15/06/2016 Victoria Derbyshire

Our top story today - the former owner of BHS -

who sold it for a pound to a man who'd twice been declared bankrupt

and never worked in retail - is being quizzed by MPs today

about what led to the collapse of the home store and the loss

While Sir Philip's former workers contemplate redundancy with

significantly reduced terms and a pension, he awaits delivery of a

brand-new ?100 million yacht. being questioned at about 9.15 this

morning, we'll bring you much Also on the programme,

an alligator's dragged a two-year-old boy into a lake

at Disney World in Florida. His father tried to wrestle

the alligator away. The father in at the water, and he

tried to grab the child, was not successful in doing so. That some

point I'm told that the mother may have also entered the water.

And French authorities are sending 4,000 extra officers

to Lille to try and prevent further violence between England

Meanwhile, on the pitch, Cristiano Ronaldo gets stroppy,

after his side could only draw with Iceland.

It's a great result for one of the smallest nations here.

Welcome to the programme, we're live until 11.00.

Much of the programme will be dominated by that evidence

Do listen to what he has to say and send us your reaction.

Get in touch in all the usual ways, use the hashtag #VictoriaLIVE,

and if you text, you will be charged at the standard network rate.

We'll bring you the beginning of that evidence at around

0915 this morning - but first Joanna has a summary

The retail tycoon Sir Philip Green is expected to appear before MPs in

the next hour to answer questions over the collapse of BHS. Sir Philip

owned BHS for 15 years before selling it for a pound in 2015. The

retail chain went in to administer it in late April, threatening 11,000

jobs and leaving a ?570 million deficit in its pension scheme.

The Chancellor George Osborne will say this morning that he'll

need to raise taxes and cut spending if Britain votes to leave the EU -

claiming there'll be a ?30 billion budget black hole.

But 57 Tory MPs have already warned the Chancellor

in a statement that his position would be "untenable"

if he attempted to carry out such plan.

Our Assistant Political Editor, Norman Smith is in Westminster.

Norman, what is he saying? Is he saying this is something he would

absolutely do? The Chancellor is saying there would have to be an

emergency budget if we voted for Brexit, and he is sketching out tax

rises around ?15 billion, including 2p on the basic rate, 3p on the

higher rate, higher road and alcohol duties, and significant cuts,

tearing up the Conservative's party commitment to protect school

spending, and says there would have to be a ?2 billion hit to pensions.

But that plan has pretty much gone up in flames, been torpedoed by his

own MPs, around 60 of whom have signed a letter this morning, saying

that they would not bow to such a budget, because it would be in

contradiction of their manifesto pledges. More than that, they say

the Chancellor's position would be untenable. And you sense the raging

Civil War over Europe has just gone up another notch. Thank you, Norman,

much more on this throughout the programme.

Police in Florida are searching for a two-year-old boy,

after reports that he was snatched by an alligator in

the grounds of a Disney resort near Orlando.

The search is going on at Disney's Grand Floridian Resort

The local sheriff says the boy was seized as he was playing

His father, from Nebraska, entered in the water but was unable

As a father, as a grandfather, we are going to hope for the best

But based upon my 35 years of law enforcement experience,

we know that we have some challenges ahead of us at this time.

Two women have alleged they were sexually abused

as children by the late Liberal MP and broadcaster, Sir Clement Freud.

They've made the claims on ITV's Exposure, which will

His widow, Jill, says she feels profoundly sorry

In the programme, Sylvia Woosley describes years of abuse,

including while she lived with Freud in his home.

That's a summary of the latest BBC News - more at 9.30.

Good morning, Victoria. Yes, Cristiano Ronaldo was not happy with

his side's performance last night. Portugal drew 1-1 with Iceland.

After the match, Ronaldo said I thought they had won the Euros, the

way they celebrated at the end. This, in my opinion, shows a small

mentality and they are not going to do anything in the competition. Nani

had given Portugal the lead, but it was this goal from beyond the Sun

that secured a valuable point for Iceland, playing in their first

major tournament. It is thought that nearly 10% of Iceland's entire

population is here in France to watch the team. There was another

surprise result in Group F, as Hungary who themselves have not

competed at the Euros for 44 years, with Austria 2-0. The Euros are

barely underway, but the countdown to the new Premier League season has

started. In the last human its, the fixtures for next season have been

released. Here is how the opening weekend is looking. Dates and times

of course are subject to change. Champions Leicester bid visit newly

promoted Hull. Arsenal against Liverpool might be the fixture of

the weekend at the Emirates. And West Ham's first match at their new

Olympic Stadium home will be against Bournemouth on 20th of August. All

of the fixtures can be found on the BBC Sport website. Andy Murray gave

coach Ivan Lendl the perfect welcome back with a win over Nicolas Mahut

at Queen's Club London. He won 7-6, 7-6 to reach round two. He now faces

petition of two, Aljaz bird next. He doesn't give many signs during

the match was dubbed he has quite a straight face. Whilst I'm playing.

But it is great. I started working with Jamie Delgado a few months ago

and that has worked it strangely well, and obviously I had some of my

best years with Ivan a few years ago, and I think it is a very strong

team. I am hoping they can help me win more major events. Finally,

jockey Adam Kirby had a really memorable first day of Royal Ascot.

