalism”.

The chain was bought by Philip Green in 2000 for £200m. Throughout the period that he ran the business, Green was highly praised in the financial press as a canny operator. After the purchase shareholders, mainly Green and his wife Tina, relieved BHS of £422m in dividends they paid themselves. Technically the firm was owned in the name of Tina, who conveniently lived in the tax haven Monaco.

These two tax-dodging slimeballs were systematically looting BHS. I do not consider myself to be entrepreneurial. But even on my occasional visits to West Ealing’s branch to buy a pair of socks (it’s the only clothes shop in the area) it was clear that the shops were being completely run down by management.

The Greens are the UK’s 29th richest household, said to be ‘worth’ £3.22bn, according to the 2016 Sunday Times Rich List. Others, including BHS employees, may have a different view of what they’re worth. They have just taken delivery of a 90 metre super-yacht called Lionheart. They are clearly taking the mickey.

When he had done the damage and extracted all he could from the chain, Green sold it on for £1 in 2015. It was bought by a group led by Dominic Chappell, a man who has twice been declared bankrupt. He continued in the fine tradition of BHS management of looting the firm and sucking it dry. BHS, though clearly struggling by this time, paid lavish fees to his firm, Retail Acquisitions, and enough in salary so that Chappell could run out and buy a yacht (of course!). BHS was also borrowing money to pay to the directors of Retail Acquisitions. When they had squeezed every penny they could out of the firm, Chappell and co put it into administration.

In addition to 11,000 employees BHS has 20,000 people dependent on their company pension. The pension fund was in surplus when Green took over in 2000. Clearly he had been dipping his hands into the pension fund as well. It now has a deficit of £571m.

Who can help the pensioners? The Pension Protection Fund may have to bail them out. This is a government body which is apparently devised for the sole purpose of offering protection to the innocent from the depredations of the guilty, like Green and Chappell. Many will feel that Green and his like should at the very least be dipping deep into their ill-gotten gains to compensate. They may also think that Green, rather than being knighted for his ‘achievements’, ought to be in prison.

Even a Tory MP recognises that the BHS case study shows “the unacceptable face of capitalism”. Is there an acceptable face to be seen anywhere?

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