15/06/2016

:00:09. > :00:13.Our top story today - the former owner of BHS -

:00:14. > :00:17.who sold it for a pound to a man who'd twice been declared bankrupt

:00:18. > :00:20.and never worked in retail - is being quizzed by MPs today

:00:21. > :00:23.about what led to the collapse of the home store and the loss

:00:24. > :00:40.While Sir Philip's former workers contemplate redundancy with

:00:41. > :00:42.significantly reduced terms and a pension, he awaits delivery of a

:00:43. > :00:47.brand-new ?100 million yacht. being questioned at about 9.15 this

:00:48. > :00:50.morning, we'll bring you much Also on the programme,

:00:51. > :00:53.an alligator's dragged a two-year-old boy into a lake

:00:54. > :00:56.at Disney World in Florida. His father tried to wrestle

:00:57. > :01:08.the alligator away. The father in at the water, and he

:01:09. > :01:12.tried to grab the child, was not successful in doing so. That some

:01:13. > :01:16.point I'm told that the mother may have also entered the water.

:01:17. > :01:18.And French authorities are sending 4,000 extra officers

:01:19. > :01:20.to Lille to try and prevent further violence between England

:01:21. > :01:23.Meanwhile, on the pitch, Cristiano Ronaldo gets stroppy,

:01:24. > :01:25.after his side could only draw with Iceland.

:01:26. > :01:38.It's a great result for one of the smallest nations here.

:01:39. > :01:42.Welcome to the programme, we're live until 11.00.

:01:43. > :01:45.Much of the programme will be dominated by that evidence

:01:46. > :01:53.Do listen to what he has to say and send us your reaction.

:01:54. > :01:55.Get in touch in all the usual ways, use the hashtag #VictoriaLIVE,

:01:56. > :01:59.and if you text, you will be charged at the standard network rate.

:02:00. > :02:01.We'll bring you the beginning of that evidence at around

:02:02. > :02:03.0915 this morning - but first Joanna has a summary

:02:04. > :02:11.The retail tycoon Sir Philip Green is expected to appear before MPs in

:02:12. > :02:15.the next hour to answer questions over the collapse of BHS. Sir Philip

:02:16. > :02:20.owned BHS for 15 years before selling it for a pound in 2015. The

:02:21. > :02:26.retail chain went in to administer it in late April, threatening 11,000

:02:27. > :02:28.jobs and leaving a ?570 million deficit in its pension scheme.

:02:29. > :02:31.The Chancellor George Osborne will say this morning that he'll

:02:32. > :02:35.need to raise taxes and cut spending if Britain votes to leave the EU -

:02:36. > :02:37.claiming there'll be a ?30 billion budget black hole.

:02:38. > :02:39.But 57 Tory MPs have already warned the Chancellor

:02:40. > :02:41.in a statement that his position would be "untenable"

:02:42. > :02:43.if he attempted to carry out such plan.

:02:44. > :02:50.Our Assistant Political Editor, Norman Smith is in Westminster.

:02:51. > :02:57.Norman, what is he saying? Is he saying this is something he would

:02:58. > :03:02.absolutely do? The Chancellor is saying there would have to be an

:03:03. > :03:06.emergency budget if we voted for Brexit, and he is sketching out tax

:03:07. > :03:13.rises around ?15 billion, including 2p on the basic rate, 3p on the

:03:14. > :03:18.higher rate, higher road and alcohol duties, and significant cuts,

:03:19. > :03:21.tearing up the Conservative's party commitment to protect school

:03:22. > :03:27.spending, and says there would have to be a ?2 billion hit to pensions.

:03:28. > :03:31.But that plan has pretty much gone up in flames, been torpedoed by his

:03:32. > :03:35.own MPs, around 60 of whom have signed a letter this morning, saying

:03:36. > :03:38.that they would not bow to such a budget, because it would be in

:03:39. > :03:42.contradiction of their manifesto pledges. More than that, they say

:03:43. > :03:48.the Chancellor's position would be untenable. And you sense the raging

:03:49. > :03:51.Civil War over Europe has just gone up another notch. Thank you, Norman,

:03:52. > :03:54.much more on this throughout the programme.

:03:55. > :03:56.Police in Florida are searching for a two-year-old boy,

:03:57. > :03:58.after reports that he was snatched by an alligator in

:03:59. > :04:00.the grounds of a Disney resort near Orlando.

:04:01. > :04:03.The search is going on at Disney's Grand Floridian Resort

:04:04. > :04:07.The local sheriff says the boy was seized as he was playing

:04:08. > :04:13.His father, from Nebraska, entered in the water but was unable

:04:14. > :04:20.As a father, as a grandfather, we are going to hope for the best

:04:21. > :04:24.But based upon my 35 years of law enforcement experience,

:04:25. > :04:34.we know that we have some challenges ahead of us at this time.

:04:35. > :04:36.Two women have alleged they were sexually abused

:04:37. > :04:40.as children by the late Liberal MP and broadcaster, Sir Clement Freud.

:04:41. > :04:42.They've made the claims on ITV's Exposure, which will

:04:43. > :04:45.His widow, Jill, says she feels profoundly sorry

:04:46. > :04:50.In the programme, Sylvia Woosley describes years of abuse,

:04:51. > :04:55.including while she lived with Freud in his home.

:04:56. > :05:02.That's a summary of the latest BBC News - more at 9.30.

:05:03. > :05:16.Good morning, Victoria. Yes, Cristiano Ronaldo was not happy with

:05:17. > :05:20.his side's performance last night. Portugal drew 1-1 with Iceland.

:05:21. > :05:24.After the match, Ronaldo said I thought they had won the Euros, the

:05:25. > :05:28.way they celebrated at the end. This, in my opinion, shows a small

:05:29. > :05:32.mentality and they are not going to do anything in the competition. Nani

:05:33. > :05:37.had given Portugal the lead, but it was this goal from beyond the Sun

:05:38. > :05:43.that secured a valuable point for Iceland, playing in their first

:05:44. > :05:47.major tournament. It is thought that nearly 10% of Iceland's entire

:05:48. > :05:51.population is here in France to watch the team. There was another

:05:52. > :05:54.surprise result in Group F, as Hungary who themselves have not

:05:55. > :06:03.competed at the Euros for 44 years, with Austria 2-0. The Euros are

:06:04. > :06:07.barely underway, but the countdown to the new Premier League season has

:06:08. > :06:10.started. In the last human its, the fixtures for next season have been

:06:11. > :06:16.released. Here is how the opening weekend is looking. Dates and times

:06:17. > :06:20.of course are subject to change. Champions Leicester bid visit newly

:06:21. > :06:23.promoted Hull. Arsenal against Liverpool might be the fixture of

:06:24. > :06:27.the weekend at the Emirates. And West Ham's first match at their new

:06:28. > :06:31.Olympic Stadium home will be against Bournemouth on 20th of August. All

:06:32. > :06:37.of the fixtures can be found on the BBC Sport website. Andy Murray gave

:06:38. > :06:45.coach Ivan Lendl the perfect welcome back with a win over Nicolas Mahut

:06:46. > :06:47.at Queen's Club London. He won 7-6, 7-6 to reach round two. He now faces

:06:48. > :06:57.petition of two, Aljaz bird next. He doesn't give many signs during

:06:58. > :07:02.the match was dubbed he has quite a straight face. Whilst I'm playing.

:07:03. > :07:05.But it is great. I started working with Jamie Delgado a few months ago

:07:06. > :07:11.and that has worked it strangely well, and obviously I had some of my

:07:12. > :07:16.best years with Ivan a few years ago, and I think it is a very strong

:07:17. > :07:22.team. I am hoping they can help me win more major events. Finally,

:07:23. > :07:27.jockey Adam Kirby had a really memorable first day of Royal Ascot.

:07:28. > :07:32.He won the Kingsdown stakes on Profitable. Just watch him closely

:07:33. > :07:36.as he came home, he had to fight back the tears, when he revealed

:07:37. > :07:40.that his girlfriend Megan had given birth to a baby boy just a couple of

:07:41. > :07:46.hours before the race. He also dedicated the win to his dad, who he

:07:47. > :07:51.said had always wanted to watch him ride a Group 1 winner, who died

:07:52. > :07:56.three years ago. Before I go, all eyes on the Russia- Slovakia match

:07:57. > :07:59.in Lille this afternoon. Russia have been warned that if there is any

:08:00. > :08:01.trouble inside the stadium similar to what happened in Marseille they

:08:02. > :08:08.will be thrown out of this competition. The match is live on

:08:09. > :08:10.BBC One. Kick-off is 2pm. Thank you. More from Sally throughout the

:08:11. > :08:12.programme, live from Paris. The former boss of BHS,

:08:13. > :08:14.Sir Phillip Green, is about to appear before MPs

:08:15. > :08:16.to answer questions Throughout the programme we'll bring

:08:17. > :08:22.you the key parts of his evidence - and you can watch it all on the BBC

:08:23. > :08:25.Parliament channel and online. The business tycoon who's worth

:08:26. > :08:29.an estimated 3.2 billion pounds will be questioned by politicians

:08:30. > :08:34.on what's called a select committee - a group of MPs who examine

:08:35. > :08:37.the work of government departments They're televised and often end up

:08:38. > :08:48.providing some memorable moments. select committee moments that

:08:49. > :08:54.grabbed the headlines. In February 2016, Matt Brittin,

:08:55. > :08:56.head of Google Europe, failed to tell MPs how

:08:57. > :08:58.much he earnt. If that's relevant, I'll happily

:08:59. > :09:00.disclose that to the committee. I'll happily disclose that if that's

:09:01. > :09:06.a relevant matter to the committee. I'm asking you, so it

:09:07. > :09:08.is a relevant matter. Can you tell me what you get paid,

:09:09. > :09:10.please. I don't have the figure but I'll

:09:11. > :09:12.happily provide... Perhaps you could give

:09:13. > :09:19.us a ballpark? Forget the share options,

:09:20. > :09:21.what is your basic salary? I don't have the figure but I'll

:09:22. > :09:26.provide the figure privately, if it's relevant to the committee

:09:27. > :09:29.to understand my salary. OK, you don't know

:09:30. > :09:32.what you get paid. My point is, out there,

:09:33. > :09:37.taxpayers are very angry. They live in a different world,

:09:38. > :09:40.clearly, to the world that you live in, if you can't even tell us

:09:41. > :09:44.what you are actually paid. In July 2012, G4S chief Nick Buckles

:09:45. > :09:48.was quizzed by MPs after the firm failed to supply enough security

:09:49. > :09:51.staff at the London Olympics, requiring the Army to step

:09:52. > :09:57.in and fill the gap. My view and the view of the board

:09:58. > :10:01.is that I'm the best person at the moment to take this

:10:02. > :10:04.through to its final conclusion. So you will accept ultimate

:10:05. > :10:06.responsibility for what Members of this House called

:10:07. > :10:09.a fiasco and a shambles? You may be making sure it's

:10:10. > :10:16.delivered now, but ultimately you will agree that somebody has

:10:17. > :10:21.to be responsible for this? As CEO of the group,

:10:22. > :10:23.I'm accountable for the delivery Mr Buckles, it's a humiliating

:10:24. > :10:28.shambles, isn't it? It's not where we would want to be,

:10:29. > :10:32.that is certain. It's a humiliating shambles

:10:33. > :10:35.for the company, yes or no? In June 2016, Sports Direct founder

:10:36. > :10:42.Mike Ashley admitted workers at its Derbyshire warehouse

:10:43. > :10:45.were paid below the minimum wage, and its policy of fining staff

:10:46. > :10:52.for being late was unacceptable. Do you accept that the company

:10:53. > :10:55.was effectively paying workers below On that specific point,

:10:56. > :11:00.at that specific bit If one of my kids went to work

:11:01. > :11:08.somewhere and they were two minutes late and got fined 15 minutes pay,

:11:09. > :11:10.I wouldn't be very Do you think your company has

:11:11. > :11:15.outgrown your ability to manage it? Some of the things you said to me

:11:16. > :11:21.today would actually lead me to believe that it's

:11:22. > :11:24.definitely outgrown me. In June 2016, the former owner

:11:25. > :11:27.of BHS, Dominic Chappell, was accused of being a liar

:11:28. > :11:30.by the firm's former financial His former chief executive

:11:31. > :11:35.Darren Topp also claimed Mr Chappell threatened to kill him during a row

:11:36. > :11:40.over company money. I think the technical

:11:41. > :11:43.term is a mythomaniac. The layperson's term

:11:44. > :11:46.is he was a Premier League liar, and a Sunday pub league

:11:47. > :11:52.retailer, at best. He basically said, do not kick

:11:53. > :11:57.off about this Darren, I've had enough of you telling me

:11:58. > :12:00.what to do over the last few months, it's my business,

:12:01. > :12:02.I can do what I want. And if you kick off about it

:12:03. > :12:05.I'm going to come down In October 2012, George Entwistle,

:12:06. > :12:10.then Director-General of the BBC, came under fire while giving

:12:11. > :12:12.evidence over allegations of sexual There was an allegation

:12:13. > :12:22.that there was a paedophile Have you or the BBC taken any steps

:12:23. > :12:28.to identify who else was involved That's an allegation I've seen made

:12:29. > :12:34.in the last few days. It's something we are putting our

:12:35. > :12:37.resources at the disposal A paedophile ring would be a matter

:12:38. > :12:44.for a police investigation. In July 2011, a protester lunged

:12:45. > :12:46.at Rupert Murdoch with a pie full of shaving foam

:12:47. > :12:49.while the News Corporation chairman took questions

:12:50. > :12:53.about the phone hacking scandal. I would just like to

:12:54. > :12:56.say one sentence. This is the most humble day

:12:57. > :12:58.of my life. Still astonishing that that

:12:59. > :13:14.happened, isn't it? Sir Philip Green will be questioned

:13:15. > :13:17.in the next few minutes by MPs on both the Business and the Work

:13:18. > :13:20.and Pensions Select Committees. Our business reporter

:13:21. > :13:27.Ben Thompson is here and will be Who is Sir Philip Green? He is the

:13:28. > :13:30.man best known for some of the biggest names on our high street,

:13:31. > :13:35.all of those names that feature up and down the country, companies like

:13:36. > :13:39.Dorothy Perkins, Wallace, Evans, top shop, top man and Miss Selfridge.

:13:40. > :13:44.All of those names we have known for so long. He is a veteran of the

:13:45. > :13:48.retail industry, about 40 years. At two points in his career he came

:13:49. > :13:53.very close to buying Marks Spencer 's. He put in two bids, and he did

:13:54. > :14:00.not quite succeed, the first time because the management at M

:14:01. > :14:04.painted a picture of him as a ruthless man only in it for his own

:14:05. > :14:08.self interest. That bid failed. The second time he walked away, saying

:14:09. > :14:11.they wanted to much money. But he could have been one of the biggest

:14:12. > :14:16.names on the high street, if he got hold of M But a very colourful

:14:17. > :14:21.history, I think it is fair to say. A self-made man who worked his way

:14:22. > :14:25.up from just one store. But there is a lot of controversy around him too.

