IoD chief attacks former BHS owners over 'lamentable failures'

The former owners of BHS came under fire on Friday from the leader of one of Britain's biggest business lobby groups, who accused them of “lamentable failures”.

Simon Walker, director general of the Institute of Directors (IoD) said the collapse of the department store chain could be “deeply damaging” to the reputation of British business.

Administrators Duff & Phelps put BHS into liquidation with the immediate loss of 8,000 jobs on Thursday after failing to find a buyer for its 163 stores. A further 3,000 jobs are at risk.

The chain was sold by retail tycoon Philip Green for £1 last year to Dominic Chappell, a three-time bankrupt and former racing car driver. It went into administration in April with a pension fund deficit of £571m.

"We spend a lot of time agonising about the loss of trust in the business community, and I think we can see why this is. I think there is a lamentable failure of behaviour and there are a lot of questions that need to be asked," Walker told BBC radio.

“Philip Green is a very high-profile business leader. He is the person who is on the front page with Kate Moss on his arm and who has a £100m superyacht and so on. When someone like this ends up behaving like this, people think that’s how business is, and it’s not. The majority of business leaders are people who are more likely to have mortgaged their homes to keep their company going than to own this kind of lavish thing.”

Walker added that Green had "moral responsibilities" towards members of the BHS pension fund.

His attack is unusual as the IoD is normally a champion of business. It is not the first time Walker has criticised Green over his stewardship of BHS.

Asked if he could defend Green's handling of the company, Walker told the BBC: "No, I can't."

"You can't just get yourself off the hook by selling a business to someone who's been bankrupt three times and is a former racing driver with no retail experience," he said.

"It's the manner of its failure and the fact that it ends up dumping huge liabilities on to the taxpayer that is a problem, and it is the lack of due diligence in selling it (to Chappell)... something's wrong."

The collapse of the 98 year-old store has led to a joint parliamentary inquiry by the Work & Pensions and Business select committees. Green and Chappell have been summoned to give evidence in the next two weeks.

Former City Minister and ex chairman of Marks & Spencer Lord Paul Myners also went on the attack, saying Green should remove himself from the head of the creditors' queue.

There is no love lost between the two. Myners fought off a £9bn takeover bid for M&S in 2004.

"He could give up that security and make sure the money is used for the benefit of the employees and pensioners and not claim to be in the front of the queue," Myners told the BBC.

He also questioned the decision to sell the business to Chappell.

"Sir Philip Green must take some of the responsibility, not least of all selling the business to Mr Dominic Chappell, which is rather like giving the keys of your car to a five-year-old, and then allowing the five-year-old to go off and crash the car."

Green, who is no stranger to publicity, complained after Frank Field, head of the Work & Pensions committee, called for him to be stripped of his knighthood if he did not help make up the pension fund deficit. The flamboyant businessman said Field should step down as he was “clearly prejudiced”.

But Walker, writing on the IoD's Director website last month, said Green’s "remonstration" that two parliamentary committees investigating him were conducting a 'trial by media' was “particularly ironic given his constant seeking of the limelight, often flanked by celebrity friends”.