Dominic Chappell, whose consortium owned BHS before it collapsed last month, was forced out of a previous business venture after taking around €400,000 (£315,000) from the company for his personal use.
The money, which appears to have been moved without the permission of other shareholders and has never been repaid, was transferred from a start-up company in Spain called Olivia Petroleum, which Chappell fronted and used to bolster his City credentials when he acquired BHS.
It is understood that the funds were then diverted into other accounts, including one belonging to Chappell’s wife, as well as being spent at a series of luxury restaurants, hotels and shopping trips, plus a chandlery business that fits out yachts. Chappell is a keen sailor.
The allegation about Olivia Petroleum’s finances will raise further questions about the due diligence conducted by the billionaire Sir Philip Green, who sold BHS to Chappell’s consortium Retail Acquisitions for £1 last year and is under mounting pressure to explain his actions.
Green isn’t responsible for the actions of Chappell.
As I understand the allegation, Green is alleged to have failed to conduct proper due diligence into the moral character of the people he sold BHS to.
If BHS was a publicly listed company, Green surely would have had an obligation to consider whether he was selling BHS to be a bunch of spivs who were not going to honour their legal and customary obligations. The management of companies targeted for take overs should recommend some bidders over others even if their offers are lower.
But it was a private one. So I don’t think the same rules apply.
Due diligence is carried out by the purchaser – the only due diligence required of the seller is to check whether the purchaser can actually pay the purchase price (and one may assume that Chappell’s lawyers showed Sir Philip a nice new £1 coin).
Philip Green may oral maynot have been a good owner of NHS. (And as the shares were in his wife’s name, he wasn’t the owner at all) but we now seem to be in the land of “blame anything on him we can”. So now he has failed to do what he has no obligation to to do, either in law or under normal commercial practice.
We should start a Twitter trend “It’s Philip Green’s fault”, a bit like we had for Sam Burgess.
john77 – “Due diligence is carried out by the purchaser – the only due diligence required of the seller is to check whether the purchaser can actually pay the purchase price”
I didn’t say it was accurate. Just that is what the allegation seems to be. The management of a lot of companies do more than this. They do recommend, or not, take over bids based on more than the price. After all, the price is often hard to determine. Suppose they offer cash and shares?
Ironman – “we now seem to be in the land of “blame anything on him we can”. So now he has failed to do what he has no obligation to to do, either in law or under normal commercial practice.”
Indeed we are. All part of the modern British culture of politically correct hysteria people like you have contributed so much to. However whatever normal commercial practice is, I would think most people would believe that if his workers behaved in good faith to him, he has a moral obligation to avoid, in so far as it is possible, handing their pensions over to spivs.
Whether or not he has done that deliberately is another matter. However it is not a good look when he removed hundreds of millions of pounds from a company, more or less the pension deficit in fact, leaving it bankrupt and then selling it to some wide boys. So he did that in fact.
There is a clear case for requiring pensions to be fully funded and in the hands of a third party. Especially if the rest of us are expected to pay for companies that are looted by their management.
It is ironic that in the old days – pre 1980s – most pension schemes were fully funded. However, as investment returns were around 10% per annum at the time, the government (Conservative, note) decided that companies were dodging tax by continuing to fund the schemes. So they “encouraged” companies to take contribution holidays. This became a practice. Investment returns plummetted to under 5%, and here we are.
@ SMFS
For a change I wasn’t taking issue with you – it was the Grauniad which alleged Sir Philip conducted due diligence.
‘is under mounting pressure to explain his actions.’
Is the self same Guardian article what constitutes “mounting pressure?”
“responsible for the actions of Chappell” is the issue – what was the relationship, if any, between the wide boy and the spiv before the sale of the company?
I presume you are on a smartphone or similar but that is a lovely couple of auto-incorrects.
Just imagine the leftie rage if he had owned the NHS and was being accused of corruption in its sale due to being partly paid in blowjobs!
Fat fingers, little keypad.
IIRC, due diligence is carried out by accountants. Which firm did this (and bungled it)?
Did he get his quid off him though?
There is a clear case for requiring pensions to be fully funded
I don’t disagree, but pensions schemes are normally valued on an ‘ongoing’ basis. New entrants (shiny faced graduates etc.) contribute a significant surplus as they join the scheme and even more if they leave before retirement (as most will, these days). Suddenly lock the doors and wind up the company and you’ve taken away all that source of future funding.
So, if every pension scheme had to be valued on the basis that the underlying business would fold the next day, I expect very few of them would be solvent.
@ Chris Miller
Those pension schemes that are insured are normally solvent.
Secondly most “final salary” pension schemes assume that the individual will gain salary rises between “now” and retirement so their funding model requires them to accrue n/60ths of estimated final salary not n/60ths of current salary which is what the guy would be entitled to if the company went bust tomorrow.
The problem (or 99% of it) with pension schemes is negative real interest rates.