The BHS scandal is far from over, in fact it may only just be starting. The flagship store on Oxford Street in London is pulling down its shutters for the final time this weekend and the last of the retail chain’s 164 outlets around the country will all be closed by the following Saturday.
However, the news that Jones Day has been brought in to investigate the conduct of BHS’s directors in the run-up to its collapse shows that questions remain unanswered.
Jones Day has been brought in by FRP Advisory, the joint administrator to BHS. It is standard practice for an administrator to bring in a law firm to help with an insolvency process, but this appointment stands out for two reasons.
Firstly, FRP was only appointed as the second administrator in June because the Pension Protection Fund – the biggest creditor to BHS – wanted a second opinion alongside the initial administrator Duff & Phelps. Secondly, Jones Day is a heavyweight US law firm. FRP could have brought in a less prestigious law firm to just help it tick a few boxes, but it has chosen the outfit that is a leading an internal investigation into the diesel emissions scandal at Volkswagen.
The parliamentary report into the collapse of BHS, led by the Labour MPs Frank Field and Iain Wright, provided an impressive and detailed account of how the 88-year-old retailer was brought to its knees. It heavily criticised Sir Philip Green, the former owner of BHS, accusing him of plundering the company for his own financial gain. Field has subsequently described the billionaire tycoon as “evil” and asked the Serious Fraud Office to look into whether money was illegally moved around to make Dominic Chappell, who led the consortium that bought BHS from Green, look a credible buyer.
Green clearly has a moral obligation, potentially a legal one too, to fill the £571m blackhole in BHS’s pension scheme. However, Field’s war of words with Green must not stop the mismanagement of BHS under Chappell from being thoroughly investigation.
While the SFO and the Insolvency Service, which is also looking into BHS, will inevitably look into Chappell’s acquisition of the retailer for £1 from Green in March 2015, there are more questions about what happened in the following 13 months.
These questions include: how did Chappell’s consortium Retail Acquisitions extract at least £17m from BHS while it owned the retailer? Did Retail Acquisitions breach contractual agreements with Green by taking money from the sale of BHS property? Was BHS money used to pay off the mortgage on Chappell’s family home? Why did Chappell move £1.5m from BHS into the unconnected BHS Sweden just days before it collapsed?
The appointment of Jones Day will help to find the answers.
Minimum wage
The government on Thursday unveiled its new list of the companies failing to pay the minimum wage by trumpeting it as the “largest ever”. But the naming and shaming of so many offenders should not be celebrated; it is shameful.
There are 198 employers on the list, including some recognisable names such as Greene King, Poundstretcher, and Brighton & Hove Albion Football Club.
Sports Direct is not on the latest list, but founder Mike Ashley has admitted it is under investigation by HMRC for failing to pay staff the minimum wage.
The retailer’s latest annual report shows that staff turnover at the company rose to 22% last year. That is three times the national average and means that one in five at Sports Direct left the business in just 12 months.
This suggests that staff are prepared to act if they are unhappy with their job. However, not all workers have the option of another job or the confidence to leave their position.
The government must do more than simply name-and-shame or fine offenders. Company directors should be made personally responsible for paying their staff properly and face criminal charges if they don’t. It is not difficult to ensure that staff are being paid.
Virgin Media and Southampton
The Premier League football season starts on Saturday after an extraordinary summer of spending, capped by Manchester United signing Paul Pogba for a world record fee of €110m (£93.2m) just four years after letting him leave for £800,000.
But in the parallel economic world of the Premier League, an interesting sponsorship agreement has been struck that will hopefully be a blueprint for the future.
As part of its deal to sponsor Southampton, Virgin Media will subsidise tickets for away fans travelling to the south coast football club. This means ticket prices will be capped at £20.
The move has been welcomed by the Football Supporters’ Federation, which is behind a “Twenty’s Plenty” campaign to lower football ticket prices for travelling fans.
The tie-up between Southampton and Virgin Media is evidence that the vast amounts of money flowing into football can be used to help supporters. Hopefully other companies and football clubs will follow the example.