He won the Kingsdown stakes on Profitable. Just watch him closely

as he came home, he had to fight back the tears, when he revealed

that his girlfriend Megan had given birth to a baby boy just a couple of

hours before the race. He also dedicated the win to his dad, who he

said had always wanted to watch him ride a Group 1 winner, who died

three years ago. Before I go, all eyes on the Russia- Slovakia match

in Lille this afternoon. Russia have been warned that if there is any

trouble inside the stadium similar to what happened in Marseille they

will be thrown out of this competition. The match is live on

BBC One. Kick-off is 2pm. Thank you. More from Sally throughout the

programme, live from Paris. The former boss of BHS,

Sir Phillip Green, is about to appear before MPs

to answer questions Throughout the programme we'll bring

you the key parts of his evidence - and you can watch it all on the BBC

Parliament channel and online. The business tycoon who's worth

an estimated 3.2 billion pounds will be questioned by politicians

on what's called a select committee - a group of MPs who examine

the work of government departments They're televised and often end up

providing some memorable moments. select committee moments that

grabbed the headlines. In February 2016, Matt Brittin,

head of Google Europe, failed to tell MPs how

much he earnt. If that's relevant, I'll happily

disclose that to the committee. I'll happily disclose that if that's

a relevant matter to the committee. I'm asking you, so it

is a relevant matter. Can you tell me what you get paid,

please. I don't have the figure but I'll

happily provide... Perhaps you could give

us a ballpark? Forget the share options,

what is your basic salary? I don't have the figure but I'll

provide the figure privately, if it's relevant to the committee

to understand my salary. OK, you don't know

what you get paid. My point is, out there,

taxpayers are very angry. They live in a different world,

clearly, to the world that you live in, if you can't even tell us

what you are actually paid. In July 2012, G4S chief Nick Buckles

was quizzed by MPs after the firm failed to supply enough security

staff at the London Olympics, requiring the Army to step

in and fill the gap. My view and the view of the board

is that I'm the best person at the moment to take this

through to its final conclusion. So you will accept ultimate

responsibility for what Members of this House called

a fiasco and a shambles? You may be making sure it's

delivered now, but ultimately you will agree that somebody has

to be responsible for this? As CEO of the group,

I'm accountable for the delivery Mr Buckles, it's a humiliating

shambles, isn't it? It's not where we would want to be,

that is certain. It's a humiliating shambles

for the company, yes or no? In June 2016, Sports Direct founder

Mike Ashley admitted workers at its Derbyshire warehouse

were paid below the minimum wage, and its policy of fining staff

for being late was unacceptable. Do you accept that the company

was effectively paying workers below On that specific point,

at that specific bit If one of my kids went to work

somewhere and they were two minutes late and got fined 15 minutes pay,

I wouldn't be very Do you think your company has

outgrown your ability to manage it? Some of the things you said to me

today would actually lead me to believe that it's

definitely outgrown me. In June 2016, the former owner

of BHS, Dominic Chappell, was accused of being a liar

by the firm's former financial His former chief executive

Darren Topp also claimed Mr Chappell threatened to kill him during a row

over company money. I think the technical

term is a mythomaniac. The layperson's term

is he was a Premier League liar, and a Sunday pub league

retailer, at best. He basically said, do not kick

off about this Darren, I've had enough of you telling me

what to do over the last few months, it's my business,

I can do what I want. And if you kick off about it

I'm going to come down In October 2012, George Entwistle,

then Director-General of the BBC, came under fire while giving

evidence over allegations of sexual There was an allegation

that there was a paedophile Have you or the BBC taken any steps

to identify who else was involved That's an allegation I've seen made

in the last few days. It's something we are putting our

resources at the disposal A paedophile ring would be a matter

for a police investigation. In July 2011, a protester lunged

at Rupert Murdoch with a pie full of shaving foam

while the News Corporation chairman took questions

about the phone hacking scandal. I would just like to

say one sentence. This is the most humble day

of my life. Still astonishing that that

happened, isn't it? Sir Philip Green will be questioned

in the next few minutes by MPs on both the Business and the Work

and Pensions Select Committees. Our business reporter

Ben Thompson is here and will be Who is Sir Philip Green? He is the

man best known for some of the biggest names on our high street,

all of those names that feature up and down the country, companies like

Dorothy Perkins, Wallace, Evans, top shop, top man and Miss Selfridge.

All of those names we have known for so long. He is a veteran of the

retail industry, about 40 years. At two points in his career he came

very close to buying Marks Spencer 's. He put in two bids, and he did

not quite succeed, the first time because the management at M

painted a picture of him as a ruthless man only in it for his own

self interest. That bid failed. The second time he walked away, saying

they wanted to much money. But he could have been one of the biggest

names on the high street, if he got hold of M But a very colourful

history, I think it is fair to say. A self-made man who worked his way

up from just one store. But there is a lot of controversy around him too.

His tax affairs are always under the spotlight because he tends to spend

a lot of his time in Monaco. His wife, Tina, is actually a Monaco

resident, so tax affairs have come under scrutiny in the past. But he

is a British citizen, but spends a lot of time abroad and still managed

to get a knighthood. There is one crucial issue that Arcadia, the

parent company of all of those brands I mentioned, they are

actually owned by his wife, Tina. Not by Sir Philip Green, but by his

wife, Tina, who as a Monaco resident enjoys the tax benefits of being

outside the UK. Sir Philip Green runs them and quite legally he is

able to reduce his tax bill by spending a lot of time over in

Monaco. But at the time he was knighted, it raised a lot of

questions about whether it was fit and proper that he should receive a

knighthood, given that he is able to reduce how much tax you pay is in

the UK. What we will expect to hear today is a lot of insight into how

that business is run, what dealings he has with running not only those

companies we have talked about but crucially BHS. He bought it for ?200

million back the year 2000. He sold it last year to just ?1, two Dominic

Chappell. -- to Dominic Chappell. Both of those giving evidence about

the demise of the retailer. And clearly what happens to the 11,000

staff and the 164 stores across the country. The administrators were

trying to find a buyer for BHS, and to sell it as a going concern. They

were not able to do that, so the business is in the process of being

wound down. So clearly lots of uncertainty for the 11,000 staff who

work there. But one of the most crucial things is for the pensions,

people who have paid in for their entire career into a BHS pension

fund. That fund is now in a deficit, to the June of ?570 million. There

will be serious questions for Philip Green today to find out what he

intends to do to try to plug that Black hole to make sure those

pensioners don't lose out. We await the beginning of his

evidence. Let's talk now to some former BHS

workers whose pension pots both stand to be affected -

Lin MacMillan and Mark Dadson. Welcome to the programme. Simon, I

wonder what you want to hear from Sir Philip Green this morning as he

sits before MPs? I would like him to be open and honest about the

practices that were going on and why he was willing so eagerly to sell

the business to somebody who is proven bankrupt and just get some

honest answers as to why, morally, he thinks he can get away with it.

