U.K. probe into BHS reveals sordid details of retail giant’s demise

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When iconic British retailer BHS collapsed into bankruptcy protection in April, it marked a sad ending to an 88-year-old department store chain. It also threw 11,000 people out of work and left a £571-million ($986-million) hole in the retailer's pension plan.

Now, a parliamentary probe into the company collapse has revealed tales of death threats among company executives, accusations of theft and allegations that the former owner, retailing legend Sir Philip Green, siphoned off money for years to fund his lavish lifestyle.

"What kind of man is it who can count his fortune in billions but does not know what decent behaviour is?" said Labour MP Frank Field, chair of the parliamentary committee investigating BHS. Sir Philip, he added, is "the unacceptable face of capitalism."

His comments came as the committee released a 66-page report on Monday that slammed Sir Philip along with his advisers, Goldman Sachs, the company's auditors, PricewaterhouseCoopers, and many others. The findings have prompted an outcry with calls for Sir Philip to lose his knighthood and cover the pension deficit. More investigations are under way and Prime Minister Theresa May has indicated that she will use the findings to tackle "corporate irresponsibility."

The report is a stunning comedown for Sir Philip, once hailed as a retailing wunderkind who rose from a working-class background in London to run a retail empire that stretched across 35 countries and employed 45,000 people.

He bought BHS in 2000 for £220-million after earning a reputation as a hard-driving fashion entrepreneur who started out buying jeans in Asia and selling them for a discount in London. "I taught myself and never worked with anybody in the industry," he told the committee last month.

By the time he bought BHS, the company had around 200 stores, including outlets in Moscow, the Middle East and Hong Kong. Its roots dated back to 1928, when the first British Home Stores opened in London as an alternative to Woolworths.

Sir Philip slashed costs, changed the product mix and doubled the number of stores. In 2002, he bought the Arcadia Group Ltd. for £800-million, giving him a retailing empire that included some of Britain's best-known names such as Dorothy Perkins, Topshop, Topman and Miss Selfridge. By 2006, he was worth more than £3-billion and considered the most respected retailer in the country.

And he paid himself handsomely.

According to the committee's report, BHS doled out £423-million in dividends from 2002 to 2004, with most of it going to Sir Philip's myriad of holding companies based in offshore tax havens and headed by his wife, Tina. The dividend payments were almost double the company's after-tax profit. In 2005, Arcadia paid £1.3-billion in dividends to the Greens.

The money funded Sir Philip's yachts, private jet and homes in London and Monaco. He famously spent £5-million on his 50th birthday party, flying 220 guests to a resort in Cyprus for a toga party that included performances by Eric Clapton, Rod Stewart and Tom Jones. He won friends in politics too, receiving a knighthood from prime minister Tony Blair in 2006 and being appointed to lead a review of government inefficiency by prime minister David Cameron in 2010.

But BHS struggled. The committee said that while Sir Philip sucked money out of the business, he put little back in and by 2009 it was facing steep losses and the pension plan had gone from surplus to deficit. The report said he ignored calls to fund the pension, focusing instead on unloading the company.

After years of trying to find a buyer, he finally sold BHS in March, 2015, for £1 to Dominic Chappell, a former racing car driver who had no experience in retail and a history of bankruptcies. Sir Philip pushed through the sale, eager to offload what was by then a failing business.

The committee singled out Goldman Sachs for failing to clarify its role in the deal, leaving the impression that it was working for Sir Philip when it was only providing informal, free advice to him. That gave an air of credibility to a questionable sales process, the report said. PricewaterhouseCoopers also failed to raise red flags about the company's finances, the report found.

Mr. Chappell immediately ran into trouble and the business floundered. He also used BHS to enrich himself, the report said. At one point, he tried to transfer £1.5-million out of BHS and into one of his holding companies.

"I said to him, 'That's theft,'" former chief executive officer Darren Topp told the committee. Mr. Chappell allegedly replied: "If you kick off about it, I'm going to come down there and kill you."

The money was returned, but the committee said Mr. Chappell used BHS to pay for a family holiday, a £1.5-million interest-free loan and £2.6-million in salary.

Sir Philip has vowed to resolve the pension issue and he has insisted that he invested heavily in BHS but the company ran into similar problems of other retailers.

He wasn't available to respond to the committee's report on Monday. Instead, he was in Greece sailing on his new $150-million (U.S.) superyacht named Lionheart.