Billionaire Green Faces Parliamentary Probe Over BHS Pension

  • Plan, fully funded when Green bought BHS, now has deficit
  • BHS paid 420 million pounds in dividends after Green purchase

Philip Green, the British billionaire and prominent face of the high street, faces a parliamentary interrogation over his part in allowing BHS’s pension deficit to swell as the retailer lurches toward bankruptcy.

Green will be called up by a cross-party committee to answer questions related to the funds he withdrew from BHS when the company was under his ownership, Frank Field, chairman of the House of Commons Work and Pensions Committee, said in an interview on Tuesday.

“We’ll be doing it as soon as we can fit it in our program," Field said by phone.

Green, whose Arcadia Group Plc owns Top Shop, is in the spotlight after court records revealed that BHS’s pension deficit had grown to 571 million pounds ($834 million) last month. When the 64-year-old retail tycoon bought the business for 200 million pounds 16 years ago, the plan was fully funded. BHS subsequently paid dividends of 420 million pounds to its owners. Green sold the money-losing chain for 1 pound little over a year ago.

BHS, a mainstay on U.K. shopping streets for almost nine decades, appointed administrators to protect against insolvency on Monday, putting 11,000 jobs at risk in what would be the industry’s biggest collapse since Woolworths Group Plc in 2008.

Philip Green

Photographer: Mike Marsland/WireImage/Getty Images

‘Fair Share’

“BHS staff and the public will understandably want to know whether the former owner who took so much money out of the business will have to pay his fair share in liabilities that he accrued during his ownership,” Angela Eagle, the opposition Labour Party’s spokeswoman on business issues, said in Parliament on Monday.

Lawmaker Richard Fuller of the ruling Conservative Party said: “If the sale was done on the understanding that it was avoiding a responsibility for pension losses, that 1 pound he received was equivalent to 30 pieces of silver in his betrayal of the BHS employees and pensioners.”

Green didn’t respond to a request for comment. He has offered 80 million pounds to help plug the deficit, the Times newspaper reported last month.

Protection Fund

The Work and Pensions Committee is also investigating whether the assumption of BHS’s pension liabilities by the Pension Protection Fund will increase the levies that need to be paid by other members of the program, and whether laws are strong enough to protect future pensioners. The fund was created in 2004 to guarantee pensions when sponsor companies go bankrupt.

If the retailer is liquidated, it will owe another 757 million pounds to landlords, suppliers and other unsecured creditors, court document shows. The company also owes 124 million pounds to secured creditors including Green’s Arcadia Group, Barclays Plc, Gordon Brothers Group and Grovepoint Capital, according to the document.

The U.K.’s pensions regulator is seeking to determine whether it would be appropriate to use its anti-avoidance powers, a spokesman said. These include demanding that where there is a deliberate attempt to avoid a statutory debt, individuals pay up to the full amount owed.

BHS employees who have paid into the program have been assured they are protected by the Pension Protection Fund.

“The PPF will now work with the pensions regulator and other parties to secure the best outcome for the pension schemes,” Malcolm Weir, head of restructuring and insolvency at the PPF, said in an e-mailed statement.

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