And leave so many people with a shortfall after working so long and

putting money into their pension fund. And Lynn, what would you like

to hear from Sir Philip this morning? I would like to hear him

say that he accepts that he has a moral responsibility to repay the

pension fund and secure the pensions who have worked for BHS in the past

and are still working there. What is the exact figure, Ben? ?570 million?

OK, that's the black hole. Sir Philip himself has offered ?80

million. It is not enough, is it? It is not. It is 14% of the deficit.

Really that is like a slap in the face to the people who worked so

hard in BHS for all these years, all of whom are going to lose their jobs

if a buyer is not found for the company. Remember that the taxpayer

will have to pick up the redundancy payments for these people. Simon,

this is going to be the first time we have heard Sir Philip give his

version of events, tell his side of the story. Do you think there is

another side to this story? Yeah, I'm sure he will almost certainly

given opposite answer to what Dominic Chappell said last week. He

will fight his way out. He does not want to lose face. Doesn't want to

lose his knighthood. He will give many excuses and reasons, I don't

think we will get honest answers. I'm going to pause you there, the

session has just begun, let's have a listen. Huge amount of evidence and

questions to put to you. And I'd like to ask Michelle to open up

questions for us. Good morning and thank you for attending our session

this morning. As Frank says, the focus of today's session will be

very detailed but before we start I'd like to get a sense of EU, Sir

Philip. You're recognised as a captain of industry. In your view,

what is the one key value which has defined you as an individual during

your long business career? Well, I think it's actually not the right

way to mark your own essay. I don't think that is probably a good way

for me to start. But I think that I started from walking the street, in

terms of learning the industry. When I first started retailing I used to

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

go to Asia from 1974 once a month. I learned how to make the garments. So

I've been intimately involved in virtually every aspect of this

business over 45 Years. And taught myself. Never worked with anybody in

the industry. And hopefully over this next period of time we are here

you won't hear all the bad stuff everybody wants to keep writing

about, hopefully I will give you a fair and Alan 's view. If I have

done something wrong I will put my hands up and say I have done

something wrong -- fair and balanced view. You can be your own judge. I

don't tell lies, I tell it as it is. I've been across several thousand

stores in this country. Still employing 28,000 people currently.

Pre-BHS, nearly 40,000 people. And my allowed to summarise, would it be

a fair assessment to describe it as honesty and hard-working? Well, I

think so. And I think in spite of everything that has occurred I have

been getting quite a lot of messages from BHS people, and if I may, just

before we get started, I'd like to say a few words, if that's OK.

Contrary to everything that's getting written, I spent 15 years,

nearly a third of my working career with BHS. Probably the thing that

got me into trouble was having too strong an emotional tie with both

the people and the business. If you went to ask the people I work with,

who worked with me, I think they would all testified that I was

honest, hard-working, and nothing is more sad than how this has ended.

And I hope during the morning you will hear there was certainly no

intent on my part for anything to be like this. And it did not need to be

like this. And I just want to apologise to all the BHS people that

have been involved in this. And I hope by the end of the morning they

will hear everything and we can find some sensible solutions to some of

the issues. And your apology is noted. What is a key value that the

11,000 employees and future pensioners would use to describe

you? I'm sorry? In terms of your key values of hard working and honesty,

what word to describe your key values would be in there than

thousand employees and future pensioners use? Respectfully I think

I've just said what I said. I can't make everybody happy. There will be

unhappy people and I accept that. But hopefully by the end of the

morning when we've been through the things we have to go through,

hopefully people will hear that is not the intent and we can find some

solutions. Thank you for that. Moving forward, I wanted to ask some

specific questions about the early days of you getting involved with

BHS, firstly in terms of dividend. With hindsight, how do you view your

dividend policy at BHS? Well, if we were here and able to use hindsight

we wouldn't be here. Lots of us would be doing different things if

we could use hindsight but we can't. Respectfully, if you look at how

businesses were financed in those days, early 2000, the financing of

BHS was extremely conservative. If you go and look at and I'm sure we

could find many transactions where people used to borrow multiples,

four, five, six, seven, eight times cash flow, were how businesses were

financed by venture capital people, private equity, this is how

businesses were bought. If you look at this business, it did not have

more than one times cash flow as debt, so actually it was

conservatively run. We have a chart of the numbers and we can go through

them. You have got to look at the dividends in the context of the cash

flow the business was making, context of the profits it was

making. And did you regard your dividend policy as prudent? As I

said, I do not think we exceeded one times cash flow. If you ask any

independent banker or anybody in venture capital or the buyout

business, they would have asked why we were being so conservative. So it

was not an aggressive finance strategy. Given that dividends paid

over the period of 2000 to 2014 were 19,732% of profit as compared to MMS

at 84% profit. I'm sorry... The last dividend was paid in 2004. With

respect, we can pick any numbers, if you want to make them look

disconnected. We've got to pick the numbers in line. Respectfully, if

you go to a public company that paid X in 2002, three or four, you

couldn't have a strategy knowing where you would be 11 years later,

that's not realistic. Between 2002 and 2004 the dividends were roughly

double the profits, would you that prudent? The operating profit as is

normally looked at, in 2000, 2001, was ?80.6 million. The next year

?146.7 million. The next year 153.5 million. The next year 157.8

million. Cash generated from the business was ?537 million. Over

those years. That's the audited numbers. You are giving me

something... Then we can move on from there. In that period of time

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

people of the committee today that we get more detail into the numbers,

but obviously there is significant interest in all of this matter for

people at home as well. My simple question to you is, with the benefit

of hindsight, do you view the dividend policy given the excessive

dividends when you do comparative is against other companies as prudent?