:14:26. > :14:30.His tax affairs are always under the spotlight because he tends to spend

:14:31. > :14:33.a lot of his time in Monaco. His wife, Tina, is actually a Monaco

:14:34. > :14:39.resident, so tax affairs have come under scrutiny in the past. But he

:14:40. > :14:44.is a British citizen, but spends a lot of time abroad and still managed

:14:45. > :14:47.to get a knighthood. There is one crucial issue that Arcadia, the

:14:48. > :14:51.parent company of all of those brands I mentioned, they are

:14:52. > :14:57.actually owned by his wife, Tina. Not by Sir Philip Green, but by his

:14:58. > :15:01.wife, Tina, who as a Monaco resident enjoys the tax benefits of being

:15:02. > :15:04.outside the UK. Sir Philip Green runs them and quite legally he is

:15:05. > :15:08.able to reduce his tax bill by spending a lot of time over in

:15:09. > :15:11.Monaco. But at the time he was knighted, it raised a lot of

:15:12. > :15:15.questions about whether it was fit and proper that he should receive a

:15:16. > :15:20.knighthood, given that he is able to reduce how much tax you pay is in

:15:21. > :15:24.the UK. What we will expect to hear today is a lot of insight into how

:15:25. > :15:29.that business is run, what dealings he has with running not only those

:15:30. > :15:34.companies we have talked about but crucially BHS. He bought it for ?200

:15:35. > :15:45.million back the year 2000. He sold it last year to just ?1, two Dominic

:15:46. > :15:49.Chappell. -- to Dominic Chappell. Both of those giving evidence about

:15:50. > :15:53.the demise of the retailer. And clearly what happens to the 11,000

:15:54. > :15:59.staff and the 164 stores across the country. The administrators were

:16:00. > :16:02.trying to find a buyer for BHS, and to sell it as a going concern. They

:16:03. > :16:06.were not able to do that, so the business is in the process of being

:16:07. > :16:10.wound down. So clearly lots of uncertainty for the 11,000 staff who

:16:11. > :16:14.work there. But one of the most crucial things is for the pensions,

:16:15. > :16:19.people who have paid in for their entire career into a BHS pension

:16:20. > :16:24.fund. That fund is now in a deficit, to the June of ?570 million. There

:16:25. > :16:27.will be serious questions for Philip Green today to find out what he

:16:28. > :16:28.intends to do to try to plug that Black hole to make sure those

:16:29. > :16:32.pensioners don't lose out. We await the beginning of his

:16:33. > :16:35.evidence. Let's talk now to some former BHS

:16:36. > :16:38.workers whose pension pots both stand to be affected -

:16:39. > :16:45.Lin MacMillan and Mark Dadson. Welcome to the programme. Simon, I

:16:46. > :16:50.wonder what you want to hear from Sir Philip Green this morning as he

:16:51. > :16:55.sits before MPs? I would like him to be open and honest about the

:16:56. > :16:59.practices that were going on and why he was willing so eagerly to sell

:17:00. > :17:06.the business to somebody who is proven bankrupt and just get some

:17:07. > :17:11.honest answers as to why, morally, he thinks he can get away with it.

:17:12. > :17:14.And leave so many people with a shortfall after working so long and

:17:15. > :17:18.putting money into their pension fund. And Lynn, what would you like

:17:19. > :17:23.to hear from Sir Philip this morning? I would like to hear him

:17:24. > :17:29.say that he accepts that he has a moral responsibility to repay the

:17:30. > :17:33.pension fund and secure the pensions who have worked for BHS in the past

:17:34. > :17:40.and are still working there. What is the exact figure, Ben? ?570 million?

:17:41. > :17:48.OK, that's the black hole. Sir Philip himself has offered ?80

:17:49. > :17:54.million. It is not enough, is it? It is not. It is 14% of the deficit.

:17:55. > :17:59.Really that is like a slap in the face to the people who worked so

:18:00. > :18:03.hard in BHS for all these years, all of whom are going to lose their jobs

:18:04. > :18:08.if a buyer is not found for the company. Remember that the taxpayer

:18:09. > :18:12.will have to pick up the redundancy payments for these people. Simon,

:18:13. > :18:18.this is going to be the first time we have heard Sir Philip give his

:18:19. > :18:22.version of events, tell his side of the story. Do you think there is

:18:23. > :18:27.another side to this story? Yeah, I'm sure he will almost certainly

:18:28. > :18:33.given opposite answer to what Dominic Chappell said last week. He

:18:34. > :18:36.will fight his way out. He does not want to lose face. Doesn't want to

:18:37. > :18:40.lose his knighthood. He will give many excuses and reasons, I don't

:18:41. > :18:45.think we will get honest answers. I'm going to pause you there, the

:18:46. > :18:54.session has just begun, let's have a listen. Huge amount of evidence and

:18:55. > :19:00.questions to put to you. And I'd like to ask Michelle to open up

:19:01. > :19:06.questions for us. Good morning and thank you for attending our session

:19:07. > :19:09.this morning. As Frank says, the focus of today's session will be

:19:10. > :19:15.very detailed but before we start I'd like to get a sense of EU, Sir

:19:16. > :19:21.Philip. You're recognised as a captain of industry. In your view,

:19:22. > :19:27.what is the one key value which has defined you as an individual during

:19:28. > :19:34.your long business career? Well, I think it's actually not the right

:19:35. > :19:40.way to mark your own essay. I don't think that is probably a good way

:19:41. > :19:46.for me to start. But I think that I started from walking the street, in

:19:47. > :19:49.terms of learning the industry. When I first started retailing I used to

:19:50. > :19:57.visit 12 cities or towns on Saturday. Start at 6:30am. I used to

:19:58. > :20:02.go to Asia from 1974 once a month. I learned how to make the garments. So

:20:03. > :20:06.I've been intimately involved in virtually every aspect of this

:20:07. > :20:13.business over 45 Years. And taught myself. Never worked with anybody in

:20:14. > :20:20.the industry. And hopefully over this next period of time we are here

:20:21. > :20:24.you won't hear all the bad stuff everybody wants to keep writing

:20:25. > :20:27.about, hopefully I will give you a fair and Alan 's view. If I have

:20:28. > :20:32.done something wrong I will put my hands up and say I have done

:20:33. > :20:39.something wrong -- fair and balanced view. You can be your own judge. I

:20:40. > :20:50.don't tell lies, I tell it as it is. I've been across several thousand

:20:51. > :20:58.stores in this country. Still employing 28,000 people currently.

:20:59. > :21:01.Pre-BHS, nearly 40,000 people. And my allowed to summarise, would it be

:21:02. > :21:09.a fair assessment to describe it as honesty and hard-working? Well, I

:21:10. > :21:14.think so. And I think in spite of everything that has occurred I have

:21:15. > :21:19.been getting quite a lot of messages from BHS people, and if I may, just

:21:20. > :21:24.before we get started, I'd like to say a few words, if that's OK.

:21:25. > :21:36.Contrary to everything that's getting written, I spent 15 years,

:21:37. > :21:40.nearly a third of my working career with BHS. Probably the thing that

:21:41. > :21:44.got me into trouble was having too strong an emotional tie with both

:21:45. > :21:50.the people and the business. If you went to ask the people I work with,

:21:51. > :21:56.who worked with me, I think they would all testified that I was

:21:57. > :22:03.honest, hard-working, and nothing is more sad than how this has ended.

:22:04. > :22:07.And I hope during the morning you will hear there was certainly no

:22:08. > :22:12.intent on my part for anything to be like this. And it did not need to be

:22:13. > :22:16.like this. And I just want to apologise to all the BHS people that

:22:17. > :22:20.have been involved in this. And I hope by the end of the morning they

:22:21. > :22:24.will hear everything and we can find some sensible solutions to some of

:22:25. > :22:31.the issues. And your apology is noted. What is a key value that the

:22:32. > :22:38.11,000 employees and future pensioners would use to describe

:22:39. > :22:41.you? I'm sorry? In terms of your key values of hard working and honesty,

:22:42. > :22:47.what word to describe your key values would be in there than

:22:48. > :22:54.thousand employees and future pensioners use? Respectfully I think

:22:55. > :22:58.I've just said what I said. I can't make everybody happy. There will be

:22:59. > :23:01.unhappy people and I accept that. But hopefully by the end of the

:23:02. > :23:05.morning when we've been through the things we have to go through,

:23:06. > :23:10.hopefully people will hear that is not the intent and we can find some

:23:11. > :23:14.solutions. Thank you for that. Moving forward, I wanted to ask some

:23:15. > :23:20.specific questions about the early days of you getting involved with

:23:21. > :23:28.BHS, firstly in terms of dividend. With hindsight, how do you view your

:23:29. > :23:37.dividend policy at BHS? Well, if we were here and able to use hindsight

:23:38. > :23:41.we wouldn't be here. Lots of us would be doing different things if

:23:42. > :23:44.we could use hindsight but we can't. Respectfully, if you look at how

:23:45. > :23:50.businesses were financed in those days, early 2000, the financing of

:23:51. > :23:54.BHS was extremely conservative. If you go and look at and I'm sure we

:23:55. > :24:00.could find many transactions where people used to borrow multiples,

:24:01. > :24:05.four, five, six, seven, eight times cash flow, were how businesses were

:24:06. > :24:10.financed by venture capital people, private equity, this is how

:24:11. > :24:14.businesses were bought. If you look at this business, it did not have

:24:15. > :24:17.more than one times cash flow as debt, so actually it was

:24:18. > :24:22.conservatively run. We have a chart of the numbers and we can go through

:24:23. > :24:27.them. You have got to look at the dividends in the context of the cash

:24:28. > :24:31.flow the business was making, context of the profits it was

:24:32. > :24:36.making. And did you regard your dividend policy as prudent? As I

:24:37. > :24:41.said, I do not think we exceeded one times cash flow. If you ask any

:24:42. > :24:45.independent banker or anybody in venture capital or the buyout

:24:46. > :24:50.business, they would have asked why we were being so conservative. So it

:24:51. > :24:56.was not an aggressive finance strategy. Given that dividends paid

:24:57. > :25:06.over the period of 2000 to 2014 were 19,732% of profit as compared to MMS

:25:07. > :25:12.at 84% profit. I'm sorry... The last dividend was paid in 2004. With

:25:13. > :25:17.respect, we can pick any numbers, if you want to make them look

:25:18. > :25:22.disconnected. We've got to pick the numbers in line. Respectfully, if

:25:23. > :25:26.you go to a public company that paid X in 2002, three or four, you

:25:27. > :25:36.couldn't have a strategy knowing where you would be 11 years later,

:25:37. > :25:39.that's not realistic. Between 2002 and 2004 the dividends were roughly

:25:40. > :25:53.double the profits, would you that prudent? The operating profit as is

:25:54. > :26:00.normally looked at, in 2000, 2001, was ?80.6 million. The next year

:26:01. > :26:07.?146.7 million. The next year 153.5 million. The next year 157.8

:26:08. > :26:12.million. Cash generated from the business was ?537 million. Over

:26:13. > :26:18.those years. That's the audited numbers. You are giving me

:26:19. > :26:25.something... Then we can move on from there. In that period of time

:26:26. > :26:28.there was ?537 million generated. It may well be as we go through the

:26:29. > :26:33.people of the committee today that we get more detail into the numbers,

:26:34. > :26:38.but obviously there is significant interest in all of this matter for

:26:39. > :26:42.people at home as well. My simple question to you is, with the benefit

:26:43. > :26:47.of hindsight, do you view the dividend policy given the excessive

:26:48. > :26:52.dividends when you do comparative is against other companies as prudent?

:26:53. > :26:56.Did you regard them as prudent men and do you regard them looking back

:26:57. > :27:02.as prudent? As I said to you, I think the leveraged used on this

:27:03. > :27:07.company was not excessive. The bank debt against the profitability I

:27:08. > :27:12.read you in year one was ?111 million. In year two it was ?2.2

:27:13. > :27:18.million. In year three it was ?9.9 million. And in the third year when

:27:19. > :27:24.the company made ?157 million, it was ?111 million. You can go and

:27:25. > :27:28.take that to any independent banker or organisation you like, look at

:27:29. > :27:32.those numbers, they are not excessive based on the bank debt

:27:33. > :27:36.versus the earnings. Did you have any concerns that dividends were

:27:37. > :27:43.still being paid out at the rate they were when the pension scheme

:27:44. > :27:49.was moving into deficit? I'm happy to tackle the pensions any time you

:27:50. > :27:52.like, but I think... I imagine it is a separate section but looking at

:27:53. > :27:57.overarching financial governance. If you want to have a separate pension

:27:58. > :28:01.conversation we can. But let's stick the numbers and go through them and

:28:02. > :28:04.then I am more than happy to answer any questions you like on the

:28:05. > :28:09.pensions. I think you have answered my question. Carrying on, in terms

:28:10. > :28:15.of property, your company got a number of properties from BHS for

:28:16. > :28:18.?1.59 million as a sale and lease back to another company called

:28:19. > :28:22.Carmen properties. Who was the controlling party of Carmen

:28:23. > :28:31.properties Limited? I think you are using the wrong numbers. It probably

:28:32. > :28:35.doesn't matter. The fact is, can we agree that a number of properties

:28:36. > :28:40.were sold to Carmen properties Limited? What we can agree is a

:28:41. > :28:45.number of properties were purchased on an external valuation by a

:28:46. > :28:50.company called Carmen, which was a family company. Were going to pause

:28:51. > :28:55.for a moment and leave Sir Philip Green giving his evidence. He began

:28:56. > :29:01.the session by explaining that he was self-taught comity started in

:29:02. > :29:06.business over 4245 Years ago. He said he wanted to give a fair and

:29:07. > :29:10.balanced view in his evidence. He said "I don't tell lies. Contrary to

:29:11. > :29:14.everything written about me I spent 15 years with BHS and probably what

:29:15. > :29:18.got me in trouble was having too strong an emotional tie with the

:29:19. > :29:23.company. I'm honest, hard-working, and I want to apologise to all BHS

:29:24. > :29:31.people. I can't make everyone happy, there are going to be some unhappy

:29:32. > :29:36.people. ". Ben Thompson, his opening statement, what did you think? The

:29:37. > :29:41.line that jumped out was the fact he said "It didn't need to be like

:29:42. > :29:45.this". And anybody with any connection with BHS will feel the

:29:46. > :29:50.same, that it ended pretty messily after being in Philip Green's hands

:29:51. > :29:55.for so long. He bought it in 2000, sold last year for just ?1. The

:29:56. > :33:00.decline quite evident. What is so interesting, this is very much

:33:01. > :33:04.see him do is to make an apology in a tangible way by bailing out the

:33:05. > :33:09.pension fund. And if he is really sorry for what happened to be HS,

:33:10. > :33:13.that would be the way to make things right. OK, thank you. A couple of

:33:14. > :33:17.messages from people watching as well. Carol on e-mail says he should

:33:18. > :33:22.be forced to sell his yacht and return the money to the BHS pension

:33:23. > :33:26.fund. John has e-mailed to say Sir Philip Green, irrespective of his

:33:27. > :33:31.excuses, must be made to repay funds taken from BHS to protect the

:33:32. > :33:36.interest of BHS pensioners. Lin and Simon, we will hear more from you

:33:37. > :33:42.later as Sir Philip Green continues to make a statement. Ben, I wonder

:33:43. > :33:45.if I could bring you the latest on employment figures to get your

:33:46. > :33:50.response. We will talk to the relevant minister in the next

:33:51. > :33:57.half-hour or so let's have a look. The number of people on the claimant

:33:58. > :34:01.count last month fell to 764,100, according to the office for National

:34:02. > :34:05.statistics. So on climate has fallen a bit. The one thing here that we

:34:06. > :34:09.always watch, the headline figures frankly not that interesting, it is

:34:10. > :34:14.the politicians get so excited about it. The thing that affects all of us

:34:15. > :34:17.is earnings. Average earnings rising by 2%, that is unchanged, but what

:34:18. > :34:22.we have to remember and we have talked about that a lot, the gap

:34:23. > :34:26.between how much on average we are being paid and the cost of living

:34:27. > :34:30.amateur it is going up, there is a gap of about 1.5% at the moment, so

:34:31. > :34:36.we should be feeling a bit better off. You will continue listening to

:34:37. > :34:39.Sir Philip Green's evidence. If you want to watch it live and

:34:40. > :34:44.uninterrupted it is in BBC Parliament.

