The Work and Pensions Committee of the House of Commons has said this morning that:
The truth is that a large proportion of those who have got rich or richer off the back of BHS are to blame. Sir Philip Green, Dominic Chappell and their respective directors, advisers and hangers-on are all culpable. The tragedy is that those who have lost out are the ordinary employees and pensioners. This is the unacceptable face of capitalism.
They are right, of course.
They are right to say Sir Philip Green and his family should now return funds he was paid by BHS whilst its pension scheme sank.
But some of their solutions are too timid. Asking for a review of the audits is not good enough: these audits were grossly deficient by not referring to the payment of dividends when there were no funds to pay them.
Asking for a review of the pension when the company collapsed is not good enough: that should have happened when the deficit was developing.
And saying that governance was deficient in a company set up through a tier of offshore structures that extracted value from the company at lowest possible tax cost at long term risk to others does nothing to address the point.
It was for this committee to say more than this one problem case has to be resolved by saying one man has a moral duty to act. It should have said what it expects of auditors and their regulators, what it expects of corporate behaviour when pension funds are in deficit and how company should be required to protect pension interests long before a situation like this could arise. And it should have suggested when, how and why the benefits of limited liability should be removed from those who have got rich whilst their companies have failed at cost to others.
Much will be made in the media of the sloganeering of this committee. But it should have done so much more, and what I have read of their report suggests they too have fallen short of the mark we and BHS pensioners might have expected of them.
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I remember reading Will Hutton’s book – ‘The State We Are In’ in 1990’s – a very important book for me at the time as I had just re-entered University as a mature student.
He introduced to me the concept of the ‘hollowing out’ of buinesses and economies ecouraged by financial sector – the almost cannibalistic mode of making money and enabling it to be funnelled to fewer people. often destroying buinesses and lives in the process.
It seems to me that ‘hollowing out’ has reached it’s nadir in this case.
Shameful.
Everything wrong about pensions can be traced back to the abandonment of SERPS.
To a very large degree I agree
Politicians are to blame
It is they that decide the law
The law is clearly lacking when it allows companies to ditch their pension schemes on to the insurance scheme.
As long as nothing changes expect other companies to junk their expensive defined benefits schemes in the same way.
I do not dispute that the will to enforce regulation does not exist
I have said so several times today
It seems that Green is the new Maxwell: another opportunity for wags to say “It’d be a crime if it wasn’t legal”, and another missed opportunity for effective reform.
Nevertheless, your thoughts on the boundaries of limited liability are interesting, and might be worth expanding.
I have to say I think Maxwell was fraudulent
I have seen no evicence from anyone to say Green is
Unethical by many people’s standards, yes, but fraudulent no, so quite different
True, Maxwell was a crook – his company accounts were a fiction, and clearly in breach of both accounting standards and the law.
Also, he was all too eager to initiate litigation against anyone who told the truth.
But the worst of his depredations on the pension fund were legal at the time.
This is often forgotten.
There is no way Green is a Maxwell
Whatever the inaction of politicians, the opportunity for political direct action by consumers in solidarity with BHS employees and pensioners is available by boycotting the Greens Arcadia stores namely Topshop, Topman, Wallis, Evans, Burton, Miss Selfridge, Dorothy Perkins, and Outfit. A sharp drop in sales would get Philip Green’s attention.
True