Goldman Sachs banker apologises to MPs for not disclosing BHS talks
Graham Ruddick, Sarah Butler, Graun, Jun 29 2016
The leading British banker at Goldman Sachs has apologised to MPs after he revealed that the bank was approached by Sir Philip Green about offering a £40m loan to BHS when it was bought by Dominic Chappell. Goldman had not previously disclosed talks about the loan, despite giving oral and written evidence to the parliamentary committee investigating the demise of BHS. Iain Wright, the chair of the business, innovation and skills committee, said:
How can clients trust you when you’ve failed to remember a potential £40m transaction?
Michael Sherwood, a vice-chairman of the bank, said sorry, declaring that he had forgotten the conversation with Green and that a formal request for the loan did not materialise. He said:
We never put terms of the loan, ever.
Goldman was thrown into the centre of the BHS scandal after Green claimed that he “one million per cent” would not have sold the department store chain to Chappell had he not passed an informal vetting by the bank. Goldman had previously said it provided informal observations to Green on the prospective buyer and was not paid for its work. Sherwood insisted that Goldman had “done a good job of highlighting the risks” of the deal, but would have done “substantially more” had it been paid. BHS collapsed into administration in April, putting 11,000 jobs at risk and leaving a £571m pension deficit. Green controlled BHS for 15 years until he sold it to a consortium led by Chappell, who has been declared bankrupt three times. There is growing anger about the collapse of BHS because Green and other investors collected more than £580m in dividends, rental payments and interest during the Topshop owner’s period in charge. Chappell’s consortium Retail Acquisitions also collected at least £17m from BHS, despite owning it for just 13 months.
MPs on the work and pensions committee, and the business, innovation and skills committee, are investigating how the BHS pension scheme ended up heavily in deficit and why Green sold the company to Chappell. In hearings on Tuesday, the man who introduced Chappell to Green, thereby facilitating the controversial takeover of BHS for £1, said he “never thought in a million years” that Chappell would end up running the department store chain. Paul Sutton, who has a spent conviction for fraud in France, told MPs that Chappell had initially been his driver when he was working on his own deal to buy BHS. Sutton was forced to stand down from his bid after a dossier describing a series of allegations against him, including the fraud conviction, was sent to Green. Chappell then took over Sutton’s proposal, eventually buying BHS from Green’s retail business Arcadia Group in Mar 2015. Sutton said standing down from his bid team “was the only decent thing to do” and that he agreed to sign a declaration that he would not be involved in buying BHS. Sutton claims that the dossier was sent by the sisters of his partner and is part of an alleged blackmail attempt against him.