Company - BHS
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Nils Pratley ... Why was Dominic Chappell so relaxed about the hole in BHS’s pension fund?

Burgess COMMENTARY

Peter Burgess

Why was Dominic Chappell so relaxed about the hole in BHS’s pension fund?

The problems with Philip Green’s Project Thor ought to have been a deal-breaker for Retail Acquisitions’ purchase of BHS

Dominic Chappell, who went ahead with the purchase of BHS despite its huge pensions deficit. Photograph: Reuters

That’s some twist of the knife. The board of BHS had already called Dominic Chappell a “mythomaniac” and “Premier League liar”. Now BHS chief executive Darren Topp has written to parliament about Chappell’s attempts to put family flights to the Bahamas on the company’s travel budget and use a £90,000 loan from the company to meet a personal tax bill. In short, Chappell couldn’t see the difference between his own money and BHS’s, alleges Topp.

It’s all “pathetic and petty”, says Chappell, the man who bought BHS from Sir Philip Green for £1. The business with the flights was about being out of the office and not having his credit card or bank log-in to hand, he said. He would have cleared the sum on his return and there was no intent to have the company pay. As for the loan, he’d been working so hard that he hadn’t been able to move the cash to the correct account; he gave the company a seven-day post-dated cheque, which cleared on time.

The MPs examining the failure of BHS will have to pick the bones out of that exchange.

But let’s not get distracted. The focus of the inquiry is still the run-up to the sale of BHS, which looks more extraordinary as the evidence piles up.

In the latest documents, Olswang, the law firm acting for Chappell, says that it was always understood, up until a month before the sale, that BHS was to be delivered free of the deficit in its pension fund – that is the deficit that has subsequently ballooned to £571m on one accounting measure.

It is not fresh news that the terms of the deal changed, apparently because Green’s Arcadia had not been able to deliver its intended restructuring of the pension scheme in time. But what’s astonishing is that nobody seems to have been alarmed by this development.

Chappell – it hardly needs saying – was monumentally stupid to agree to buy BHS with the pension deficit. But what were his advisers – Olswang and Grant Thornton – doing? They should have been screaming at their client not to be so reckless, insisting that he get a cast-iron guarantee from Green that Arcadia would be responsible for settling whatever deal that could be thrashed out with the Pensions Regulator.

Instead, everybody seems to have accepted that Green’s difficulty in delivering Project Thor – the proposed restructuring of the pension scheme – was merely a minor irritation and not a deal-breaker. That is despite the fact that Arcadia had laboured unsuccessfully for months on Thor the previous year, spending in excess of £1m, according to Green. The level of disregard for the interest of the pensioners at the point the business changed hands is staggering.

Green, who owned BHS for 15 years and should have tackled the deficit when it first appeared, clearly bears responsibility for filling the shortfall. It would be a disgrace if the Pension Protection Fund, which is funded by a levy on solvent schemes, is asked to contribute a single penny. But let’s hope the MPs, when they report, give a verdict not just on Chappell’s alleged shenanigans, but also the role of well-remunerated professional advisers.