Frank Field MP told Arcadia directors today that “a very large cheque from the Green family” was necessary to fill BHS’s pension black hole.
Field made the comments during a select committee hearing in response to Arcadia directors refusing to accept blame for the collapse of the department store chain.
In a gruelling four-hour session:
- It emerged that Arcadia’s holding company, Taveta, was not party to the sale of BHS to Retail Acquisitions
- MPs laid into Arcadia’s corporate governance structure
- Goldman Sachs, who offered informal advice to Arcadia on the BHS sale, said Retail Acquisitions had not passed its “sniff test”
Arcadia finance boss Paul Budge refused to lay the blame at any single party’s door when quizzed on who was responsbile for the failure of BHS but admitted that Sir Philip Green’s fashion empire had let itself down.
He said: “There are a number of people to blame. We have let ourselves down and a number of people have let us down.”
Budge made it clear he included Goldman Sachs in that number.
He echoed comments made by Green to MPs earlier this month.
At that time Green said that he would “one million per cent” not have sold BHS to Retail Acquisitions had its owner Dominic Chappell not been vetted by the bank and passed muster.
But today Goldman Sachs bankers told MPs that Chappell had not passed its “sniff test”.
Gutman said that any judgement made by Goldman Sachs was “preliminary” and based “on one meeting with Dominic Chappell”.
He said that the bank made it clear that further due diligence was needed and that Green “did not come back to us to ask what he should or shouldn’t be doing”.
He added that because the bank was not formally advising Green the extent of its to contribution was to “identify the risks attached and [leave] them to make their judgements”.
MPs suggested to Sherwood that the reason that Goldman Sachs chose not to be the formal advisers to the deal was not because, as Goldman bankers had stated, it was too small but because they knew “it stank”. Sherwood denied this.
Goldman Sachs is now reviewing its relationship with Green “as all this has come to pass”.
MPs also quizzed Arcadia directors on the company’s corporate governance after it emerged that the board of Taveta, Arcadia’s holding company, was unaware of the sale of BHS to Retail Acquisitions.
Budge stated that “a very small” sub-team met on a daily basis to discuss the sale of BHS, and had the blessing of the board to do so.
He added that the board of Arcadia was “totally aligned” on decision to offload the business.
No records of these meetings exist, as they were not formally scheduled. Arcadia directors said that non-executive directors, such as Lord Grabiner QC, learned the identity of BHS’s buyer after it had been agreed in principle, but before the deal was formally ratified.
In response, MPs suggested that non-executive directors had no power over the main Arcadia shareholders, the Green family.
Michelle Thomson MP asked which non-executives spoke up against Green and held the board to account. The directors could give no immediate examples.
Thomson added that she believed board members “fell into line” with Green’s wishes, with “cataclysmic” results while Jeremy Quin MP alleged that Arcadia and the Green family functioned as one entity.
Non-executive directors were also only informed of the £53m deal, which saw Arcadia acquire Marylebone House from Tina Green after the event, MPs heard.