Did you regard them as prudent men and do you regard them looking back

as prudent? As I said to you, I think the leveraged used on this

company was not excessive. The bank debt against the profitability I

read you in year one was ?111 million. In year two it was ?2.2

million. In year three it was ?9.9 million. And in the third year when

the company made ?157 million, it was ?111 million. You can go and

take that to any independent banker or organisation you like, look at

those numbers, they are not excessive based on the bank debt

versus the earnings. Did you have any concerns that dividends were

still being paid out at the rate they were when the pension scheme

was moving into deficit? I'm happy to tackle the pensions any time you

like, but I think... I imagine it is a separate section but looking at

overarching financial governance. If you want to have a separate pension

conversation we can. But let's stick the numbers and go through them and

then I am more than happy to answer any questions you like on the

pensions. I think you have answered my question. Carrying on, in terms

of property, your company got a number of properties from BHS for

?1.59 million as a sale and lease back to another company called

Carmen properties. Who was the controlling party of Carmen

properties Limited? I think you are using the wrong numbers. It probably

doesn't matter. The fact is, can we agree that a number of properties

were sold to Carmen properties Limited? What we can agree is a

number of properties were purchased on an external valuation by a

company called Carmen, which was a family company. Were going to pause

for a moment and leave Sir Philip Green giving his evidence. He began

the session by explaining that he was self-taught comity started in

business over 4245 Years ago. He said he wanted to give a fair and

balanced view in his evidence. He said "I don't tell lies. Contrary to

everything written about me I spent 15 years with BHS and probably what

got me in trouble was having too strong an emotional tie with the

company. I'm honest, hard-working, and I want to apologise to all BHS

people. I can't make everyone happy, there are going to be some unhappy

people. ". Ben Thompson, his opening statement, what did you think? The

line that jumped out was the fact he said "It didn't need to be like

this". And anybody with any connection with BHS will feel the

same, that it ended pretty messily after being in Philip Green's hands

for so long. He bought it in 2000, sold last year for just ?1. The

decline quite evident. What is so interesting, this is very much

see him do is to make an apology in a tangible way by bailing out the

pension fund. And if he is really sorry for what happened to be HS,

that would be the way to make things right. OK, thank you. A couple of

messages from people watching as well. Carol on e-mail says he should

be forced to sell his yacht and return the money to the BHS pension

fund. John has e-mailed to say Sir Philip Green, irrespective of his

excuses, must be made to repay funds taken from BHS to protect the

interest of BHS pensioners. Lin and Simon, we will hear more from you

later as Sir Philip Green continues to make a statement. Ben, I wonder

if I could bring you the latest on employment figures to get your

response. We will talk to the relevant minister in the next

half-hour or so let's have a look. The number of people on the claimant

count last month fell to 764,100, according to the office for National

statistics. So on climate has fallen a bit. The one thing here that we

always watch, the headline figures frankly not that interesting, it is

the politicians get so excited about it. The thing that affects all of us

is earnings. Average earnings rising by 2%, that is unchanged, but what

we have to remember and we have talked about that a lot, the gap

between how much on average we are being paid and the cost of living

amateur it is going up, there is a gap of about 1.5% at the moment, so

we should be feeling a bit better off. You will continue listening to

Sir Philip Green's evidence. If you want to watch it live and

uninterrupted it is in BBC Parliament.