:34:45. > :34:48.The latest on the legal battle of man who says -

:34:49. > :34:51.as a wheelchair user - he should have had priority over

:34:52. > :35:00.Before we get the latest news headlines, let's go back to Sir

:35:01. > :35:05.Philip Green. If we were actually looking for a route to set up the

:35:06. > :35:09.companies to be aggressive non-taxpayers. If you look at over

:35:10. > :35:13.the period of time how much tax the company 's have paid, I think you

:35:14. > :35:20.will find it is pretty substantial. We might come back to that a bit

:35:21. > :35:26.later, if we may. Just for your information, Mildenhall Holdings Ltd

:35:27. > :35:36.was registered in Jersey, Inc in 2005 and dissolved in 2012. The

:35:37. > :35:43.screen and her -- TS green and her immediate family are the controlling

:35:44. > :35:49.party. It made 2.8 million on rent on top of the 152 million in meant

:35:50. > :35:54.extracted through Carmen Properties. We can see looking at the accounts

:35:55. > :36:00.you paid tax on your UK-based Holdings, but in terms of the

:36:01. > :36:03.complexity of your corporate structure, how transparent would you

:36:04. > :36:11.consider it to be, the wider group, given the number of holdings in

:36:12. > :36:16.Jersey, Monaco and so on? Is that something you regarded as common as

:36:17. > :36:22.well? Is it more, Lex and you have seen elsewhere? I don't think it is

:36:23. > :36:27.complex at all. Everybody knows that the company is owned offshore. Where

:36:28. > :36:33.is that complex? It has not been hidden. And so going back to the

:36:34. > :36:41.purpose, then, my question is it may well be in Thai leader Jit at tax

:36:42. > :36:46.avoidance -- entirely legitimate tax avoidance... 30% of the FTSE is

:36:47. > :36:51.owned by non-UK corporations. If we go around the high Street and other

:36:52. > :36:59.industries, there are dozens and dozens and dozens of non-UK

:37:00. > :37:03.investors. Do you want to say every non-UK holder is a tax avoidance? I

:37:04. > :37:06.am sorry, there are people doing business in this country, which are

:37:07. > :37:12.written about regularly, so I'm not going to name any names, who are

:37:13. > :37:19.competitors of ours, right, who compete against us and don't pay tax

:37:20. > :37:28.as a normal course of business. It is the British Home Stores we are

:37:29. > :37:34.talking about. And the major player in this is your wife, Lady Green. It

:37:35. > :37:41.is not as though it is some foreign entity. There are a lot of other

:37:42. > :37:49.businesses owned here by people that do not live or reside in the UK. If

:37:50. > :37:55.you don't want non-UK investors, then so be it, but I'm sorry. That

:37:56. > :38:01.is not what I designed or set up, that is the system. So I suppose

:38:02. > :38:08.coming from that, my question is that, in terms of the lack of

:38:09. > :38:13.transparency of the offshore vehicles, it makes the job of

:38:14. > :38:17.tracking funds very difficult. It made the job of tracking funds for

:38:18. > :38:21.myself and the supporting team difficult, but it also makes it

:38:22. > :38:25.difficult for people such as a pensions regulator, when they don't

:38:26. > :38:32.have the transparency of where all funding is going. Is that something

:38:33. > :38:36.you accept? No, I don't. Threw so are you prepared to make the

:38:37. > :38:43.accounts available for the pensions regulators, in order that they can

:38:44. > :38:51.do that? Make what accounts available? The once offshore in

:38:52. > :38:57.Jersey. They are not my accounts. The Green family accounts? They are

:38:58. > :39:03.not my account so I don't have any control. So when it says P Green is

:39:04. > :39:09.the major holding party, what is that refer to? I am not the major

:39:10. > :39:18.shareholder. This is your wife. She has the accounts, you don't. I have

:39:19. > :39:27.never had an overseas bank account. Can I just finish off with a couple

:39:28. > :39:31.of things? I am mindful of time. In terms of restructuring the group,

:39:32. > :39:34.when you got around to doing that, back office functions were moved

:39:35. > :39:43.into Arcadia. What was the purpose of doing that? Hopefully to find

:39:44. > :39:47.some economies of scale. So that is a fairly common thing, in my

:39:48. > :39:59.understanding, but then looking at the kind of p and L breakdown,

:40:00. > :40:07.between 2009, the expenditure on that was 36.3 million. After it was

:40:08. > :40:13.pulled into Arcadia, it went up to 57.7 million, an increase of 57%. If

:40:14. > :40:20.it was designed to save money, what was that about, can you recall? I am

:40:21. > :40:27.happy if anybody wants to meet up with my team that run the back

:40:28. > :40:34.office, that is not my job. I think you will find that all the charges,

:40:35. > :40:38.all of the business is run off a central charge, all of the different

:40:39. > :40:47.brands, and they are all charged as if the centre is a provider. I

:40:48. > :40:53.understand how that works what Vila let me just finish, if I make you

:40:54. > :40:58.asked a question, let me answer it. I am more than happy to provide the

:40:59. > :41:02.relevant people who do the back office to take you through whatever

:41:03. > :41:06.you want to look at, right, of how the costs were charged, and I think

:41:07. > :41:12.you will find there was no profit, which is where you are going, there

:41:13. > :41:20.was no profit made by Arcadia in respect of any third-party charges

:41:21. > :41:23.made to BHS. That is what my team has told me. If you want that

:41:24. > :41:32.information made available to you, you can happily see it. There is no

:41:33. > :41:38.problem. Just finishing off, then, in terms of looking for a sale... If

:41:39. > :41:43.I may before you continue, with respect, coming from outside looking

:41:44. > :41:45.in, unless you are inside the business yourself, right, the types

:41:46. > :41:50.of figures you are trying to look at, without somebody internally

:41:51. > :41:52.taking you through, it will be very difficult for anyone outside to

:41:53. > :41:58.understand how those numbers come together, because I think they

:41:59. > :42:02.started to do other functions. But as I said, I am more than happy to

:42:03. > :42:06.provide my accounts team and take you through it, there is no issue.

:42:07. > :42:11.What I am saying is there was zero profit. Everybody wants to think it

:42:12. > :42:20.was a game, we did not. That service was provided I am told by my team,

:42:21. > :42:26.low cost. We will come back to that. Just to finish off, then, in terms

:42:27. > :42:30.of looking for a sale. What was the point you started to think about

:42:31. > :42:50.selling BH S? When did that first occur? I would say probably 14.

:42:51. > :42:55.2014? Yes. So the talks you had with Asda and Debenhams, the Icelandic

:42:56. > :43:06.retailer, talks you had in 2007 about the sale of BH S... From time

:43:07. > :43:09.to time, it could be somebody phoned up and they could be a brief,

:43:10. > :43:18.session but there was no thought process. There should have been

:43:19. > :43:23.maybe, for a sale. Just for the record, so I'm clear, you are saying

:43:24. > :43:27.there was no serious attempt to sell BHS before 2014, that the talks that

:43:28. > :43:35.were held in 2005 were simply a phone call, a speculative phone

:43:36. > :43:42.call? As I said, there was no serious, proper dialogue had about

:43:43. > :43:50.making a disposal, nobody turned up with something that was serious, as

:43:51. > :43:56.I say, I wish they would have done. Jeremy Cooke at Sir Philip, the

:43:57. > :44:00.point Michelle was talking about... I apologise, what I think we didn't

:44:01. > :44:07.finish, if I may, Michelle, what we didn't finish, OK, which I asked

:44:08. > :44:11.yesterday just to make sure we don't get lost, you are just focusing on

:44:12. > :44:16.the first four years of business, so let's just spend five minutes if we

:44:17. > :44:21.may just on the rest of the numbers, because otherwise the story is very

:44:22. > :44:23.easy to actually get misrepresented. There are certain things that have

:44:24. > :44:26.been said by other people here coming to this committee that do not

:44:27. > :44:34.actually fairly reflect what did happen. Is that what we have already

:44:35. > :44:38.said, Sir Philip, because there will be lots of opportunities... No, this

:44:39. > :44:43.will just take three or four minutes so we fell in the total picture so I

:44:44. > :44:45.think it is represented fairly. Because there have been things that

:44:46. > :44:58.have been said that do not reflect what occurred. In the following

:44:59. > :45:02.years, 4-5, 5-6, 6-7, 8-9, we invested 6 million of capital in the

:45:03. > :45:06.stores will stop the other day it was represented that we did not

:45:07. > :45:14.invest any money at all, but we did invest 254 million. Post-2009, I

:45:15. > :45:26.think it has been widely written when the business came into Arcadia,

:45:27. > :45:29.Arcadia lent to be H S on and unsecured interest-free basis, which

:45:30. > :45:32.is highly unusual, as most entrepreneurs would have struck all

:45:33. > :45:39.the assets down and taken everything for their own, which we did not, and

:45:40. > :45:42.we lent 256 million on an unsecured interest-free basis over the next

:45:43. > :45:48.five years. In addition to that, we invested a further short hundred

:45:49. > :45:55.million in capital. So that is before we get to the disposal.

:45:56. > :46:01.Right? We put 250 million in capital X, we lent 250 million, and we

:46:02. > :46:07.invested a further 100 million. The 600 million got invested in the

:46:08. > :46:11.business post the dividends before we get to the disposal, where I

:46:12. > :46:15.think the other day you were battling to sort out the balance

:46:16. > :46:17.sheets that were sold, right? But if we waste the last two minutes on

:46:18. > :46:29.that, OK? This will only take one minute.

:46:30. > :46:34.Right? We then left the balance sheet which I know you were

:46:35. > :46:38.struggling the other day to work out. I think Mr Chappell was

:46:39. > :46:46.struggling. All right, between you. I can show you, anyway, there was

:46:47. > :46:54.proud 80 million, and 100 million of assets left in the company when it

:46:55. > :46:59.was sold. So nearly 800 million if you want to add that up went back

:47:00. > :47:11.into the business, OK? Post-2000 four. We put all the money back plus

:47:12. > :47:17.a lot more. Just one point com Michelle was talking about cash

:47:18. > :47:26.extraction, it is completely transparent, in your tablature every

:47:27. > :47:32.year since 2009. To confirm, you are still playing Lady Green for the

:47:33. > :47:38.acquisition of BHS? Yes. 20 million a year is the payment? 200 million

:47:39. > :47:41.paid with interest for the acquisition of BHS by Arcadia? And

:47:42. > :47:46.that's to 20 million charge that goes on every year to Lady Green

:47:47. > :47:52.Western Marc Serre last year Arcadia sold BHS for ?1. But it is still

:47:53. > :48:01.paid ?20 million to Lady Green for its prior person purchase. That is

:48:02. > :48:09.still the situation, is it? If you say so, I don't know. I'm sure you

:48:10. > :48:14.do. I don't. You signed off on the account. I didn't sign anything off,

:48:15. > :48:20.OK? I don't sign the accounts. You were a director of the company.

:48:21. > :48:26.Thank you, that's all. Good morning. Like yourself I was reflecting, 15

:48:27. > :48:30.years of your life doing retail, I've nearly done 40 years in retail

:48:31. > :48:36.myself, a long time and I love retail. I would like to get back to

:48:37. > :48:43.the retail side. Can you tell me when you first of all purchased BHS,

:48:44. > :48:49.what were your plans for it? I think that the people I bought it from had

:48:50. > :48:57.lost interest or, I don't know, lost their way with the business. And

:48:58. > :49:04.actually it is about 40 years, 15 at BHS, so I can keep up with you.

:49:05. > :49:11.Basically it stems from the product site. I think the buying was poor,

:49:12. > :49:20.sourcing was pretty poor. There was not really an owner driving the

:49:21. > :49:23.business. So I think I worked pretty long hours sort of going through

:49:24. > :49:28.each of the areas of the whole business department by department to

:49:29. > :49:31.understand what was working, what wasn't working, and I didn't know

:49:32. > :49:36.any of the people in the building, they were all new to me. Hadn't been

:49:37. > :49:40.in the building before. Think I'd been in once before. Didn't know the

:49:41. > :49:48.staff. You have to get to know the people. Coming back earlier on

:49:49. > :49:53.something Michelle said, when you buy businesses from public

:49:54. > :49:57.companies, people have to trust you. Therefore when you get into those

:49:58. > :50:02.businesses as a starting point you have to get to know the people

:50:03. > :50:06.because you have to work with them. And I think we've got a pretty good

:50:07. > :50:13.track record as a company. Our existing business, the average stay

:50:14. > :50:16.in head office is 11 or 12 years. Do you mind not looking at me like that

:50:17. > :50:23.all the time? It's really disturbing. Sorry? You just want to

:50:24. > :50:28.stare at me? It is uncomfortable. I don't wish to make you

:50:29. > :50:37.uncomfortable. Just makes me uncomfortable, staring at me. To get

:50:38. > :50:42.back to retailing, I am intrigued. Possibly to what the plans were in

:50:43. > :50:46.order to rebrand. Did you have an idea? Talking about maybe

:50:47. > :50:55.relaunching, did you have any plans in terms of how to take it on the

:50:56. > :50:59.road to profit? When you are starting out on the track with these

:51:00. > :51:03.things, I have never sat down and worked out a profit track and said,

:51:04. > :51:07.what have we got to do to make it work? If we make it work, it will

:51:08. > :51:12.make money. Don't think I've sat down with any of the businesses I've

:51:13. > :51:16.looked at. I've looked at what happens if it goes wrong as opposed

:51:17. > :51:22.to what happens if it goes right. And I think this looked like it

:51:23. > :51:26.needed a lot of work doing. I had experience of going to Asia, able to

:51:27. > :51:32.reopen supply chains, sought the supply chain out, and really I think

:51:33. > :51:36.looked over the first quarter at virtually every piece of product

:51:37. > :51:40.across every department in the business. Started to familiarise

:51:41. > :51:46.myself, go to all the product meetings, and start from the ground

:51:47. > :51:51.up working on the business. You mentioned the ?800 million

:51:52. > :51:56.investment you made over, I guess it was, what, 12 years, possibly? 11 or

:51:57. > :52:05.12 years. And also I suppose counter to that there was other ways of

:52:06. > :52:08.streamlining. How did that investment translate into a

:52:09. > :52:25.business? What kinds of things were you doing? As I said, when we... 04-

:52:26. > :52:36.five we spent 37 million on X, looking to improve the stores. The

:52:37. > :52:41.following year we spent 84 million. We thought we had some things, we

:52:42. > :52:46.opened stores. We were increasing staff numbers, we did not reduce

:52:47. > :52:49.staff numbers. Obviously the discounters were becoming more

:52:50. > :52:54.powerful, online, it was early days but it was just starting. Maybe we

:52:55. > :53:01.were all we weren't not quickly into that. All of these things have eaten

:53:02. > :53:07.into the mainstream marketplace. If you are a retail lady, you will no.

