Retailer Philip Green answers MPs questions on the sale of BHS
Retailer Philip Green answers MPs' questions on the sale of BHS © Reuters

A legal opinion commissioned by Sir Philip Green has dismissed the conclusions of a parliamentary inquiry that sharply criticised the tycoon over the demise of BHS as “bizarre” and “unsupportable”.

In an 82-page rebuttal seen by the Financial Times, two leading barristers said that MPs investigating the retailer’s collapse had already decided who to blame before hearing from a single witness.

Their findings represent an attempt by Sir Philip to draw the sting of a damning parliamentary report, ahead of a potentially rancorous House of Commons vote on his conduct in the affair.

Sir Philip, along with other directors of his high street empire, lambasted MPs on Monday for using “parliamentary privilege . . . as a licence to run kangaroo courts”.

In July, a joint committee of MPs denounced the billionaire for selling BHS to an ex-bankrupt who had no experience of running a large business.

They said that Sir Philip was so determined to offload the lossmaking retailer that he proceeded with a rushed sale to the “wholly unsuitable” Dominic Chappell, overlooking some of the buyer’s “obvious” shortcomings, and remedying others, such as shortage of cash.

The House of Commons will consider the committee’s report on Thursday, before voting on whether the former BHS owner should lose his knighthood over the affair.

But, in a legal opinion commissioned by Sir Philip, one of Britain’s most senior human rights lawyers criticised the committee’s behaviour as “unfair” and “biased”. He concluded that if parliamentary privilege did not prevent a legal challenge, a court would set their findings aside.

Lord Pannick QC, an authority on public law who has argued 100 cases before Britain’s highest court, reserved his most withering criticism for the committee’s co-chair, Frank Field, an often pugnacious questioner who sometimes used media appearances to comment on the proceedings he was overseeing.

“We have had nothing but people coming here, trying to disguise what has really gone on. You are past masters at this,” Mr Field told one witness during an exchange in parliament, which the barristers cited as an example of the committee’s bias.

That witness — Chris Harris, property director of Sir Philip’s Arcadia Group — shot back that Mr Field was being “disrespectful”. Sir Philip’s lawyers agreed with his view. “Any court looking at the transcripts would be concerned that abuse, insults, bullying and threats are not conducive [to discovery of the facts]”, they wrote.

Lord Pannick complained that, days before the inquiry heard from its first witness and at a time when Mr Field should have been keeping an open mind, the MP told the Financial Times that Sir Philip should hand over £571m or face losing his knighthood. Mr Field later said that if Sir Philip offered less than £600m, the committee would “just laugh”.

Lord Pannick concluded that Mr Field’s “apparent predetermination as chairman infects the whole of the report, which therefore cannot stand”.

“That this inquiry was conducted by MPs in a political context cannot excuse the unfairness of the procedure,” he wrote.

However, Mr Field dismissed the lawyers’ opinion as a sideshow to the parliamentary debate due on Thursday. “That one of the country’s top legal minds has been drawn in to defend Sir Philip’s actions shows how Herculean that task is,” he said. “But the House will draw its own conclusions later this week.”

Sir Philip promised in June to “sort” the BHS pension deficit by handing over a significant chunk of his personal fortune, a move that would require agreement from regulators and trustees. Talks are continuing, although several parties said that progress was slow.

However, the two barristers contradicted the committees’ finding that the BHS pension deficit was “ultimately Sir Philip Green’s responsibility”, pointing instead to evidence that blamed rising life expectancy and the financial crisis.

They added that the MPs’ report had mentioned a £1.3bn dividend paid by another of the retail tycoon’s companies “for the [sole] purpose of creating prejudice against Sir Philip”.

They also described Sir Philip’s decision to help arrange £25m of financing to enable Mr Chappell’s consortium to buy BHS as “lawful” and “unsurprising”.

MPs wrote that Sir Philip “overlooked or made good each of Chappell’s shortcomings and proceeded with a rushed sale regardless”, a criticism that the barristers called “bizarre”.

Michael Todd QC, a specialist on company law who co-wrote the opinion, also criticised MPs for misunderstanding the duties owed by Sir Philip and the other directors of his fashion empire.

“In their capacities as directors of [Taveta Investments, the holding company for Sir Philip’s retail interests], the directors owed duties to those companies alone; they did not owe duties to . . . BHS”, he wrote.

Documents released during the inquiry suggested that Sir Philip had originally insisted that any buyers of BHS should have a credible retail “frontman”, inject money of their own, and have enough cash to keep the business afloat. MPs criticised the tycoon for seeming to waive all three criteria when he sold to Mr Chappell.

“We think that [criticism] unfair”, the barristers wrote. “The Taveta Group was under no duty to check that [Mr Chappell’s consortium] passed any tests of creditworthiness”.

The directors of Taveta Investments — among them, Sir Philip — on Monday described their decision to sell to Mr Chappell as an “honest mistake” and said they had suffered “unfair vilification and unjustified criticism” from MPs.

The select committee inquiry had “not only been distressing and damaging to those individuals whose reputations have been wrongly traduced, but . . . made it even more difficult to achieve a positive outcome to the pension settlement discussions in the interests of the BHS pensioners.”

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