The latest on the legal battle of man who says -

as a wheelchair user - he should have had priority over

Before we get the latest news headlines, let's go back to Sir

Philip Green. If we were actually looking for a route to set up the

companies to be aggressive non-taxpayers. If you look at over

the period of time how much tax the company 's have paid, I think you

will find it is pretty substantial. We might come back to that a bit

later, if we may. Just for your information, Mildenhall Holdings Ltd

was registered in Jersey, Inc in 2005 and dissolved in 2012. The

screen and her -- TS green and her immediate family are the controlling

party. It made 2.8 million on rent on top of the 152 million in meant

extracted through Carmen Properties. We can see looking at the accounts

you paid tax on your UK-based Holdings, but in terms of the

complexity of your corporate structure, how transparent would you

consider it to be, the wider group, given the number of holdings in

Jersey, Monaco and so on? Is that something you regarded as common as

well? Is it more, Lex and you have seen elsewhere? I don't think it is

complex at all. Everybody knows that the company is owned offshore. Where

is that complex? It has not been hidden. And so going back to the

purpose, then, my question is it may well be in Thai leader Jit at tax

avoidance -- entirely legitimate tax avoidance... 30% of the FTSE is

owned by non-UK corporations. If we go around the high Street and other

industries, there are dozens and dozens and dozens of non-UK

investors. Do you want to say every non-UK holder is a tax avoidance? I

am sorry, there are people doing business in this country, which are

written about regularly, so I'm not going to name any names, who are

competitors of ours, right, who compete against us and don't pay tax

as a normal course of business. It is the British Home Stores we are

talking about. And the major player in this is your wife, Lady Green. It

is not as though it is some foreign entity. There are a lot of other

businesses owned here by people that do not live or reside in the UK. If

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

is not what I designed or set up, that is the system. So I suppose

coming from that, my question is that, in terms of the lack of

transparency of the offshore vehicles, it makes the job of

tracking funds very difficult. It made the job of tracking funds for

myself and the supporting team difficult, but it also makes it

difficult for people such as a pensions regulator, when they don't

have the transparency of where all funding is going. Is that something

you accept? No, I don't. Threw so are you prepared to make the

accounts available for the pensions regulators, in order that they can

do that? Make what accounts available? The once offshore in

Jersey. They are not my accounts. The Green family accounts? They are

not my account so I don't have any control. So when it says P Green is

the major holding party, what is that refer to? I am not the major

shareholder. This is your wife. She has the accounts, you don't. I have

never had an overseas bank account. Can I just finish off with a couple

of things? I am mindful of time. In terms of restructuring the group,

when you got around to doing that, back office functions were moved

into Arcadia. What was the purpose of doing that? Hopefully to find

some economies of scale. So that is a fairly common thing, in my

understanding, but then looking at the kind of p and L breakdown,

between 2009, the expenditure on that was 36.3 million. After it was

pulled into Arcadia, it went up to 57.7 million, an increase of 57%. If

it was designed to save money, what was that about, can you recall? I am

happy if anybody wants to meet up with my team that run the back

office, that is not my job. I think you will find that all the charges,

all of the business is run off a central charge, all of the different

brands, and they are all charged as if the centre is a provider. I

understand how that works what Vila let me just finish, if I make you

asked a question, let me answer it. I am more than happy to provide the

relevant people who do the back office to take you through whatever

you want to look at, right, of how the costs were charged, and I think

you will find there was no profit, which is where you are going, there

was no profit made by Arcadia in respect of any third-party charges

made to BHS. That is what my team has told me. If you want that

information made available to you, you can happily see it. There is no

problem. Just finishing off, then, in terms of looking for a sale... If

I may before you continue, with respect, coming from outside looking

in, unless you are inside the business yourself, right, the types

of figures you are trying to look at, without somebody internally

taking you through, it will be very difficult for anyone outside to

understand how those numbers come together, because I think they

started to do other functions. But as I said, I am more than happy to

provide my accounts team and take you through it, there is no issue.

What I am saying is there was zero profit. Everybody wants to think it

was a game, we did not. That service was provided I am told by my team,

low cost. We will come back to that. Just to finish off, then, in terms

of looking for a sale. What was the point you started to think about

selling BH S? When did that first occur? I would say probably 14.

2014? Yes. So the talks you had with Asda and Debenhams, the Icelandic

retailer, talks you had in 2007 about the sale of BH S... From time

to time, it could be somebody phoned up and they could be a brief,

session but there was no thought process. There should have been

maybe, for a sale. Just for the record, so I'm clear, you are saying

there was no serious attempt to sell BHS before 2014, that the talks that

were held in 2005 were simply a phone call, a speculative phone

call? As I said, there was no serious, proper dialogue had about

making a disposal, nobody turned up with something that was serious, as

I say, I wish they would have done. Jeremy Cooke at Sir Philip, the

point Michelle was talking about... I apologise, what I think we didn't

finish, if I may, Michelle, what we didn't finish, OK, which I asked

yesterday just to make sure we don't get lost, you are just focusing on

the first four years of business, so let's just spend five minutes if we

may just on the rest of the numbers, because otherwise the story is very

easy to actually get misrepresented. There are certain things that have

been said by other people here coming to this committee that do not

actually fairly reflect what did happen. Is that what we have already

said, Sir Philip, because there will be lots of opportunities... No, this

will just take three or four minutes so we fell in the total picture so I

think it is represented fairly. Because there have been things that

have been said that do not reflect what occurred. In the following

years, 4-5, 5-6, 6-7, 8-9, we invested 6 million of capital in the

stores will stop the other day it was represented that we did not

invest any money at all, but we did invest 254 million. Post-2009, I

think it has been widely written when the business came into Arcadia,

Arcadia lent to be H S on and unsecured interest-free basis, which

is highly unusual, as most entrepreneurs would have struck all

the assets down and taken everything for their own, which we did not, and

we lent 256 million on an unsecured interest-free basis over the next

five years. In addition to that, we invested a further short hundred

million in capital. So that is before we get to the disposal.

Right? We put 250 million in capital X, we lent 250 million, and we

invested a further 100 million. The 600 million got invested in the

business post the dividends before we get to the disposal, where I

think the other day you were battling to sort out the balance

sheets that were sold, right? But if we waste the last two minutes on

that, OK? This will only take one minute.

Right? We then left the balance sheet which I know you were

struggling the other day to work out. I think Mr Chappell was

struggling. All right, between you. I can show you, anyway, there was

proud 80 million, and 100 million of assets left in the company when it

was sold. So nearly 800 million if you want to add that up went back

into the business, OK? Post-2000 four. We put all the money back plus

a lot more. Just one point com Michelle was talking about cash

extraction, it is completely transparent, in your tablature every

year since 2009. To confirm, you are still playing Lady Green for the

acquisition of BHS? Yes. 20 million a year is the payment? 200 million

paid with interest for the acquisition of BHS by Arcadia? And

that's to 20 million charge that goes on every year to Lady Green

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

paid ?20 million to Lady Green for its prior person purchase. That is

still the situation, is it? If you say so, I don't know. I'm sure you

do. I don't. You signed off on the account. I didn't sign anything off,

OK? I don't sign the accounts. You were a director of the company.

Thank you, that's all. Good morning. Like yourself I was reflecting, 15

years of your life doing retail, I've nearly done 40 years in retail

myself, a long time and I love retail. I would like to get back to

the retail side. Can you tell me when you first of all purchased BHS,

what were your plans for it? I think that the people I bought it from had

lost interest or, I don't know, lost their way with the business. And

actually it is about 40 years, 15 at BHS, so I can keep up with you.