:53:08. > :53:17.That's why I am so fascinated. So the other 600,000, what other things

:53:18. > :53:23.were you investing in? All these businesses, you are investing to

:53:24. > :53:31.improve, right? For better or for worse, in 2002, when we acquired

:53:32. > :53:39.Arcadia, which basically took our total portfolio in the UK to about

:53:40. > :53:48.2400 stores, there was quite a lot more to do. Basically my time got

:53:49. > :53:56.split. Whereas all my time prior was only in BHS, after this my time got

:53:57. > :54:00.split. Maybe too pick a bandwidth. All the businesses needed a similar

:54:01. > :54:06.piece of work doing. So there was a lot to do. I heard earlier that you

:54:07. > :54:11.were quite hands-on in terms of vision. So what you are saying

:54:12. > :54:18.really is that probably be involvement in Arcadia, that took

:54:19. > :54:23.more of your time? My time got split. Not an excuse, just a fact.

:54:24. > :54:29.It is not easy to find great people to run these businesses, not easy to

:54:30. > :54:33.find World Championship Chief Executive is to operate the

:54:34. > :54:39.business. We tested a few people along the way, but there was a very

:54:40. > :54:46.loyal staff base. Everybody was trying hard. A long-stay of people

:54:47. > :54:53.staying in the jobs. Maybe we didn't get the business, it didn't change,

:54:54. > :55:00.it got caught in that mainstream... And I guess it is that unique

:55:01. > :55:04.selling point and thinking of. At what point did it then become clear

:55:05. > :55:12.to you that it wasn't going to be the success you'd hoped at the

:55:13. > :55:16.start? I think after the discussion over nine when it came into Arcadia

:55:17. > :55:21.and we injected into the space, started injecting some of the

:55:22. > :55:25.Arcadia brands to trade in cyberspace, it looked like possibly

:55:26. > :55:29.that could be a changing format that would help bring more people through

:55:30. > :55:34.the doors, and we have successfully done that in other department

:55:35. > :55:37.stores, where we take space in other peoples department stores our

:55:38. > :55:44.brands. Possibly that could be the start of something fresh. At a much

:55:45. > :55:48.later stage we introduced food into the business, and the way the food

:55:49. > :55:53.market was developing, I'd had many conversations with different

:55:54. > :55:58.supermarkets, but they were all sort of running off with their own

:55:59. > :56:04.expansion. Looking at taking one of the food retailers in. Is it fair to

:56:05. > :56:10.say the sites were often secondary sites with yellow I think

:56:11. > :56:18.using your colleague Michelle Bulls words, in hindsight, unfortunately

:56:19. > :56:22.the underlying portfolio, even before we bought it, had some very

:56:23. > :56:31.poor property deals done over the years. It had leases signed that

:56:32. > :56:37.were 40, 50 years, too expensive. In the early days we made them work.

:56:38. > :56:48.And if I galloped forward, if I could, to what happened, when they

:56:49. > :56:56.did the CVA, 45 landlords agreed to take a 75% drop in rent, voted for

:56:57. > :57:05.it. That will give you some idea. That 40, 45 stores were presented

:57:06. > :57:14.?30 million of loss. That block just started to erode the business. Just

:57:15. > :57:19.too expensive for their locations. If I could interrupt, Michelle's

:57:20. > :57:27.point early on about the first moves made to you to sell, and what you

:57:28. > :57:32.said about the difficulty of moving Topp into a new territory, that

:57:33. > :57:39.would have been the time to sell -- moving BHS. If we were allowed to

:57:40. > :57:49.use hindsight, 2002 would have been a good time to sell it. Amanda? Just

:57:50. > :57:55.following on from that, really, just so that I am really clear, following

:57:56. > :58:00.the acquisition of Arcadia, we heard that some services were paid for,

:58:01. > :58:06.could you explain to me how BHS was linked to Arcadia? To be honest with

:58:07. > :58:11.you, so we don't have any accidents, I am more than happy, whoever wants

:58:12. > :58:14.to go and see, you can go and see all the relationship between the

:58:15. > :58:19.back office, I don't want to discuss it because it is not my forte. I

:58:20. > :58:26.don't have that detail here to explain line by line. I'd much

:58:27. > :58:30.rather get my back office finance team to sit with you and I'm happy,

:58:31. > :58:36.whoever wants to see the numbers, line by line, no problem. I can't

:58:37. > :58:39.get into that because I might give you some wrong information and I

:58:40. > :58:45.don't want to. Just a flavour of whether they were interlinked? The

:58:46. > :58:48.answer is it was a service provider. Outside of taking space in the

:58:49. > :58:53.stores which it paid for, it was a service provider. I'm happy to

:58:54. > :58:57.provide you with any detail you want in relation to the services and how

:58:58. > :59:02.they were charged. That would be things like human resources?

:59:03. > :59:10.Everything, finance, ran the back office, IT, online. All the back

:59:11. > :59:20.office. Like a third-party provider. And when it came to finally thinking

:59:21. > :59:23.this is no longer... In your mind it was no longer a viable retail

:59:24. > :59:32.operation, is that what made you decide? It was a combination of,

:59:33. > :59:39.probably we'd let it run too long. We'd put a lot of money into it

:59:40. > :59:47.already. And felt that our efforts in terms of operating a business

:59:48. > :59:55.with 27,000 people across 30 countries and the 27,000 people are

:59:56. > :00:00.purely UK, right? We've got jobs across the country, across the group

:00:01. > :00:03.probably 3000 stores. I think it was just decided that we'd invested

:00:04. > :00:14.enough money and we would try to find a solution. Richard? I think it

:00:15. > :00:19.is another parliamentary colleague who has got out his death stare. I'm

:00:20. > :00:23.sorry if it has an overdue. I lived in my previous career in business

:00:24. > :00:28.and in politics, if you are doing something important, you should look

:00:29. > :00:30.someone straight in the eye. Now that we are talking, we can look at

:00:31. > :00:43.each other. Why do we have companies? What's the

:00:44. > :00:52.goal, the aim? You tell me. You tell me. What is the purpose of having a

:00:53. > :00:59.company? To run a business. Is if to make money? To employ people? To do

:01:00. > :01:08.something creative? It's a combination of many things. Not just

:01:09. > :01:14.one thing. OK. Can I go to numbers? Perhaps we can get some comfort on

:01:15. > :01:22.that. I think I have the numbers correct for the period 2,000-2004.

:01:23. > :01:34.You said over that period of ?537 million of cash was generated over

:01:35. > :01:41.that period? This's the EB IT DA. You say that but cash? That's

:01:42. > :01:48.normally cash. Is it right ?440 million was paid out in deaf denned?

:01:49. > :01:55.I have ?423 million. I have that too. That was just a trick question,

:01:56. > :02:00.then? I tricked myself! To see if I was paying attention? Over that

:02:01. > :02:05.period, ?102 million debt was repaid. You then relievied the

:02:06. > :02:13.business? As I said, over the period of the four years, the business

:02:14. > :02:22.started with ?111 million of debt. In 2003 it had ?10 million in the

:02:23. > :02:29.bang. In 2003/4 it had ?111 million in debt. See if I have it right. I

:02:30. > :02:36.know you have. ?537 million of cash generated. ?404 million by the

:02:37. > :02:43.business. ?414 million... ?423 million. That left 21 million net of

:02:44. > :02:51.cash generated, probably less than that now. Sorry, it has on my sheet

:02:52. > :02:58.here. Deaf tends deLaird of 483 but 380 paid. 537 of cash in, 380 out.

:02:59. > :03:05.How much of deaf denned was repaid? Over what period? Over that period,

:03:06. > :03:12.2,000-2004? 123450 sorry? You relievied the business. I gave you

:03:13. > :03:19.the four years. 111, 2.2, ?10 million in the bang. The impression

:03:20. > :03:23.is this was a cash-generative business... You're watching Sir

:03:24. > :03:26.Philip green give evidence to the business select committee and the

:03:27. > :03:35.work and pensions select committee about the collapse of BHS after he

:03:36. > :03:39.sold it last year for ?1. We heard a lot of chronology, really. There was

:03:40. > :03:46.one moment where Sir Philip green did tell off a member of the select

:03:47. > :03:51.committee for staring at him. "Would you mind not staring at me". We've

:03:52. > :03:57.heard from Sir Philip green about what he did invest in BHS over the

:03:58. > :04:02.years. This is crucial. It refutes the allegations we heard last week

:04:03. > :04:07.from the current Chief Executive Darren Topp. They talked about

:04:08. > :04:11.Philip Green not investing in the business in its rarityer years which

:04:12. > :04:16.contributed to the decline of the business. Philip Green saying he

:04:17. > :04:19.spent over ?250 million in stores and invested heavily in the

:04:20. > :04:24.business. That prompted the question why sell for ?1. He said, we simply

:04:25. > :04:30.came to the decision we'd run it too long. Put money in already. We were

:04:31. > :04:37.running 27,000 staff. Shops in 30 countries. 3,000 stories. We simply

:04:38. > :04:49.foment we'd invested enough. Let's go back to his evidence. I'd...

:04:50. > :04:55.Regardless of how we end, I think you should come and visit our

:04:56. > :04:59.building. We have 1500 or 1600 people working in Central London.

:05:00. > :05:06.27,000 people. It's a very, very, very well-run machine. It produces

:05:07. > :05:11.very accurate and you're more than welcome to come and visit, come and

:05:12. > :05:17.see. This isn't made up. There is a lot of people doing this every day.

:05:18. > :05:22.Sir Philip, every witness we've had up to now have presented the image

:05:23. > :05:29.to us that you're the guy who calls the shots. So I'm pleased to hear

:05:30. > :05:34.with the team... Let me, please. You can't run 3,000 stores with one

:05:35. > :05:44.person. Let me say this to you. You can write this down. I have never

:05:45. > :05:48.moved or made one penny from any bank account of our company. I

:05:49. > :05:54.wouldn't even know where to phone to actually get any money out of our

:05:55. > :05:59.bank. I don't sign for money. I don't deal with it. There is a

:06:00. > :06:03.process in the company on a day-to-day basis where there's a lot

:06:04. > :06:07.of people who have accountability and responsibility and are allowed

:06:08. > :06:11.to act. While we're sit can here during this session, in the next

:06:12. > :06:16.four hours, there will be people in our building writing anything

:06:17. > :06:20.between ?50 million and 100 million purchase orders they don't need

:06:21. > :06:24.sign-off on. That's their job. That's the day job. In these big

:06:25. > :06:28.businesses, you have to allow people the freedom to operate. That's what

:06:29. > :06:34.happens in our business. We have a competent finance team. Each of the

:06:35. > :06:38.businesses has its own finance director, managing director, HR

:06:39. > :06:42.director and they're run as independent businesses that have to

:06:43. > :06:48.produce proper data otherwise we couldn't survive. This is the

:06:49. > :06:51.problem Mr Chappel came up against. You were saying you wouldn't know

:06:52. > :06:57.how to take money out of the company, he wanted to do it all the

:06:58. > :07:02.time and was told he shouldn't? I think that's... He tried to destroy

:07:03. > :07:08.your system immediately and got into trouble for doing so? That's a

:07:09. > :07:14.different conversation. Just on that second bit of the question my

:07:15. > :07:22.colleague Amanda, you talk about ?254 million of capital invested

:07:23. > :07:28.over 2005-09. Unskiier and another ?100 million of Capex. Didn't seem

:07:29. > :07:33.to do any good? Unfortunately, no. You're the supremo of retail. Why

:07:34. > :07:38.couldn't you make any difference? If it was easy, everyone would be doing

:07:39. > :07:42.it. That's why you had this title? That you did know, Sir Philip?

:07:43. > :07:45.People trusted you to know. You were called the king of retail. You were

:07:46. > :07:52.the king because the others didn't know how to do it. If you look at

:07:53. > :07:55.the retail business across the high streets, Amanda here said she has

:07:56. > :08:00.been in the retail business a long time. You get good years and bad

:08:01. > :08:08.years. The market's changed. You have a market in 2002/3/4 in terms

:08:09. > :08:13.of online didn't exist. Today, it's billions of pounds. Other companies

:08:14. > :08:17.managed to modify and change even though they were more exposed to

:08:18. > :08:24.online refail than your business? OK. You mentioned, maybe this will

:08:25. > :08:29.be my final question. Maybe, without wishing to be rude, in your next

:08:30. > :08:35.career you should try retail. I don't think I'd be very good at it,

:08:36. > :08:39.I know that. On arcadia group, you mentioned to Amanda about your time

:08:40. > :08:47.being split. On the business select committee last week, we had Mike

:08:48. > :08:52.Ashley who used the, I'm sure it's a met foreor analogy, he started off

:08:53. > :08:59.in an inflatable dinghy, became an oil tanker and it became too big for

:09:00. > :09:03.him. Is that what happened to you? I think, basically, I think there's

:09:04. > :09:10.two different pieces without ma I canning any excuses. Instructly, BHS

:09:11. > :09:13.structurally was in the wrong shape in terms of the wrong leases,

:09:14. > :09:20.stores, some of the space was too big. They are very expensive to

:09:21. > :09:25.modernise. You're talking 40-40,000 peat. It could be ?3-5 million a

:09:26. > :09:32.building. The economics in this marketplace of doing that were not

:09:33. > :09:38.right. If it would have been possible, if you said to me what

:09:39. > :09:44.would have been utopia, you would have down-sized this a fee years

:09:45. > :09:50.ago. It is what Michelle started with, the early days when you first

:09:51. > :09:54.took over BHS, you said the funding structure was fairly conservative

:09:55. > :09:59.compared to other businesses. We then discussed the sale of a number

:10:00. > :10:02.of properties to Carmen, this offshore entity owned by your

:10:03. > :10:08.family. That was a big transaction. You say you have a big team behind

:10:09. > :10:13.you who do all the nuts and bolts.s whose idea was that transaction? Was

:10:14. > :10:20.it yours or did that come from one of your professional advisers that a

:10:21. > :10:25.company of this size might have had? I don't know. It's a big

:10:26. > :10:31.transaction. I don't remember. In those days, thing banks were fairly

:10:32. > :10:37.active in this type of... This wasn't an abnormal trade. Would it

:10:38. > :10:41.have been one of your bangers would have gone, Sir Philip, you really

:10:42. > :10:46.should should be doing this? I don't want to pass it to somebody else.

:10:47. > :10:50.It's too long ago. That transaction when these properties were sold

:10:51. > :10:54.would have created a profit in the BHS accounts, that would have been

:10:55. > :10:58.distributable. That profit could have formed part of the dividends

:10:59. > :11:04.you received there after. I don't think that's the case. The actual

:11:05. > :11:30.profit from the number I saw somewhere, I think the profit...

:11:31. > :11:40.I'm just thinking... It was a small number. I think the profit for BHS

:11:41. > :11:45.itself from the historical base was ?10 million or ?11 million from...

:11:46. > :11:52.There after, of course, the rent paid by BHS would have gone to

:11:53. > :11:59.Carmen offshore? It would have gone to the landlord. Yeah, OK. Thank

:12:00. > :12:05.you. When we are looking at the profits generated and taken out, Sir

:12:06. > :12:11.Philip, our audit trail seems to suggest your wife, quite a

:12:12. > :12:16.legitimate owner, is offshore. Does she share those accounts with you?

:12:17. > :12:19.Which accounts? The accounts for her company into which quite a lot of

:12:20. > :12:24.these profits were paid. Do you ever look at them? No. You don't, thank

:12:25. > :12:29.you. Let's move to the pensions. We're going to ask you a number of

:12:30. > :12:34.fairly specific questions about the pension fund. I'd like to

:12:35. > :12:39.concentrate on the early years. I just wondered how you describe the

:12:40. > :12:51.course of the BHS pension fund under your stewardship? There's three

:12:52. > :12:57.different pieces. Going back to your colleague next to you, in hindsight,

:12:58. > :13:01.the reality is if the world were perfect, they should have spoken to

:13:02. > :13:05.us about dealing with this on day one or even our auditors should have

:13:06. > :13:15.spoken to us about dealing with it on day one or we wouldn't be here.

