Goldman’s Sherwood Regrets Lack of Paper Trail in Sale of BHSby
Goldman Sachs doesn’t accept any blame for retailer’s demise
U.K. lawmakers probe bank’s informal advisory role in BHS sale
The co-chief executive of Goldman Sachs International said he regrets having not kept a more thorough paper trail over the bank’s role in the sale of failed U.K. retailer BHS Ltd.
Michael Sherwood was one of three Goldman bankers who appeared to answer lawmakers’ questions on Wednesday at a U.K. parliamentary hearing into BHS’s collapse. The bank’s role in billionaire Philip Green’s sale of the chain to former race-car driver Dominic Chappell was “extremely limited,” Sherwood said, adding that Goldman doesn’t accept any blame for the retailer’s subsequent demise.
“If I had a regret, which I do, I wish that we had documented more clearly our role in writing so that we could not have the subsequent confusion that we’re going through today,” Sherwood said. “It was crystal clear in our minds what our role was.”
The bankers appeared two weeks after Green told the same hearing that he never would have sold BHS to Chappell, who had no previous retailing experience, had the buyer not been approved by Goldman Sachs. That was challenged by Sherwood, who said Chappell never passed the bank’s “sniff test," as Green had told lawmakers.
“All we highlighted was observations about the risks around Mr. Chappell and the transaction,” Sherwood said.
Goldman declined an official advisory role on the sale of BHS because it was too small and the bank wasn’t sure it would be able to find a buyer. Little more than a year into Chappell’s ownership, the retailer collapsed, putting as many as 11,000 jobs at risk and leaving 20,000 pensioners facing cuts to their retirement savings.
Sherwood didn’t rule out doing more business in future with Green, with whom he has an association dating back more than ten years. After advising the billionaire on his failed bid for Marks & Spencer Group Plc in 2004, Sherwood said, he stayed close to Green to remain in contention for any large transaction he might have wished to undertake.
Asked what changes Goldman would make in light of the BHS collapse, Sherwood said the bank will look again at the frequency with which it reviews clients.
“But we have a very robust program that we talk to our regulator about all the time, and we are convinced it will work,” he said.