Basically it stems from the product site. I think the buying was poor,

sourcing was pretty poor. There was not really an owner driving the

business. So I think I worked pretty long hours sort of going through

each of the areas of the whole business department by department to

understand what was working, what wasn't working, and I didn't know

any of the people in the building, they were all new to me. Hadn't been

in the building before. Think I'd been in once before. Didn't know the

staff. You have to get to know the people. Coming back earlier on

something Michelle said, when you buy businesses from public

companies, people have to trust you. Therefore when you get into those

businesses as a starting point you have to get to know the people

because you have to work with them. And I think we've got a pretty good

track record as a company. Our existing business, the average stay

in head office is 11 or 12 years. Do you mind not looking at me like that

all the time? It's really disturbing. Sorry? You just want to

stare at me? It is uncomfortable. I don't wish to make you

uncomfortable. Just makes me uncomfortable, staring at me. To get

back to retailing, I am intrigued. Possibly to what the plans were in

order to rebrand. Did you have an idea? Talking about maybe

relaunching, did you have any plans in terms of how to take it on the

road to profit? When you are starting out on the track with these

things, I have never sat down and worked out a profit track and said,

what have we got to do to make it work? If we make it work, it will

make money. Don't think I've sat down with any of the businesses I've

looked at. I've looked at what happens if it goes wrong as opposed

to what happens if it goes right. And I think this looked like it

needed a lot of work doing. I had experience of going to Asia, able to

reopen supply chains, sought the supply chain out, and really I think

looked over the first quarter at virtually every piece of product

across every department in the business. Started to familiarise

myself, go to all the product meetings, and start from the ground

up working on the business. You mentioned the ?800 million

investment you made over, I guess it was, what, 12 years, possibly? 11 or

12 years. And also I suppose counter to that there was other ways of

streamlining. How did that investment translate into a

business? What kinds of things were you doing? As I said, when we... 04-

five we spent 37 million on X, looking to improve the stores. The

following year we spent 84 million. We thought we had some things, we

opened stores. We were increasing staff numbers, we did not reduce

staff numbers. Obviously the discounters were becoming more

powerful, online, it was early days but it was just starting. Maybe we

were all we weren't not quickly into that. All of these things have eaten

into the mainstream marketplace. If you are a retail lady, you will no.

That's why I am so fascinated. So the other 600,000, what other things

were you investing in? All these businesses, you are investing to

improve, right? For better or for worse, in 2002, when we acquired

Arcadia, which basically took our total portfolio in the UK to about

2400 stores, there was quite a lot more to do. Basically my time got

split. Whereas all my time prior was only in BHS, after this my time got

split. Maybe too pick a bandwidth. All the businesses needed a similar

piece of work doing. So there was a lot to do. I heard earlier that you

were quite hands-on in terms of vision. So what you are saying

really is that probably be involvement in Arcadia, that took

more of your time? My time got split. Not an excuse, just a fact.

It is not easy to find great people to run these businesses, not easy to

find World Championship Chief Executive is to operate the

business. We tested a few people along the way, but there was a very

loyal staff base. Everybody was trying hard. A long-stay of people

staying in the jobs. Maybe we didn't get the business, it didn't change,

it got caught in that mainstream... And I guess it is that unique

selling point and thinking of. At what point did it then become clear

to you that it wasn't going to be the success you'd hoped at the

start? I think after the discussion over nine when it came into Arcadia

and we injected into the space, started injecting some of the

Arcadia brands to trade in cyberspace, it looked like possibly

that could be a changing format that would help bring more people through

the doors, and we have successfully done that in other department

stores, where we take space in other peoples department stores our

brands. Possibly that could be the start of something fresh. At a much

later stage we introduced food into the business, and the way the food

market was developing, I'd had many conversations with different

supermarkets, but they were all sort of running off with their own

expansion. Looking at taking one of the food retailers in. Is it fair to

say the sites were often secondary sites with yellow I think

using your colleague Michelle Bulls words, in hindsight, unfortunately

the underlying portfolio, even before we bought it, had some very

poor property deals done over the years. It had leases signed that

were 40, 50 years, too expensive. In the early days we made them work.

And if I galloped forward, if I could, to what happened, when they

did the CVA, 45 landlords agreed to take a 75% drop in rent, voted for

it. That will give you some idea. That 40, 45 stores were presented

?30 million of loss. That block just started to erode the business. Just

too expensive for their locations. If I could interrupt, Michelle's

point early on about the first moves made to you to sell, and what you

said about the difficulty of moving Topp into a new territory, that

would have been the time to sell -- moving BHS. If we were allowed to

use hindsight, 2002 would have been a good time to sell it. Amanda? Just

following on from that, really, just so that I am really clear, following

the acquisition of Arcadia, we heard that some services were paid for,

could you explain to me how BHS was linked to Arcadia? To be honest with

you, so we don't have any accidents, I am more than happy, whoever wants

to go and see, you can go and see all the relationship between the

back office, I don't want to discuss it because it is not my forte. I

don't have that detail here to explain line by line. I'd much

rather get my back office finance team to sit with you and I'm happy,

whoever wants to see the numbers, line by line, no problem. I can't

get into that because I might give you some wrong information and I

don't want to. Just a flavour of whether they were interlinked? The

answer is it was a service provider. Outside of taking space in the

stores which it paid for, it was a service provider. I'm happy to

provide you with any detail you want in relation to the services and how

they were charged. That would be things like human resources?

Everything, finance, ran the back office, IT, online. All the back

office. Like a third-party provider. And when it came to finally thinking

this is no longer... In your mind it was no longer a viable retail

operation, is that what made you decide? It was a combination of,

probably we'd let it run too long. We'd put a lot of money into it

already. And felt that our efforts in terms of operating a business

with 27,000 people across 30 countries and the 27,000 people are

purely UK, right? We've got jobs across the country, across the group

probably 3000 stores. I think it was just decided that we'd invested

enough money and we would try to find a solution. Richard? I think it

is another parliamentary colleague who has got out his death stare. I'm

sorry if it has an overdue. I lived in my previous career in business

and in politics, if you are doing something important, you should look

someone straight in the eye. Now that we are talking, we can look at

each other. Why do we have companies? What's the

goal, the aim? You tell me. You tell me. What is the purpose of having a

company? To run a business. Is if to make money? To employ people? To do

something creative? It's a combination of many things. Not just

one thing. OK. Can I go to numbers? Perhaps we can get some comfort on

that. I think I have the numbers correct for the period 2,000-2004.