:13:16. > :13:20.When was day one? When we bout it. -- bought it. Rightly or wrongly, I

:13:21. > :13:24.don't now how it works in other companies, the trustees are very,

:13:25. > :13:30.very independent from the company. I would say that the lady you met

:13:31. > :13:35.here, Margaret, if I met her three times in ten years, that would be

:13:36. > :13:39.have been a lot. Right. Three or four times. That's all I ever saw

:13:40. > :13:47.her. We never had any meetings with her. You're looking puzzled, those

:13:48. > :13:55.were the facts. She recalled meeting you? I saw her in 2008/9. To

:13:56. > :14:00.understand what the investments were, where the they were. What sort

:14:01. > :14:08.of safety. Maybe the discon sect, I think probably, whether it is just

:14:09. > :14:11.our company, but the disconnect and total self-contained pension team,

:14:12. > :14:15.trustees, and all the people who looked after the pension, totally

:14:16. > :14:20.self-contained with us. They didn't discuss with us their strategy. We

:14:21. > :14:26.were not involved in any way, shape or form in what they did. ? Day one,

:14:27. > :14:35.if we're talking about day one, it was in surplus? Day one was a long

:14:36. > :14:41.time ago. Jeremy, you're looking puzzled? I seem to recall maybe my

:14:42. > :14:47.correction's at fault. I remember Margaret saying you helped with her

:14:48. > :14:52.investment strategy? I had one, maybe two discussions with her. I

:14:53. > :14:58.was never involved, excuse me, I was never involved at all, ever, in what

:14:59. > :15:01.they did, where they invested. I was not a part, never a beneficiary,

:15:02. > :15:06.didn't get involved. Maybe should have done. Maybe the disconnect is

:15:07. > :15:13.another reason we're here. I'd like you to look at some time, she's a

:15:14. > :15:20.lovely lady, maybe at some point, I didn't bring it with me today, there

:15:21. > :15:24.were very, very, very substantial fees paid to advisers from a sheet I

:15:25. > :15:31.saw, which I didn't bring with, but in the early days, I recall seeing a

:15:32. > :15:39.figure on the sheet of about ?650,000 paid to pension advisers.

:15:40. > :15:43.By 2,0005/6 that was north of ?1.5 million. It is a sheet maybe you

:15:44. > :15:48.could have a look at. I'm not blaming her. There were very

:15:49. > :15:53.substantial monies paid to third party advisers that grew. I remember

:15:54. > :15:57.at one point grew over ?2 million a year, whoever they were paying.

:15:58. > :16:05.Nothing to do with us. Nothing recommended from us at all. That was

:16:06. > :16:11.a waste of money? Your words. All I'm saying is, sadly, nobody ever

:16:12. > :16:15.came to us and said... I'm happy to take both ways. There wasn't the

:16:16. > :16:17.right dialogue and right communication. If there was, we

:16:18. > :16:27.wouldn't be here. Who do you think is responsible for

:16:28. > :16:33.the deficit? I think that's... You are not trying to blame Margaret? I

:16:34. > :16:40.didn't say that. What I'm saying is a combination of I think poor

:16:41. > :16:44.communication on both sides. She had a lot of advisers. None of them ever

:16:45. > :16:48.came to see us and said, here's a way you could do this, we could do a

:16:49. > :16:54.buyout or do something, that never came to the table. I'm happy to say

:16:55. > :16:58.we should have been doing that and it didn't happen. I'm not blaming

:16:59. > :17:02.anybody. I'm just saying conversations that maybe should have

:17:03. > :17:09.happened did not. Thank you, Karen? For the record you believe human the

:17:10. > :17:16.trustee three times over that period? What I would rather say to

:17:17. > :17:20.you, I am saying to you there were very, very few conversations or

:17:21. > :17:24.discussions with any of the trustees. And that is speaking for

:17:25. > :17:31.you as an individual but also for your chief operating officer? I

:17:32. > :17:35.don't believe any of our operating... I don't think they

:17:36. > :17:41.were. So when Paul Coakley was writing a little bit later in

:17:42. > :17:45.response to letters from Margaret Downs in 2006 and he says "The

:17:46. > :17:48.company keeps the pension arrangements under 3-point review"

:17:49. > :17:52.what does that mean? He was the finance director. Whatever

:17:53. > :17:58.conversation he was having, I was not involved in. I'm not blaming him

:17:59. > :18:02.but I wasn't involved. I'm just trying to understand the distinction

:18:03. > :18:06.between you as an individual, the company, and the chief operating

:18:07. > :18:12.officer acting on your behalf? Everybody has this impression so let

:18:13. > :18:15.me try one more time, you cannot run businesses of this size doing

:18:16. > :18:21.everything yourself. You have other people doing their jobs. I can't

:18:22. > :18:25.tell you every single conversation everybody had. I'm happy to look you

:18:26. > :18:29.in the eye and say to you I was not actively involved in pension

:18:30. > :18:35.conversations. Maybe if I had have been we wouldn't all be sitting here

:18:36. > :18:43.but I wasn't. But before however, whatever, we are here. We can spend

:18:44. > :18:46.all week if you like but we can't trade backwards, we can trade

:18:47. > :18:52.forward. But we also need to understand what happened. So you

:18:53. > :18:55.were explaining what happened to the pension fund under your stewardship

:18:56. > :19:00.and you would say that poor two-way communication was one thing? I would

:19:01. > :19:09.say so, yes, yes. And there were others? I just think... Do you

:19:10. > :19:14.recall what the situation was with the pension fund when you took over

:19:15. > :19:23.at the beginning? I understand that there was a ?43 million surplus in

:19:24. > :19:31.2000. Do you recall what the state of the Puncheon fund was in 2006 --

:19:32. > :19:33.pension fund, in the years after substantial dividends were taken

:19:34. > :19:38.from the company? I don't think that's very fair. With due respect

:19:39. > :19:46.I've just told you, we put back ?750 million. You go and find anybody

:19:47. > :19:49.else, please find somebody who lends ?250 million, doesn't seize the

:19:50. > :19:55.assets, and lends it interest-free, it doesn't happen. Having got it

:19:56. > :20:01.wrong, we try to get it right by reinvesting. That didn't work. We

:20:02. > :20:06.didn't run away. I think what I'd like to do, if I may, so we can

:20:07. > :20:10.maybe fast forward a little, I have two letters with me, three letters.

:20:11. > :20:13.Can we return, do you mind very much if we return to that, it would be

:20:14. > :20:19.helpful just to talk through the sequence of events that happened in

:20:20. > :20:24.the early years. To be clear, you are not disputing this, we went from

:20:25. > :20:31.a ?43 million surplus to a ?7 million deficit. Can I just say, I

:20:32. > :20:37.was not in charge, at any point, of the pension fund. I was not a

:20:38. > :20:42.trustee, I was never in the room. Why did Margaret not come to see us

:20:43. > :20:45.when it was ?43 million in surplus and say let's sell it to an

:20:46. > :20:51.insurance company? She had all these advisers. She didn't. You are

:20:52. > :20:55.ultimately accountable. You may not be responsible but surely you are

:20:56. > :20:59.ultimately accountable for overseeing all of the businesses

:21:00. > :21:04.that you are the head of, and that included the pensions fund? Where is

:21:05. > :21:07.this conversation taking us? I'm trying to point out the difference

:21:08. > :21:12.between accountability and responsibility. Responsibility is

:21:13. > :21:20.the day-to-day detail, but accountability, who ultimately is

:21:21. > :21:24.accountable? We are at the Olympics, they have put the bar up and now you

:21:25. > :21:32.want to jump 12 feet, do you want to go to the pension issue? What I'm

:21:33. > :21:36.saying is, I'm happy at whatever point we want to come to it but I

:21:37. > :21:41.think it is unfair or unreasonable to attack me without letting me be

:21:42. > :21:44.able to respond. And I have letters and I'm happy to debate the pension

:21:45. > :21:50.and I'm not running away, I'm sitting here. But you cannot

:21:51. > :21:55.suddenly tell me I am accountable. Let's come to debate the issue. If

:21:56. > :22:02.you are not, who is? I'm sorry, but am I able to respond? Karen has the

:22:03. > :22:07.question. It is slightly surprise into me and maybe others, everybody

:22:08. > :22:13.that has come has said you are this great figure, Napoleon figure, and I

:22:14. > :22:18.am slightly shocked that you are not this figure, these people got it

:22:19. > :22:24.wrong, you didn't make all the big decisions. This terrible pension

:22:25. > :22:27.deficit was sprung on you and you should have noticed it but didn't.

:22:28. > :22:33.We are a climate I is in ourselves to different imagery. Fine. At what

:22:34. > :22:39.I want to also make sure we leave here with is that we keep reading on

:22:40. > :22:46.the daily basis, I have not run away. I haven't tried to run away. I

:22:47. > :22:50.think I'm going to hopefully be able to satisfy you, right? All this

:22:51. > :22:57.press I'm reading every day that's just really outrageous. OK? And

:22:58. > :23:06.pretty rude. Because if we get to the facts. Karen, the question is

:23:07. > :23:11.with you. To go back, we agreed the pension fund went from a 43 million

:23:12. > :23:15.surplus to a 7 million deficit, and at the point the deficit was

:23:16. > :23:20.emerging, around the same time that you were taking the dividends, and

:23:21. > :23:26.there was an employer contribution holiday in that pension fund. Then

:23:27. > :23:34.the trustees were making representations to PHS to support

:23:35. > :23:42.the scheme in late 2005, do you recall the response? I don't recall

:23:43. > :23:51.at all. I was not involved in that. You were not involved? No. Do you

:23:52. > :23:57.know whether PHS rejected requests for securities in support of

:23:58. > :24:03.contributions during the time of that deficit when it was growing in

:24:04. > :24:07.the second part of the decade? No. You had the knowledge of what was

:24:08. > :24:14.happening to the deficit or the pension fund? I'm afraid to say no.

:24:15. > :24:22.Other than when we got to the debate in, whenever it was, we got to the

:24:23. > :24:25.23 year conversation, and at that point there was a conversation and

:24:26. > :24:28.I'm happy to apologise. I should have been involved earlier but I

:24:29. > :24:32.wasn't. When I look at the numbers in front of me it was very easily

:24:33. > :24:37.resolvable much earlier but for whatever reason it was not resolved.

:24:38. > :24:41.The only time I did get involved was in 12 when we had this conversation

:24:42. > :24:46.around the 10 million a year which you will be familiar with. We will

:24:47. > :24:53.come onto that in a second. I was not involved in it. I cannot answer

:24:54. > :24:57.you because I was not involved. You can ask me as many questions as you

:24:58. > :25:02.like, this was not on my table to deal with, I'm sorry. So there's no

:25:03. > :25:08.question you can answer about any aspect of the pension fund between

:25:09. > :25:19.2000, and 2012? I would say virtually no is the answer. When did

:25:20. > :25:32.things get onto your table? Either when people bring them to me, I even

:25:33. > :25:37.need to know or ask a question about something, strategic things we are

:25:38. > :25:45.doing. The business, there's a lot of freedom to operate on a day to

:25:46. > :25:51.day business. And therefore, rightly or wrongly, the two ladies here are

:25:52. > :25:56.running away, but rightly or wrongly this was not on my table. I read

:25:57. > :26:00.somewhere, and I quite admired this, that when you took over from BHS,

:26:01. > :26:06.you were looking at contracts and you ordered a new contractor coat

:26:07. > :26:09.hangers to save the business ?400,000, it was that level of

:26:10. > :26:13.detail you were involved in, was that true? Yes, when you take over a

:26:14. > :26:19.business, you look at basic fundamental things, what I call

:26:20. > :26:22.pretty basic. I wouldn't do that physically but it would be something

:26:23. > :26:28.that may have come up and say, phone at three other guys or something,

:26:29. > :26:32.right? Or it may have been two years in when Arcadia came in, and we

:26:33. > :26:39.compared what they were paying to what BHS was paying, things like

:26:40. > :26:45.that. Somebody did this with coat hangers, nobody did this drawing

:26:46. > :26:54.your attention to the importance of the growing deficit on the pensions?

:26:55. > :26:57.Unfortunately no they didn't. How does this... You're opening remarks

:26:58. > :27:02.said you'd been intimately involved with every aspect of your business

:27:03. > :27:05.is over 40 years, how does that reconcile with what you are saying

:27:06. > :27:10.about nobody coming to you with the pension deficit? What I think is

:27:11. > :27:14.easy is this, I don't want to blame anybody else, right? It's my fault.

:27:15. > :27:18.The answer is it wasn't dealt with, we are here and we have to find a

:27:19. > :27:24.solution. It's not my style to blame anybody else. I'm still a little

:27:25. > :27:28.unclear about the extent to which you were involved. I've just

:27:29. > :27:32.explained to you. I have no involvement and I cannot answer you.

:27:33. > :27:37.There was a meeting of the Board of Directors of taffeta in January 2010

:27:38. > :27:42.that you were present at. Lets see how good you are, do you remember

:27:43. > :27:52.what you are doing on the 26th of January 2010 at 11am. Know I don't.

:27:53. > :27:55.You are asking questions that are impossible to answer. If I was

:27:56. > :28:01.giving evidence to a committee on the history of pensions I might have

:28:02. > :28:07.a fresh my memory. Let me respond to that, if I may. We supposedly have

:28:08. > :28:11.provided so far to the pension, I think you have picked this bit up,

:28:12. > :28:16.your lady here is sort of suggesting I should know about a board meeting

:28:17. > :28:23.in whenever it was. We have so far provided 70,000 documents to the

:28:24. > :28:26.regulator. I don't know who's reading them all, but if they do

:28:27. > :28:33.read them on that they are the sorts of things they are asking. But

:28:34. > :28:36.meanwhile nobody has had a conversation about any questions to

:28:37. > :28:43.do with the documentation that has been provided. But you can ask me

:28:44. > :28:48.all day, I can't answer you. I'm just going to try a little bit more.

:28:49. > :28:55.The tablature investment board minutes show that the 2009 recovery

:28:56. > :29:01.plan began at 20 years and eventually turned into a 12 and a

:29:02. > :29:06.half year plan. In what year? This was in 2010 when the other to board

:29:07. > :29:14.minutes showed negotiations around the 2009 pension recovery. Were you

:29:15. > :29:18.aware of those negotiations? Well, I must have been aware but I was not

:29:19. > :29:23.involved. Even though you were not present at the board meeting? With

:29:24. > :29:27.respect, you are asking me about a board meeting in isolation of

:29:28. > :29:33.thousands of meetings. I don't know. If it says I was there, I was there.

:29:34. > :29:37.If you ask me a board meeting a year ago, on a specific day, I'm not

:29:38. > :29:40.going to remember what was said. If somebody brings me the note it might

:29:41. > :29:47.refer to my memory but I come from member seven years ago, sorry. Do

:29:48. > :29:50.you feel as a sponsoring employer that you should, in retrospect, have

:29:51. > :29:57.been more aware of and involved in the deficit recovery plans during

:29:58. > :30:03.those years? What I want to try to avoid this morning is, I'm a big

:30:04. > :30:07.boy, to blame anybody else, OK? If I wanted to pass the blame I think I

:30:08. > :30:12.could spend the next 20 minutes blaming a lot of other people. So we

:30:13. > :30:16.look at the information on these sheets of paper. There are a lot of

:30:17. > :30:21.other people that have questions to answer. I am here and happy to be

:30:22. > :30:26.accountable. I am here to represent our companies, right? I am not a

:30:27. > :30:31.liar. I will not represent things I cannot tell you about. What I can

:30:32. > :30:36.tell you, which I want to be able to tell you, is to discuss the pension.

