Committees

Accounts of BHS-RAL deal in question

3 June 2016

A series of new evidence published today raises a host of fresh questions around the circumstances of the sale of BHS to Retail Acquisitions (RAL), and throws into doubt the accuracy of some of the evidence received so far.

Chair's comment

Rt Hon Frank Field MP, Chair of the Work and Pensions Committee, said:

"The full depth of the extraordinary circumstances of the sale of BHS to Retail Acquisitions are now beginning to come to light, especially with this remarkable record of the to-ings and fro-ings of the deal to sell BHS to Dominic Chappell provided by the unpaid advisers at Goldman Sachs.

An emerging theme of this inquiry is witnesses seeking to correct and clarify evidence they have given. What we are learning now throws some of the accounts we have heard so far further into question, and opens a series of new lines of inquiry that we are pursuing in advance of testimony from the lead actors in this affair over the next two weeks."

Goldman Sachs provides activity log over BHS sale

In response to the Committee's request for full details of the "informal observations" he provided to Arcadia regarding the sale to Dominic Chappell's Retail Acquisitions Limited, Anthony Gutman of Goldman Sachs has submitted a nine-page document. It details 95 substantive emails, phone calls and meetings at Goldman Sachs' offices with very senior executives regarding the deal.

The information begs questions including:

  • Why did River Rock resign as advisers to Swiss Rock in December 2014?
  • Sir Philip Green said on 15 January 2015 that the Swiss Rock bid was not acceptable, noting that retail front person was "not creditable". The deal was called off on 19 January. By 9 February Swiss Rock was the "preferred likely acquirer" of BHS (Q671). What happened in between to change Arcadia's view of Swiss Rock?
  • Did Farallon Capital really offer to provide £120 million to Swiss Rock without, on 10 February 2015, understanding the existence of a pension deficit? And if so, how had a bid apparently backed by their money become the preferred one?
  • Why did the involvement of Goldman Sachs end abruptly on 11 February?

Further information requested from Lord Grabiner

The Committee has also written to Lord Grabiner requesting further clarification of his responsibilities and remuneration as Chair of Taveta, Taveta 2 and Arcadia.

Chair's comment

Iain Wright MP, Chair of the Business, Innovation and Skills Committee (BIS) said:

"As Chairman I like to know exactly what my Committee is up to. I'm therefore intrigued and surprised by Lord Grabiner's apparent light-touch and nonchalant approach to chairing the Taveta Group boards. We are seeking information about his role and remuneration and will be further interrogating the corporate governance arrangements of these companies"

Arcadia Group and Pension Protection Fund letters published

Paul Budge, Aracadia Group Finance Director, responded to the Committees' questions about the oral evidence he gave in Parliament on Monday 23 May, with some clarifications of both his and Lord Grabiner's accounts that day.

However, the Pension Protection Fund has also sought to clarify some discrepancies in Mr Budge's account regarding their contact with Arcadia over the proposed sale, and the Project Thor pension rescue deal. They also highlight what appears to be some misunderstanding of PPF processes.

Based on these, and further evidence that is arriving, the Committees are developing new lines of questioning and inquiry to be put to the key players who will be heard in evidence over the next two weeks, including some new witnesses.

Further information

Image: PA