You said over that period of ?537 million of cash was generated over

that period? This's the EB IT DA. You say that but cash? That's

normally cash. Is it right ?440 million was paid out in deaf denned?

I have ?423 million. I have that too. That was just a trick question,

then? I tricked myself! To see if I was paying attention? Over that

period, ?102 million debt was repaid. You then relievied the

business? As I said, over the period of the four years, the business

started with ?111 million of debt. In 2003 it had ?10 million in the

bang. In 2003/4 it had ?111 million in debt. See if I have it right. I

know you have. ?537 million of cash generated. ?404 million by the

business. ?414 million... ?423 million. That left 21 million net of

cash generated, probably less than that now. Sorry, it has on my sheet

here. Deaf tends deLaird of 483 but 380 paid. 537 of cash in, 380 out.

How much of deaf denned was repaid? Over what period? Over that period,

2,000-2004? 123450 sorry? You relievied the business. I gave you

the four years. 111, 2.2, ?10 million in the bang. The impression

is this was a cash-generative business... You're watching Sir

Philip green give evidence to the business select committee and the

work and pensions select committee about the collapse of BHS after he

sold it last year for ?1. We heard a lot of chronology, really. There was

one moment where Sir Philip green did tell off a member of the select

committee for staring at him. "Would you mind not staring at me". We've

heard from Sir Philip green about what he did invest in BHS over the

years. This is crucial. It refutes the allegations we heard last week

from the current Chief Executive Darren Topp. They talked about

Philip Green not investing in the business in its rarityer years which

contributed to the decline of the business. Philip Green saying he

spent over ?250 million in stores and invested heavily in the

business. That prompted the question why sell for ?1. He said, we simply

came to the decision we'd run it too long. Put money in already. We were

running 27,000 staff. Shops in 30 countries. 3,000 stories. We simply

foment we'd invested enough. Let's go back to his evidence. I'd...

Regardless of how we end, I think you should come and visit our

building. We have 1500 or 1600 people working in Central London.

27,000 people. It's a very, very, very well-run machine. It produces

very accurate and you're more than welcome to come and visit, come and

see. This isn't made up. There is a lot of people doing this every day.

Sir Philip, every witness we've had up to now have presented the image

to us that you're the guy who calls the shots. So I'm pleased to hear

with the team... Let me, please. You can't run 3,000 stores with one

person. Let me say this to you. You can write this down. I have never

moved or made one penny from any bank account of our company. I

wouldn't even know where to phone to actually get any money out of our

bank. I don't sign for money. I don't deal with it. There is a

process in the company on a day-to-day basis where there's a lot

of people who have accountability and responsibility and are allowed

to act. While we're sit can here during this session, in the next

four hours, there will be people in our building writing anything

between ?50 million and 100 million purchase orders they don't need

sign-off on. That's their job. That's the day job. In these big

businesses, you have to allow people the freedom to operate. That's what

happens in our business. We have a competent finance team. Each of the

businesses has its own finance director, managing director, HR

director and they're run as independent businesses that have to

produce proper data otherwise we couldn't survive. This is the

problem Mr Chappel came up against. You were saying you wouldn't know

how to take money out of the company, he wanted to do it all the

time and was told he shouldn't? I think that's... He tried to destroy

your system immediately and got into trouble for doing so? That's a

different conversation. Just on that second bit of the question my

colleague Amanda, you talk about ?254 million of capital invested

over 2005-09. Unskiier and another ?100 million of Capex. Didn't seem

to do any good? Unfortunately, no. You're the supremo of retail. Why

couldn't you make any difference? If it was easy, everyone would be doing

it. That's why you had this title? That you did know, Sir Philip?

People trusted you to know. You were called the king of retail. You were

the king because the others didn't know how to do it. If you look at

the retail business across the high streets, Amanda here said she has

been in the retail business a long time. You get good years and bad

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

of online didn't exist. Today, it's billions of pounds. Other companies

managed to modify and change even though they were more exposed to

online refail than your business? OK. You mentioned, maybe this will

be my final question. Maybe, without wishing to be rude, in your next

career you should try retail. I don't think I'd be very good at it,

I know that. On arcadia group, you mentioned to Amanda about your time

being split. On the business select committee last week, we had Mike

Ashley who used the, I'm sure it's a met foreor analogy, he started off

in an inflatable dinghy, became an oil tanker and it became too big for

him. Is that what happened to you? I think, basically, I think there's

two different pieces without ma I canning any excuses. Instructly, BHS

structurally was in the wrong shape in terms of the wrong leases,

stores, some of the space was too big. They are very expensive to

modernise. You're talking 40-40,000 peat. It could be ?3-5 million a

building. The economics in this marketplace of doing that were not

right. If it would have been possible, if you said to me what

would have been utopia, you would have down-sized this a fee years

ago. It is what Michelle started with, the early days when you first

took over BHS, you said the funding structure was fairly conservative

compared to other businesses. We then discussed the sale of a number

of properties to Carmen, this offshore entity owned by your

family. That was a big transaction. You say you have a big team behind

you who do all the nuts and bolts.s whose idea was that transaction? Was

it yours or did that come from one of your professional advisers that a

company of this size might have had? I don't know. It's a big

transaction. I don't remember. In those days, thing banks were fairly

active in this type of... This wasn't an abnormal trade. Would it

have been one of your bangers would have gone, Sir Philip, you really

should should be doing this? I don't want to pass it to somebody else.

It's too long ago. That transaction when these properties were sold

would have created a profit in the BHS accounts, that would have been

distributable. That profit could have formed part of the dividends

you received there after. I don't think that's the case. The actual

profit from the number I saw somewhere, I think the profit...