:30:37. > :30:41.But with respect, you are pressing me for things I cannot answer you.

:30:42. > :30:46.Just probing the point. You can probe all you like. I'm not hiding,

:30:47. > :30:54.I just can't answer you. It would help, though... The core point on

:30:55. > :30:58.the pensions is how much is going in and I cannot believe you were

:30:59. > :31:01.indifferent as to whether ?10 million was going out of the

:31:02. > :31:04.business or ?30 million was going out to support the pension fund. You

:31:05. > :31:09.can't have been indifferent, you must have had a view.

:31:10. > :31:17.Sir, when I'm looking at these figures now... I don't mean at the

:31:18. > :31:22.time, I'm talking about now. I'm looking at the sheet of paper in

:31:23. > :31:26.front of me. I'm not looking to blame anyone else. I'm here. I

:31:27. > :31:35.haven't brought 20 people with me to share the blame. I'm looking here at

:31:36. > :31:39.pension contributions made in one, two, three, four, five. That's why I

:31:40. > :31:47.don't want to get into the debate. That would be unfair. Somebody,

:31:48. > :31:50.whether it was the trustees, wherever, somebody was asleep at the

:31:51. > :31:55.wheel. If you look at contributions the company was being asked for, in

:31:56. > :32:01.the early days we'd one auditor. I think it's unfair, not where I want

:32:02. > :32:08.to go. If I show you the sheet I'm looking at and recite you the

:32:09. > :32:15.numbers, the pension contribution in 1 in 3

:32:16. > :32:20.#4 was 5.6. If somebody came to us from the trusteeses saying we want

:32:21. > :32:25.?10 million, it would have been a ten minute debate. For whatever

:32:26. > :32:31.reason, it didn't happen. The minutes of the trustees show the

:32:32. > :32:35.trustees were regularly making representations to BHS to increase

:32:36. > :32:44.contributions. We know that letter was received. Your chief operating

:32:45. > :32:53.officer replied. Mam, they were paid ?650,000 to ?1.5 million. Nobody of

:32:54. > :32:57.those people who were their representatives or advisers ever

:32:58. > :33:05.came to see me, will you make that from 3 to five or five to eight. It

:33:06. > :33:13.would have taken ten minutes. On your other point, Ian's anxious to

:33:14. > :33:20.look at the fees people earn. We can't trade back. When you look at

:33:21. > :33:25.this, obviously, the whole issue's beyond sad and ridiculously stupid.

:33:26. > :33:32.Whether we want to have a debate and ask the auditors or ask whoever, I

:33:33. > :33:37.don't want to go there... Sir Philip, we understand that. We might

:33:38. > :33:42.want to. We are very critical about them taking their fees without

:33:43. > :33:44.giving different advice. I'm hopefully showing to you I'm not

:33:45. > :33:50.trying to blame. It would be very easy to blame it on somebody else.

:33:51. > :33:55.Right. Respectfully, all of this stuff got signed off by auditors.

:33:56. > :34:00.Everybody keeps coming to the dividends. They were signed off with

:34:01. > :34:07.distributable reeverybodies. Whatever had to be the compliance,

:34:08. > :34:12.I'm annoyed byself, trust me, I want to go and have a look, understand

:34:13. > :34:17.some of this trustee stuff in more detail. I know it's very late in the

:34:18. > :34:22.day. We are here, hopefully we'll leave here with some goodwill to get

:34:23. > :34:28.where we need to get. There have been some bad mistakes made in these

:34:29. > :34:32.early days. I don't think the representatives who represented the

:34:33. > :34:36.trustees can have no responsiblibility or the auditor.

:34:37. > :34:39.I'm happy to take the blame. We're here, I'm not running away passing

:34:40. > :34:43.it to somebody else. We're not going to look at them at this moment, the

:34:44. > :34:48.fees of the advisers. We are going to look at that. My grandmother used

:34:49. > :34:53.to say there are a whole group of people in this world who get money

:34:54. > :34:59.for old rope. There seems to be a lot of people in this whole activity

:35:00. > :35:04.who drew very substantial fees and whose advice looks good then or now.

:35:05. > :35:11.Can we finish, the last question, Sir Philip, this is into the 2012

:35:12. > :35:16.recovery plan. That was, as you know, a 23-year plan. A successively

:35:17. > :35:20.large recovery plan for pensions. You were, as I understand it,

:35:21. > :35:24.refusing to shift from a contribution of ?10 million a year.

:35:25. > :35:28.Could you tell us what that ?10 million contribution was based on?

:35:29. > :35:34.At the time, the company was not making any money. It was getting

:35:35. > :35:38.loans. And I think until we got the company to a better recovery

:35:39. > :35:44.position, it looked like basically of the funds the company was

:35:45. > :35:49.borrowing, ?10 million was in number that wasn't affordable but a minimum

:35:50. > :35:53.number that would be paid. From some information, I don't know whether it

:35:54. > :36:00.is or not accurate, on some research yesterday I was provided, I think in

:36:01. > :36:06.2009, the Post Office succeeded in presenting a 38-year recovery plan.

:36:07. > :36:11.But 23 years is excessive. May not be the only one that's ever

:36:12. > :36:18.happened? I was presented yesterday in 2009, whether it is accurate or

:36:19. > :36:24.not, Mr Wright's just checking it... Post Office had a tax post behind

:36:25. > :36:28.it. Did the ?10 million, was the calculated to reflect the pension

:36:29. > :36:32.deficit or driven entirely by what you felt was affordable? It is not

:36:33. > :36:39.about what I felt. It was decided at the time, based on the funds BHS had

:36:40. > :36:45.to borrow, ?10 million of that would be used to pay the contribution, to

:36:46. > :36:52.start to pay the contribution. As we know, again, I'm not trying to take

:36:53. > :37:00.you off track, the whole basis of pension fund calculation and

:37:01. > :37:07.valuation Mod is the is about guilts and so on. If you go this morning

:37:08. > :37:13.where currently the whole world's upside down, if you look at guilt

:37:14. > :37:16.yields, in the last 79 hours or 96 hours, guilt yields have materially

:37:17. > :37:23.changed again due to the uncertainty of what's going on. With respect, if

:37:24. > :37:28.they move half a point, no... It's a valid point but a different point.

:37:29. > :37:34.If they move half a point, that could be up to ?150 million

:37:35. > :37:39.difference in the right way. The Metology used to make the

:37:40. > :37:43.calculation... I'm interested in the calculation made. Did the trustees

:37:44. > :37:50.ask for more than ?10 million? You must have been a mind reader in your

:37:51. > :37:55.previous life. Where you? I might have been. She is in this life. A

:37:56. > :38:03.very successful politician. All right. I wasn't being rude. You have

:38:04. > :38:11.such a wonderful member of what happened on 11th June eight years

:38:12. > :38:17.ago. It was I was an employer I might have refreshed my memory on

:38:18. > :38:22.the topic are. I think respectfully, that's unreasonable. I can't read

:38:23. > :38:29.thousands and thousands of bits of paper. You're focussed on a specific

:38:30. > :38:32.thing. Looking at a board minute. I've got enough papers on my desk

:38:33. > :38:37.already. I want to try to get back to work after this. I've been out of

:38:38. > :38:42.work for four weeks. My last question. Was the size of the

:38:43. > :38:48.contribution in any way driven by the fact, according to the trustee

:38:49. > :38:52.minx, the private company status of BHS will the, these payments were

:38:53. > :38:56.being met by Sir Philip and his family? There was a conversation

:38:57. > :39:01.based on how the company was performing with the operating board.

:39:02. > :39:05.It was deemed, at that moment in time based on the losses and

:39:06. > :39:09.funding, that ?10 million a year, hoping the business would improve,

:39:10. > :39:19.would be the starting point. That ?10 million was coming from where?

:39:20. > :39:24.Coming from a loan. You said you have really no responsibility for

:39:25. > :39:31.the pension scheme and so on. I haven't, with respect. I've said

:39:32. > :39:35.quite the opposite to that. Could you therefore clarify, what do you

:39:36. > :39:41.think the responsibilities of the scheme sponsor are towards the

:39:42. > :39:47.pension scheme? I'm not following the question, sorry are. All right.

:39:48. > :39:52.You controlled BHS. BHS was the sponsor for the BHS pension scheme.

:39:53. > :40:00.What do you believe the responsibilities of the sponsor

:40:01. > :40:09.towards the scheme are? Am I missing something? Probably! But I'll ask it

:40:10. > :40:13.again. You took control of BHS. BHS had a pension scheme which you, as

:40:14. > :40:19.the controller of the company, inherited. What do you think the

:40:20. > :40:24.responsibilities of the corporate, the scheme's sponsor, towards the

:40:25. > :40:29.pension scheme were? To make the contributions. To make sure that the

:40:30. > :40:35.pension scheme kept going and that the pensions for the members of the

:40:36. > :40:38.scheme were paid. Would that be a reasonable summary.

:40:39. > :40:44.Responsibilities? I think that's what we took on when we started.

:40:45. > :40:49.Right. So you accepted when you bought BHS, the responsibility of

:40:50. > :40:54.the scheme sponsor for the pension scheme. Correct? You said earlier

:40:55. > :40:58.are, it's incredibly important when you buy a company that the people

:40:59. > :41:00.there have to trust you. What was the average salary, roughly, during

:41:01. > :41:23.your time of an employee at BHS? The payroll for 1

:41:24. > :41:28.# 2, #3, 3

:41:29. > :41:37.#4, was ?103 million. There were 13,600 people. So you could

:41:38. > :41:44.calculate that out. From there, the payroll rose to 110, 119, 128. And

:41:45. > :41:49.the number of people employed went up up to 14,500, to 15,000. Your

:41:50. > :41:53.maths is famously good and no doubt better than mine. Is an average

:41:54. > :42:03.salary of ?17,000 roughly the figure? If you say so. I'm asking

:42:04. > :42:08.you. I just gave you the payroll number and the number of people.

:42:09. > :42:15.Let's say it was around there. Traditionally, in a defined pensions

:42:16. > :42:21.pen fit scheme, the deal is the #e78 employee contributes 5% of salary.

:42:22. > :42:25.The employ 10%. On an accrual rate of 60th, after 30 years service, a

:42:26. > :42:29.person who had been working with BHS for all their working life would

:42:30. > :42:35.have been able to retire with an occupational pension from the BHS

:42:36. > :42:41.pension scheme of half their salary. So, if the average salary was around

:42:42. > :42:48.?17,000, they could expect in return to have a pension of about ?8,500.

:42:49. > :42:54.That was broadly the responsibility which you inherited. Is that

:42:55. > :42:59.correct? If you say so. Askar Ren mentioned earlier are, when you

:43:00. > :43:04.inherited the pension scheme, both of two schemes, the smaller one for

:43:05. > :43:10.the management and the much larger for around 25,000 employees in 2,000

:43:11. > :43:15.were in surplus. That is to say, there was an additional amount in

:43:16. > :43:20.the pension scheme in the as sets over and above the liabilities.

:43:21. > :43:26.Therefore, the corporate BHS hadn't paid anything in for three years. In

:43:27. > :43:31.2,000, BHS agreed to start paying contributions but at fairly low

:43:32. > :43:35.levels, less than 4% of the earnings. Under half what most

:43:36. > :43:41.defined benefit pension scheme employers were paying into their

:43:42. > :43:46.employees pension scheme. By 2005, the entire surplus was gone. There

:43:47. > :43:50.was an opportunity for many pension schemes in similar situations to

:43:51. > :43:55.plug the gap at a time when interest rates were quite low. What's your

:43:56. > :44:01.recollection, I understand it is 11 years ago, of whether in 2005, when

:44:02. > :44:09.the pension scheme went into deficit for the first time, do you recall

:44:10. > :44:15.any discussions between either you and Dr Downes, the chairman or your

:44:16. > :44:21.finance director hour the corporate could fulfil its pledge to the

:44:22. > :44:26.scheme by plugging that gap. No. Not something that crossed your mind? It

:44:27. > :44:29.wasn't Ka question of crossing my mind. It wasn't se something I was

:44:30. > :44:34.dealing with on a regular basis. Yeah, but you accepted you had a

:44:35. > :44:39.responsibility for the pension scheme which had about 25,000

:44:40. > :44:50.members at that time? I'm listening to you. In 2009, you closed the

:44:51. > :44:53.pension scheme to accruals. That means no employee could attract

:44:54. > :45:00.additional rights from the pension scheme. But the deficit had

:45:01. > :45:06.increased considerably? Again, in 2009, do you have any recollection

:45:07. > :45:09.of discussions with the trustees or finance director about what the

:45:10. > :45:11.corporate, the scheme's sponsor should be doing to plug what was a

:45:12. > :45:26.growing deficit at that stage? No. And by 2012, the next triannual

:45:27. > :45:31.review that all pension schemes have, there was a discussion in the

:45:32. > :45:36.pension scheme about what the corporate would do, and that was the

:45:37. > :45:43.time when BHS decided to offer ?10 million a year to help plug the gap,

:45:44. > :45:51.which was a 23 year project, double the normal link. Of course that was

:45:52. > :45:55.a significant amount of money, no doubt from BHS, at a time when the

:45:56. > :46:02.company was losing money, so you would surely have been involved at

:46:03. > :46:06.that stage? Yes. And Karen asked earlier how you arrived at the

:46:07. > :46:12.figure of ?10 million. Did you start by saying my responsibility to over

:46:13. > :46:17.20,000 pensioners mean that I have to keep this scheme going and I have

:46:18. > :46:23.to plug the gap, and how much do I need to do that? With respect, you

:46:24. > :46:28.are asking me questions impossible for me to answer. I don't want to

:46:29. > :46:32.make up an answer. If I look at the line I am looking at, which I am

:46:33. > :46:37.happy to share with you, and I don't want to pass this to other people,

:46:38. > :46:40.but there has clearly been and there has to be some accountability,

:46:41. > :46:46.respectfully, on the account of the trustees. Looking at the line in

:46:47. > :46:51.front of me, there have been some terrible, stupid, stupid, idiotic

:46:52. > :46:56.mistakes made. Thank you, can I bring it back to my question. Let me

:46:57. > :47:02.give you a response, if I may. OK, but please do answer the question.

