Tycoon faces demand over pension deficit after ‘warning notice’ on liabilities

by: Mark Vandevelde and Josephine Cumbo
Financial Times

Regulators have fired the opening shot in a battle that could force Sir Philip Green to hand over a chunk of his fortune to pay the pensions of former workers at the retail chain that made him a billionaire.

Sir Philip promised in June to “sort”the £571m pension deficit left behind by BHS, which collapsed in April barely a year after the Topshop tycoon sold the department store for £1. He said on Wednesday night he had offered regulators a deal, along with bank documents proving he had access to the required cash.

But officials said that, despite months of talks, they had “yet to receive a sufficiently credible and comprehensive offer” to shore up the retirement incomes of 20,000 former workers.

And, on Wednesday night they resorted to enforcement action, issuing warning notices to Sir Philip and companies controlled by his wife, Tina, who owns most of the family’s UK retail interests.

The documents, which run to more than 300 pages, explain why investigators believe Sir Philip and his companies must support the BHS pension schemes following the sale of the business in March 2015 and its subsequent insolvency.

A special panel will ultimately be asked to decide whether the regulator can use its powers to compel Sir Philip to hand over his cash — a determination that could be challenged in court. Legal experts said no hearing was likely to take place until next year.

The Pensions Regulator did not say how much money it wanted from the billionaire and stressed that it was still open to discussing a deal.

Sir Philip said his proposal had the support of the chairman of the pension fund’s trustees, “on the basis that it provides members with better benefits [than an official bailout]”.

“I have provided the regulator with what I believe to be a credible and substantial proposal, with evidence and bank confirmation of cash availability, which would prevent the scheme from entering the Pension Protection Fund,” he said.

I have provided the regulator with what I believe to be a credible and substantial proposal, with evidence and bank confirmation of cash availability, which would prevent the scheme from entering the Pension Protection Fund.

However, Frank Field, the Labour MP who co-chaired a parliamentary inquiry into the collapse of BHS, said he was “not surprised” that the regulator had “lost patience with Sir Philip Green’s excuses and empty promises”.

The House of Commons last month demanded that Sir Philip be strippedof his knighthood after a rancorous debate in which MPs denounced the former BHS owner as a “billionaire spiv” who was “not particularly good at retail”.

The notification to Sir Philip marks a tentative step towards that outcome. The honours forfeiture committee — which alone has the authority to impose such sanctions — had been viewed as unlikely to consider the case until it became clear whether a deal would be forthcoming.

In addition to the action against Sir Philip, the regulator said it was pursuing Dominic Chappell, the former bankrupt who led the acquisition of BHS last year, and his Retail Acquisitions vehicle.

Mr Chappell could not immediately be reached for comment.

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http://www.ft.com/content/e2cf3412-a146-11e6-891e-abe238dee8e2