IoD boss calls for accountancy regulator to probe BHS

The Institute of Directors has continued its assault on those involved in the collapse of BHS with a call on Tuesday for the accountancy watchdog to launch a probe into the matter.

The Times reported that IoD director general Simon Walker had written to the Financial Reporting Council to “strongly urge” it to investigate whether the board of Philip Green’s Arcadia Group had failed in its duties to promote the success of a company.

Walker also wants the FRC to examine the conduct and role of Grant Thornton and Olswang, which advised Dominic Chappell’s Retail Acquisitions consortium in the purchase of BHS for £1 in March last year, the report added.

BHS fell into administration in April and a rescue could not be organised in time to save it from being wound up last week with the potential loss of up to 11,000 jobs. Thousands of staff are facing a likely cut to their pensions as their fund had a £571m deficit.

In the letter to the FRC, Walker said: “So many unanswered questions remain about the demise of BHS, and the business community as a whole deserves to know exactly why this firm failed and who was responsible.”

He also again questioned why Lord Grabiner as chairman of Taveta Investments, the ultimate owner of Arcadia Group, was not more involved in the sale of BHS: “In the FRC’s judgment, does this constitute good corporate governance?”

Grabiner's role has come under increasing scrutiny since he gave evidence to a joint hearing of the Work & Pensions and Business select parliamentary committees where he revealed he was not involved in the decision to sell BHS.

In a separate open letter to the committees, Walker said he had “concerns about the conduct of the Arcadia Board, headed by Lord Grabiner, once they had decided to sell BHS”.

“The Arcadia board set up a sub-committee to investigate options for the sale, which is not necessarily poor governance, but evidence given by Lord Grabiner to your parliamentary committee suggests that he was relaxed about not being involved,” Walker wrote.

“It is surprising that he was not, as chair, part of that sub-committee. That he did not find out about the sale until five days after it had been agreed, and that he had not given any indication of what was an acceptable sale, is at best described as alarming.”

“This doesn’t sit very well with the UK Corporate Governance Code, which says “the chairman is responsible for leadership of the board.” It is crucial on any board that delegation of decision-making is not confused with devolution of accountability.

Walker said a failure to look at Grabiner's conduct “could set an appalling precedent for future sales of failing businesses”.

Frank Field, who chairs the Work & Pensions committee said on Monday he also also had “fresh questions” for Grabiner.
“We already knew that the chairman of Taveta (Green's family investment vehicle) learnt about, and agreed, the sale of BHS five days after the keys were handed over,” he said in a statement.

“Now we know that his first act at that meeting was to relinquish the chair to the only other director in the room [Arcadia finance director Paul Budge, Arcadia finance director). I’m baffled and have asked him to explain.”

Field added that new documents received by the committees shed further light on the “thinking of both sides of the deal” but begged further questions.

One of these was why Retail Acquisitions had adopted BHS management’s existing business plan of “outrageous ambition”.

“Could Dominic Chappell really be expected to succeed where Sir Philip Green had failed?” he said.

He also wanted to know why Taveta agreed to pay only £15m to the pension fund over three years — to be matched by Retail Acquisitions.

Chappell is scheduled to appear before the committee on June 8.