:47:03. > :47:06.When you looked at the scheme deficit and assessed how much was

:47:07. > :47:12.needed to plug the gap. When was this? In 2012. I think without

:47:13. > :47:15.remembering all the detail, however we arrived at the conversation,

:47:16. > :47:21.there was a conversation had that they were looking for a ?10 million

:47:22. > :47:25.a year contribution. I think based on where the business was at that

:47:26. > :47:29.time, it was ultimately agreed it would be ?10 million a year as a

:47:30. > :47:35.contribution. What is interesting about this, is that ?10 million a

:47:36. > :47:41.year from the company into the pension scheme to help plug the gap,

:47:42. > :47:46.but at the same time you went to see the pensions minister to discuss an

:47:47. > :47:51.increase in the pensions levy to the protection fund which I think at

:47:52. > :47:55.that time was about ?2 million, so considerably less than the amount

:47:56. > :47:58.you were offering to plug the gap, and hugely less than the deficit

:47:59. > :48:06.which by then was about ?137 million. There is a slight

:48:07. > :48:12.disconnect. Don't worry. Let me help you. The pensions minister recalled

:48:13. > :48:17.that meeting in 2012, and he asked you about the corporate

:48:18. > :48:27.responsibility for the pension scheme, and he said you had assured

:48:28. > :48:32.him there was no risk of the BHS pension scheme falling into the

:48:33. > :48:37.protection fund. Funds "Would be found from elsewhere", is that

:48:38. > :48:45.correct? I don't have a note of the meeting I had with Mr Webb. He seems

:48:46. > :48:49.to have a letter now he produced eight years later. If that is what

:48:50. > :48:52.he has written to you, that is what he has written. You are not

:48:53. > :48:58.suggesting he is lying? If he's got a note of it, good. I don't know

:48:59. > :49:00.what the conversation was. The conversation around the levy is

:49:01. > :49:05.somewhat different to how it got represented previously. On the

:49:06. > :49:10.commitment to the pension scheme? Why can't I answer the question? You

:49:11. > :49:15.are not getting the right information. You are answering my

:49:16. > :49:21.question slowly. Let me finish answering then. You have. I haven't

:49:22. > :49:28.answered it. I want to answer the question. All. Fine. We received a

:49:29. > :49:33.letter, I believe, moving the levy from ?200,000 around to about ?3

:49:34. > :49:39.million, right? I called or arrange to have a meeting with Mr

:49:40. > :49:47.Rubenstein, who you saw, and asked, why is the levy certainly going from

:49:48. > :49:52.X to why? Anyway, it is something to do with how the company's rating is,

:49:53. > :49:58.and so on. If there is really no solution here, and we really want ?3

:49:59. > :50:02.million, which I believe was the conversation I had with Mr Webb, why

:50:03. > :50:10.don't you let us put the ?3 million into the pension fund? If there is

:50:11. > :50:15.no other way to go, let's make the ?10 million, ?30 million. What is

:50:16. > :50:20.interesting about that, you had an interesting discussion of what

:50:21. > :50:26.effectively amounts to an increase of ?2.7 million, but the wider

:50:27. > :50:31.deficit of around ?137 million didn't seem to attract a great deal

:50:32. > :50:35.of your time or attention. Can you confirm to us today that you said to

:50:36. > :50:40.Steve Webb there was no risk of the scheme falling into... I just told

:50:41. > :50:43.you. You are trying to put words in my mouth. I'm offering you his

:50:44. > :50:48.recollection. The answer is I don't know. You don't remember whether he

:50:49. > :50:54.made a promise to him or anybody else including the chairman of

:50:55. > :51:01.pension trustees that funds would be found to plug the gap? Which bit of

:51:02. > :51:05.don't remember is difficult for you to listen to? I think that is quite

:51:06. > :51:11.clear. I do not recall what got said at that meeting. If he has sent you

:51:12. > :51:16.a letter and you have a letter, that's what his recollection is. I'm

:51:17. > :51:21.saying I recall I thought I had a meeting with Mr Rubenstein query in

:51:22. > :51:25.the level of the levy, and said why can't we pay more money into the

:51:26. > :51:29.fund as opposed to paying the levy? I do think I had a conversation with

:51:30. > :51:34.Mr Webb thereafter. I asked Paul Budge the other day who I think came

:51:35. > :51:37.with me to the meeting and his recollection of the meeting was

:51:38. > :51:44.somewhat different to the letter Mr Webb wrote. For the record this is

:51:45. > :51:48.an opportunity for you to restate what you earlier said was your

:51:49. > :51:52.commitment and understanding of the corporate scheme sponsored's

:51:53. > :51:55.commitment to the pension scheme. In those words there was no risk of the

:51:56. > :52:01.pension scheme falling into the DBA, funds would be found. Where you are

:52:02. > :52:07.trying to take me is not going to happen. I'm offering you the

:52:08. > :52:12.opportunity. Thank you very much. To confirm to everybody that you had

:52:13. > :52:16.the commitment in 2012. Thank you for the commitment. You don't want

:52:17. > :52:25.to take it? I'm happy to address and whenever the chairman is ready, I'm

:52:26. > :52:28.happy to address the whole pension situation, without wishing to be

:52:29. > :52:34.rude, I am happy to address the pension issue. And hopefully we will

:52:35. > :52:40.be able to leave the committee pretty clear on where I think we

:52:41. > :52:45.are, and happy to do that whenever you are ready. Like I said, I have

:52:46. > :52:49.one or two letters and I can also tell you about conversations I have

:52:50. > :52:55.had. Hopefully that will ban get everybody where they want to be.

:52:56. > :52:58.That is the next question. He is trying to make me answer things I

:52:59. > :53:02.cannot answer and force me to give him the answer he wants, I am not

:53:03. > :53:07.going to. I am trying to lead through the history. You are trying

:53:08. > :53:11.to lead me to say things I am not going to say. Allow me to finish. I

:53:12. > :53:14.am trying to lead through the history of the pension scheme so

:53:15. > :53:17.that everybody including the members of the pension scheme can understand

:53:18. > :53:23.exactly what happened and where we are today. Can I plead to you, sir.

:53:24. > :53:26.Can we go to the pension scheme therefore instead of this man

:53:27. > :53:33.beating me up which is unnecessary, right? I am here voluntarily and I'm

:53:34. > :53:37.happy to address the pension issue. At whatever time you are ready

:53:38. > :53:42.during this meeting. Me being bullied into saying something I'm

:53:43. > :53:47.not going to say. I want to address it in terms of how we have been

:53:48. > :53:50.dealing with it, and I think it is important you hear all the things

:53:51. > :53:53.that have been going on and not going on at the same time. I think

:53:54. > :53:59.it will give everybody a much clearer picture. I want Richard to

:54:00. > :54:08.finish and then I will open up. Can we move to project for, which was an

:54:09. > :54:12.attempt by Topp to resolve the pension crisis. -- by BHS. What was

:54:13. > :54:22.the key underlying motivation of the project? I apologise, I am happy to

:54:23. > :54:27.answer, I just want to understand, if we are going to address the

:54:28. > :54:38.pension issue, I think I need to give you the total context of where

:54:39. > :54:40.we have been on the pension, I am not ignoring your question but I

:54:41. > :54:53.want to answer it in the context of what is going on. We started in

:54:54. > :55:00.2000, we have moved forward to 2013. Blues we shouldn't start in

:55:01. > :55:04.isolation with attempt Project Thor, in isolation that will not give you

:55:05. > :55:07.what you want. It will not take long, and it will cover Project Thor

:55:08. > :55:12.as well, and we will hopefully arrive where you want to in respect

:55:13. > :55:19.to the pension. Would you allow me to do that? It would helpful if it

:55:20. > :55:24.is relatively brief so we can focus on questions other people want to

:55:25. > :55:29.know the answer to. I am offering to basically talk to you on the pension

:55:30. > :55:36.issue, right? If you could address the core issue of the motivation for

:55:37. > :55:43.Project Thor, that would be helpful. Sir Philip, do tell us now what you

:55:44. > :55:46.are now proposing. And Richard is presumably right, it is the same

:55:47. > :55:54.motives that you have had with Project Thor, saving the pension

:55:55. > :55:59.scheme. If I could, so, we engaged lawyers at the end of 13, early 14,

:56:00. > :56:05.we had spent a substantial amount of money exploring a conversation,

:56:06. > :56:13.having got to a place we did not want to be, and the fundamentals

:56:14. > :56:22.have changed, things have got worse short-term. And so it was

:56:23. > :56:25.recommended to us that a project like Project Thor, which basically

:56:26. > :56:33.quote unquote would give a better solution than PBS. I'm not a pension

:56:34. > :56:38.expert so we were getting educated. I said OK, go away and do whatever

:56:39. > :56:44.the work was. They went off and met with Chris Martin, chairman of the

:56:45. > :56:49.trustees, who came after Marlborough Downs, and this dialogue I think

:56:50. > :56:57.went on for several months while they were developing a plan. We

:56:58. > :57:02.could get the chronology of all of it, but I think about June, July

:57:03. > :57:12.time, they presented something to the regulator that didn't get, from

:57:13. > :57:15.my memory, didn't get rejected immediately. The regulator does take

:57:16. > :57:20.rather a long time to respond to anything which I will come to in a

:57:21. > :57:24.minute. And I think this sort of went back and forward and eventually

:57:25. > :57:31.the project got presented in September which I think you heard a

:57:32. > :57:34.week or so ago. And then we were explaining the underlying, it needed

:57:35. > :57:38.contribution from the landlords, from the suppliers and various other

:57:39. > :57:43.aspects. And basically it was felt that was probably the wrong moment,

:57:44. > :57:48.rightly or wrongly, to go and try to get a discount from the landlord,

:57:49. > :57:51.suppliers, we would pick it up. There was debate, the regular cast

:57:52. > :57:55.for it to be withdrawn. My advisers say they asked it to be paused.

:57:56. > :58:02.Either which way there was a project there on the table. Come January

:58:03. > :58:08.2015, where we looks to pick up the project began, and questioned how we

:58:09. > :58:20.would continue with it, during this time, I brought this letter with

:58:21. > :58:27.me... After this, you will come back to those key times. That is what I

:58:28. > :58:38.would like to asks Philip about when he finished this statement. This was

:58:39. > :58:44.an e-mail 48 hours ago from Chris Martin. "Thank You for the call on

:58:45. > :58:48.Tuesday, I welcome the opportunity to continue the dialogue we have had

:58:49. > :58:54.since January 2014 during the time you and Arcadia expressed the desire

:58:55. > :58:57.to benefit members above PBF compensation. The trustees remain

:58:58. > :59:04.committed to considering proposals and look forward to hearing from

:59:05. > :59:09.you. ". In addition I have spoken in the last 48 hours to Malcolm Weir,

:59:10. > :59:13.who is the PPF officer running the case. He will happily confirm to the

:59:14. > :59:17.committee that I have been in regular dialogue with him. He has

:59:18. > :59:23.been in regular dialogue with us over the past months been to our

:59:24. > :59:27.offices, and is fully well aware that we have been committed to

:59:28. > :59:32.trying to find a solution. He has been extreme helpful. Unfortunately

:59:33. > :59:42.we hit a brick call when it comes to trying to arrive at the regulator.

:59:43. > :59:47.Was he willing to sign off? What I would say to you is this, there were

:59:48. > :59:58.very encouraging signs that Mr Malcolm Weir felt a proposal like

:59:59. > :00:03.Thor. It is more generous than PPF, isn't it? He was encouraged and felt

:00:04. > :00:09.that was a better solution. He was basically happy to advance it. The

:00:10. > :00:14.last occasion he came to our office, there was going to be a meeting next

:00:15. > :00:16.day between the head of the PPF and the regulator and we never heard

:00:17. > :00:45.another word. People who tell that normally say

:00:46. > :00:52.the word but in the sentence. Local and to answer all your bits of paper

:00:53. > :01:01.in a minute. I believe representatives of this committee

:01:02. > :01:14.should be looking to be a chess --BHS and she said they had been

:01:15. > :01:22.looking certain the since made 2013. We have never had a phone call or a

:01:23. > :01:26.meeting with and June 2000 16. A summary was to get together with us

:01:27. > :01:35.and she says she knew still the end of the year and subsequently I

:01:36. > :01:40.attempted to contact Baroness Altman and my team have told me not to

:01:41. > :01:44.interfere, they are dealing with it and I thought the boss sat above the

:01:45. > :01:52.team and I could not get any engagement. In terms of moving

:01:53. > :01:56.forward, there was one meeting took place with a leg later and the PPF

:01:57. > :02:02.together which didn't go very well and would it two hours and 45

:02:03. > :02:14.minutes. We should have filmed at. When was that meeting? Probably

:02:15. > :02:26.March. Of this year. And since then we have gone nowhere. But we have

:02:27. > :02:42.been working away to see if that is wait to to Rome. -- away. -- a way.

:02:43. > :02:50.By a strange quirk of fate, which was not something I was going to

:02:51. > :02:54.discuss this morning, in the last week the regulator made a phone

:02:55. > :03:05.call. Maybe somebody had bought them a telephone. They phoned up seeing

:03:06. > :03:09.they would be interested in having a meeting and maybe Mr Field you have

:03:10. > :03:15.been instrumental in waking them up. There has been a dialogue with other

:03:16. > :03:26.adviser and I think to three phone calls over the last seven days which

:03:27. > :03:30.offend a little bit of coincidence. I said basically yesterday that due

:03:31. > :03:35.to the factor was here today it was not appropriate to try and have a

:03:36. > :03:40.meeting 24 hours before coming to see you but that does seem to be

:03:41. > :03:46.light at the end of the tunnel and I just want to respond to Mr Graham so

:03:47. > :03:54.we can maybe save a lot of time. I am prepared, I have come here so we

:03:55. > :03:58.can all be clear, we looked at some stuff last week the numbers were not

:03:59. > :04:04.quite apparently up-to-date enough and told you Chris Martin has said

:04:05. > :04:07.and I'm talking to the PPF directly. We want to

:04:08. > :04:15.find a solution for the 20,000 pensioners and we still believe that

:04:16. > :04:18.money into the PPF does not resolve it.

:04:19. > :04:21.Without wanting to get into specifics from what

:04:22. > :04:33.seen, I would say it is resolvable and sortable and we will find a

:04:34. > :04:39.solution. And I want to give an assurance to the 25,000 pensioners

:04:40. > :04:43.the time they are service in the correct way, the PPF, and I am happy

:04:44. > :04:48.separately away from this forum. There are some people in the pension

:04:49. > :04:55.fund he would get very disadvantage of the PPF and at a higher level

:04:56. > :04:59.they would not come out with a good outcome and some of the people I

:05:00. > :05:04.work with myself weather and in the last few years have retired, we are

:05:05. > :05:11.working on it and that is the team currently working through the latest

:05:12. > :05:17.all style. Because of all the things that are moving around, it is in

:05:18. > :05:25.motion and current and about another letter from Deloitte telling you

:05:26. > :05:35.basically would fare to our letters of fourteenths June and I engagement

:05:36. > :05:37.of November 2014 and January 2014 -- November 2000 13. We seek a

:05:38. > :05:46.restructured solution for the business and pension schemes.

:05:47. > :05:53.Options are better outcomes than the concession available from the

:05:54. > :05:56.pension protection fund. I welcome that statement Sir Philip. Issue to

:05:57. > :06:09.actually offer people what they would have got and of the other

:06:10. > :06:14.scheme? That is not my scheme. They are working up a plan which they

:06:15. > :06:20.have not presented. I'm basically this time going to get presented

:06:21. > :06:26.with a planned cop fully -- with the plan hopefully to find a way

:06:27. > :06:32.forward. Lots of pensioners will be watching this and so that we get

:06:33. > :06:36.clear watcher amis, do I take it your aim is to try to come up with a

:06:37. > :06:44.scheme so that the pensions they expected to get would be the pension

:06:45. > :06:50.they will get? We will share with you when you turn up with whatever

:06:51. > :06:56.the planners. -- when they turn up with whatever the plan might be. If

:06:57. > :07:02.they say they don't want it does not achieve the results, I think a man

:07:03. > :07:06.was he who said two on December ?5 million into the PPF and that does

:07:07. > :07:11.not solve the problem and does not satisfy a lot of pensioners who

:07:12. > :07:15.would not benefit. If this was just a question of running away and

:07:16. > :07:19.getting on and doing something else, we might object to the PPF and we've

:07:20. > :07:24.been trying to avoid that. I know you have, Sir Philip. I can give you

:07:25. > :07:31.the comfort of seeing regular tours have been in contact and we are

:07:32. > :07:34.working on it and the plan will be post this as soon as possible and

:07:35. > :07:38.get the relevant people in the room because they are now willing to

:07:39. > :07:45.engage and simplify the solution. Thank you. Ian and Richard and then

:07:46. > :07:53.Jeremy. Just clarify my mind you said a moment to two ago that you

:07:54. > :07:56.and your team meeting the pensions regulator and the PPF in March or

:07:57. > :08:07.April of this year, is that correct? I think there was a meeting on the

:08:08. > :08:12.4th of March, as I think heard previously. They came to our office

:08:13. > :08:19.on the 4th of March about the last of active. There has only been two

:08:20. > :08:23.meetings with the regulator. One was on the 4th of March to start a

:08:24. > :08:28.business that has ended and the result for the dialogue for whatever

:08:29. > :08:39.reason, which I would love somebody to Spain to me. Having had project

:08:40. > :08:54.soul. -- somebody explain to me. -- foul. --Thaw. Having presented that

:08:55. > :08:58.would get another 2014, the beastie me that is a total puzzle as they

:08:59. > :09:01.came to office in the 4th of March and they would advise the business

:09:02. > :09:07.was being sold in February and the worst conversations going along and

:09:08. > :09:19.when the business got sold on the 11th of March why would you 2440 hrs

:09:20. > :09:24.or days later start rattling off section 72 instead of calling us and

:09:25. > :09:31.saying could we know sit down and see can do this to bed? That this

:09:32. > :09:38.meeting took place in 2060 not 2015, with the PPF. It is 2015? I am

:09:39. > :09:42.saying there was a meeting the 4th of March 2000 15. I am puzzled

:09:43. > :09:47.because you do not own this business and you have divest it yourself of

:09:48. > :09:54.it and are coming to you in 2016. Why is that? You have got out of it.

:09:55. > :09:59.Why do they want to see you? Because basically we'll was agreed a new we

:10:00. > :10:05.would make a contribution towards the pension scheme. When the

:10:06. > :10:19.business was sold resource understood that they actually

:10:20. > :10:23.changed to project Vidar. -- --Vera. We would was make a conclusion the

:10:24. > :10:32.settlement, whatever it was. They had at one adviser, Brian Compton.

:10:33. > :10:44.-- their own adviser. The Met with the PPF and came Sears much later.

:10:45. > :11:02.And they had another law firm -- came to see us. And they presented a

:11:03. > :11:09.project for type deal. --Four. They were looking at us to pay the

:11:10. > :11:12.balance of the monies. It was all was going to be that we would

:11:13. > :11:16.participate in whatever would be settled and of history we will move

:11:17. > :11:27.into that later, I am assuming and this time progressed it was pretty

:11:28. > :11:33.clear that they would not have any money to make any contributions so

:11:34. > :11:46.ultimately the new we would have to deal. Richard. This is extremely

:11:47. > :11:53.interesting. You said that this project started in the middle of

:11:54. > :12:03.2014 and the pensions regulator spoke with Arcadia and BH S. They

:12:04. > :12:06.wrote to Chris Martin on the 4th of September outlining what were the

:12:07. > :12:14.key points they wanted the trustees to pursue with BHS to give them that

:12:15. > :12:18.relevant information. The key points weather they were interested in the

:12:19. > :12:22.management charges and leaseback arrangements and property charges

:12:23. > :12:28.and evidence going back as far as 2000. That was the 4th of September.

:12:29. > :12:43.Do you recall when you post project file? --Thaw? It was on the 5th of

:12:44. > :12:47.September, the very next day. The recent civil given at the trustees

:12:48. > :12:54.meeting by old barge were as follows. He advise the circle of

:12:55. > :12:59.green wants to pause Project Thaw for three months after the Christmas

:13:00. > :13:01.peak to consider his objects and the reasons cited were political and

:13:02. > :13:08.economic incessantly including Russia and we came -- Ukraine and

:13:09. > :13:14.the Christmas trading period. This accent you like the reasons why you

:13:15. > :13:26.decided to pause or freeze Project Thaw? The press will reason was a

:13:27. > :13:29.backwater was the principal time that BHS make money and I thought it

:13:30. > :13:33.was the wrong time to be going to the suppliers of the landlords and

:13:34. > :13:38.as a business over repeated of time we carried the business for months

:13:39. > :13:40.hope to make back quite a bit of cash and at peak period and I

:13:41. > :13:45.thought they disturb the business in that period it would not be the

:13:46. > :13:50.right time to do that. You will not at all by the fact that the pensions

:13:51. > :13:58.regulator raised questions about potential nominal asset? And the

:13:59. > :14:05.fact that this was the date, that is entirely coincidental Christmas if I

:14:06. > :14:11.can look you instruct the eye -- if I can look you straight in the eye I

:14:12. > :14:17.have never seen that letter. The answer as far as I'm concerned is I

:14:18. > :14:25.was not involved day-to-day and I was presented with the situation on

:14:26. > :14:29.Project Thaw and felt that the timing on the trading situation was

:14:30. > :14:38.wrong. So you're asking us to believe that political uncertainty

:14:39. > :14:45.in Ukraine was why Project Thaw was frozen? Was I at that meeting? No,

:14:46. > :14:49.that was a meeting between Paul barge and your business trustees but

:14:50. > :14:56.he was quoting you. But was I present? No. But in your view the

:14:57. > :15:00.fact that the pensions regulator was whizzing a potential moral hazard

:15:01. > :15:07.had nothing to do with you pausing Project Thaw? I have said for the

:15:08. > :15:15.past two hours that I have never run away from looking or finding a

:15:16. > :15:19.solution to the pensioners. You did say directly to Chris Martin,

:15:20. > :15:24.according to his records, that she felt about being tortured by the

:15:25. > :15:32.regulator and the regulator was trawling through ball shipped from

:15:33. > :15:50.ten years ago. -- trawling through Poole clap. --Bull. You get section

:15:51. > :15:57.72 from the regulator. Each time at the mind you it is a criminal

:15:58. > :16:03.offence. To give you an idea of the stuff they are asking for, they

:16:04. > :16:15.asked the bank movements mature and ?56 million it has been lent to BHS

:16:16. > :16:18.-- ?256 million. It is properly a quarter of a million bank movements

:16:19. > :16:24.of miles of computer tapes. What relevance could this possibly have,

:16:25. > :16:32.I'm just giving you an instance of the stuff would ask for. Ask for the

:16:33. > :16:46.certificate confirmed that Arcadia lengths 256 million. -- Lent. There

:16:47. > :16:51.we are a September 2014 and once Project Thaw was pause there was no

:16:52. > :16:56.solution of the table for the pension scheme but it was listening

:16:57. > :17:05.to be very difficult for you to sell BHS? As I think I continually keep

:17:06. > :17:19.seeing, with respect, we have spent in excess of ?1 million putting

:17:20. > :17:26.Project Thaw together. Why would we do that if there was not intent to

:17:27. > :17:38.find a solution? What was the solution when she had frozen Project

:17:39. > :17:45.Thaw? -- once you had frozen. We paused Project Thaw between

:17:46. > :17:49.September and January. The racial memory of Dominic Chapple is that

:17:50. > :17:53.the emotional deal you offered him what it would be pension free which

:17:54. > :18:04.was it meant that you expected Project Thaw to go ahead. Is that

:18:05. > :18:22.correct? -- the memory of Dominic Chapple. Are we in the same room? I

:18:23. > :18:29.am not sure we are. Shall I ask you the same question again Chris Mark

:18:30. > :18:35.Mr Field, I cannot deal with this. This is really simple. I am happy to

:18:36. > :18:42.get a phone in the room now. We are currently working on, as we speak

:18:43. > :18:45.and update up on Project Thaw and they have been working on it for the

:18:46. > :18:50.past two or three weeks and they had some outdated information and I am

:18:51. > :18:54.more than happy for anybody here to go outside and call Chris Martin. He

:18:55. > :18:57.was cold a week ago to make sure everybody had the latest updated

:18:58. > :19:01.information because the information we have a somewhat outdated. I cold

:19:02. > :19:07.Chris Martin to ensure as soon as possible all the current information

:19:08. > :19:11.for all the current numbers to be updated would be available. The call

:19:12. > :19:16.I had a couple of days ago, they are probably a week or a few days and a

:19:17. > :19:21.week away from making a presentation of what the latest numbers are. So I

:19:22. > :19:27.am happy to tell you, yes, we're still on April jacked that will

:19:28. > :19:34.hopefully deliver a better outcome. I spoke to Malcolm Weir in the last

:19:35. > :19:43.40,000 have spoken to Chris Martin and Deloitte confirming the same. --

:19:44. > :19:47.48 hours. Literally last four are five or six days is the first clinic

:19:48. > :19:51.is we've had from the regulator in months and months and months and

:19:52. > :20:01.hopefully some common will prevail. -- contact. I'm sure pensioners will

:20:02. > :20:04.be the most grateful for that. A lot of people have given this a lot of

:20:05. > :20:08.evidence and some other does not reflect well on you. We can present

:20:09. > :20:13.the record in the round which is putting some of those bacteria. What

:20:14. > :20:18.evidence have you heard from the stuff that I have heard because the

:20:19. > :20:26.only person I can confirm to you in terms of the pension is myself or I

:20:27. > :20:31.think Mr Budge could confirm to you. In terms of anything else you have

:20:32. > :20:42.heard, respectfully, commendable deals, there was a pension and they

:20:43. > :20:45.had one of two meetings with the regulator or PPF and one or two

:20:46. > :20:50.things were promised but most people knew they would not come to fruition

:20:51. > :20:56.but outside of that, as I said to you the start of the session, all

:20:57. > :21:02.the people I'm referencing, I cannot reference these people, and I'm

:21:03. > :21:07.seeing I'm more than happy for you to call them. I would not tell you

:21:08. > :21:12.things that are not true. I'm grateful to you for that. Dominic

:21:13. > :21:15.Chappel has asserted that you promised the company would be debt

:21:16. > :21:23.free and pension free. This is the guy that you saw the company to and

:21:24. > :21:26.I know he's bringing his piece of evidence session to a conclusion,

:21:27. > :21:32.but it is such an important because we are writing a report on evidence

:21:33. > :21:36.and I'm wishing for that to be as comprehensive as possible. From your

:21:37. > :21:51.side of the story to feature properly. I believe in the pack I

:21:52. > :21:58.believe was performed by Grant Thornton, and we need to get that,

:21:59. > :22:06.we need to spend time in a couple of things she missed, -- couple of

:22:07. > :22:15.things she missed. -- you have missed. We will get to that, Sir

:22:16. > :22:20.Philip, but we will probably have a break first. A few questions that

:22:21. > :22:27.will help clarify for us what happened after Project Thaw was

:22:28. > :22:33.frozen. I think I have already told you. Dominic Chapple believed he was

:22:34. > :22:36.going to get it pension free and that was not on the table. You said

:22:37. > :22:43.Mr Budge was an important man in this process. In an e-mail to

:22:44. > :22:47.Anthony Goodman of Goldman Sachs in April poll Budge said he said he did

:22:48. > :22:51.not enlighten Dominic Chapple about the declining health of the pension

:22:52. > :22:57.fund. Dominic Chapple thought that the gap was 50 million and poll

:22:58. > :23:02.Budge said of course it has moved on since then, and court. If you put

:23:03. > :23:06.that together with the fact that Dominic Chapple told Frank Field in

:23:07. > :23:13.one of these sessions that you stopped seeing the regulator,

:23:14. > :23:20.Dominic Chapple said if you see the regulator, said Sir Philip, I will

:23:21. > :23:24.call the deal. Some people might conclude that the pension scheme was

:23:25. > :23:32.a real challenge for you because of this presenting you -- preventing

:23:33. > :23:36.you from selling BHS and the only way out of this would have been

:23:37. > :23:42.Project Thaw there because the regulator raised moral hazard and he

:23:43. > :23:49.didn't want them being around this stuff from the last ten years, that

:23:50. > :23:53.meant effectively had to flee the pension scheme onto the bed for Mr

:23:54. > :23:59.Chapple for the company. What would you say to that hypothesis? I would

:24:00. > :24:09.say if you look at the window, is the skylight or dark? Ask Mr Chapple

:24:10. > :24:20.if it is like a darker side. -- light or dark. I would like you in

:24:21. > :24:24.the break, and I will give you his phone number, go and phone Grant

:24:25. > :24:29.Thornton, please, and speak to the pension man there. It is

:24:30. > :24:33.inconceivable and more portly impossible that I could stop anybody

:24:34. > :24:38.going to the regulator. That is nonsense. We ourselves could not get

:24:39. > :24:45.the meeting with the regulator. Respectfully, if you think, and like

:24:46. > :24:56.I said maybe should call for it, in the due diligence pack, I am just

:24:57. > :25:01.saying, I'm not performed by me. I'm led to believe this section in the

:25:02. > :25:05.due diligence back on Project Thaw. It would not have been in the due

:25:06. > :25:13.diligence pack if the pension was not on the table? Regardless of what

:25:14. > :25:16.Mr Chapple said to you. It is was been as far as I am concerned, as I

:25:17. > :25:24.have said numerous times, we always knew we would have two participate

:25:25. > :25:32.in whatever the risky scheme was. I think in the very early moments of

:25:33. > :25:36.Project Thaw back at that time there was a figure of 50 or 60 million

:25:37. > :25:44.mentioned when it first got on the table. That is where think that

:25:45. > :25:49.figure came from. Just to answer you, the time deal was being done,

:25:50. > :25:56.we were doing the deal, at that particular time I think there was a

:25:57. > :26:05.model passive exercise carried out by KPMG and I think they arrived at

:26:06. > :26:10.number 51 54 billion of this nature so that was carried out on behalf of

:26:11. > :26:19.Chris Martin for the trustees. That exercise was done in the week

:26:20. > :26:28.leading up to the deal. Can I ask for last questions before the break?

:26:29. > :26:40.You have gone on to somebody says questions. Philip, we have had about

:26:41. > :26:57.the support given to Arcadia. -- cared about the support. -- Herod.

:26:58. > :27:01.--Heard. I'm slightly bemused that reports and accounts for companies

:27:02. > :27:10.that you seem to be director for the have admitted. So you're providing a

:27:11. > :27:17.letter and seeing supporting a going concern? I have not seen a specific

:27:18. > :27:27.letter and what I am aware of. What I'm aware of is that there was

:27:28. > :27:35.allowance mate to BHS any amount of 256 million. -- in the amount.

:27:36. > :27:42.Discover we have the break, because it is really concerning, do not like

:27:43. > :27:47.all these letters. -- I do not write all these letters. This is a very

:27:48. > :27:52.big machine and other people spending tens of Marines of pounds

:27:53. > :28:02.and we're building a new building, we're a hub in Singapore will stop

:28:03. > :28:15.that people -- tens of millions of pounds. Siobhan is leading a project

:28:16. > :28:21.to build a hub. She owns that project and she reports. I have

:28:22. > :28:27.never been to one meeting we are building a building in the West End

:28:28. > :28:31.to house all our people. I don't go to those meetings and I don't sign.

:28:32. > :28:38.Those two projects could be in excess of ?100 million. The approved

:28:39. > :28:45.and it began on the phone. -- they are approved and they get on with

:28:46. > :28:51.them. I'm not producing letters and saying I am sorry. Reasonable asking

:28:52. > :28:55.you is that this corporate governance processes and it is

:28:56. > :29:03.important for us to understand. This is about two and by the committee

:29:04. > :29:04.has been commissioning the former boss of BHS Philip green.