I'm just thinking... It was a small number. I think the profit for BHS

itself from the historical base was ?10 million or ?11 million from...

There after, of course, the rent paid by BHS would have gone to

Carmen offshore? It would have gone to the landlord. Yeah, OK. Thank

you. When we are looking at the profits generated and taken out, Sir

Philip, our audit trail seems to suggest your wife, quite a

legitimate owner, is offshore. Does she share those accounts with you?

Which accounts? The accounts for her company into which quite a lot of

these profits were paid. Do you ever look at them? No. You don't, thank

you. Let's move to the pensions. We're going to ask you a number of

fairly specific questions about the pension fund. I'd like to

concentrate on the early years. I just wondered how you describe the

course of the BHS pension fund under your stewardship? There's three

different pieces. Going back to your colleague next to you, in hindsight,

the reality is if the world were perfect, they should have spoken to

us about dealing with this on day one or even our auditors should have

spoken to us about dealing with it on day one or we wouldn't be here.

When was day one? When we bout it. -- bought it. Rightly or wrongly, I

don't now how it works in other companies, the trustees are very,

very independent from the company. I would say that the lady you met

here, Margaret, if I met her three times in ten years, that would be

have been a lot. Right. Three or four times. That's all I ever saw

her. We never had any meetings with her. You're looking puzzled, those

were the facts. She recalled meeting you? I saw her in 2008/9. To

understand what the investments were, where the they were. What sort

of safety. Maybe the discon sect, I think probably, whether it is just

our company, but the disconnect and total self-contained pension team,

trustees, and all the people who looked after the pension, totally

self-contained with us. They didn't discuss with us their strategy. We

were not involved in any way, shape or form in what they did. ? Day one,

if we're talking about day one, it was in surplus? Day one was a long

time ago. Jeremy, you're looking puzzled? I seem to recall maybe my

correction's at fault. I remember Margaret saying you helped with her

investment strategy? I had one, maybe two discussions with her. I

was never involved, excuse me, I was never involved at all, ever, in what

they did, where they invested. I was not a part, never a beneficiary,

didn't get involved. Maybe should have done. Maybe the disconnect is

another reason we're here. I'd like you to look at some time, she's a

lovely lady, maybe at some point, I didn't bring it with me today, there

were very, very, very substantial fees paid to advisers from a sheet I

saw, which I didn't bring with, but in the early days, I recall seeing a

figure on the sheet of about ?650,000 paid to pension advisers.

By 2,0005/6 that was north of ?1.5 million. It is a sheet maybe you

could have a look at. I'm not blaming her. There were very

substantial monies paid to third party advisers that grew. I remember

at one point grew over ?2 million a year, whoever they were paying.

Nothing to do with us. Nothing recommended from us at all. That was

a waste of money? Your words. All I'm saying is, sadly, nobody ever

came to us and said... I'm happy to take both ways. There wasn't the

right dialogue and right communication. If there was, we

wouldn't be here. Who do you think is responsible for

the deficit? I think that's... You are not trying to blame Margaret? I

didn't say that. What I'm saying is a combination of I think poor

communication on both sides. She had a lot of advisers. None of them ever

came to see us and said, here's a way you could do this, we could do a

buyout or do something, that never came to the table. I'm happy to say

we should have been doing that and it didn't happen. I'm not blaming

anybody. I'm just saying conversations that maybe should have

happened did not. Thank you, Karen? For the record you believe human the

trustee three times over that period? What I would rather say to

you, I am saying to you there were very, very few conversations or

discussions with any of the trustees. And that is speaking for

you as an individual but also for your chief operating officer? I

don't believe any of our operating... I don't think they

were. So when Paul Coakley was writing a little bit later in

response to letters from Margaret Downs in 2006 and he says "The

company keeps the pension arrangements under 3-point review"

what does that mean? He was the finance director. Whatever

conversation he was having, I was not involved in. I'm not blaming him

but I wasn't involved. I'm just trying to understand the distinction

between you as an individual, the company, and the chief operating

officer acting on your behalf? Everybody has this impression so let

me try one more time, you cannot run businesses of this size doing

everything yourself. You have other people doing their jobs. I can't

tell you every single conversation everybody had. I'm happy to look you

in the eye and say to you I was not actively involved in pension

conversations. Maybe if I had have been we wouldn't all be sitting here

but I wasn't. But before however, whatever, we are here. We can spend

all week if you like but we can't trade backwards, we can trade

forward. But we also need to understand what happened. So you

were explaining what happened to the pension fund under your stewardship

and you would say that poor two-way communication was one thing? I would

say so, yes, yes. And there were others? I just think... Do you

recall what the situation was with the pension fund when you took over

at the beginning? I understand that there was a ?43 million surplus in

2000. Do you recall what the state of the Puncheon fund was in 2006 --

pension fund, in the years after substantial dividends were taken

from the company? I don't think that's very fair. With due respect

I've just told you, we put back ?750 million. You go and find anybody

else, please find somebody who lends ?250 million, doesn't seize the

assets, and lends it interest-free, it doesn't happen. Having got it

wrong, we try to get it right by reinvesting. That didn't work. We

didn't run away. I think what I'd like to do, if I may, so we can

maybe fast forward a little, I have two letters with me, three letters.

Can we return, do you mind very much if we return to that, it would be

helpful just to talk through the sequence of events that happened in

the early years. To be clear, you are not disputing this, we went from

a ?43 million surplus to a ?7 million deficit. Can I just say, I

was not in charge, at any point, of the pension fund. I was not a

trustee, I was never in the room. Why did Margaret not come to see us

when it was ?43 million in surplus and say let's sell it to an

insurance company? She had all these advisers. She didn't. You are

ultimately accountable. You may not be responsible but surely you are

ultimately accountable for overseeing all of the businesses

that you are the head of, and that included the pensions fund? Where is

this conversation taking us? I'm trying to point out the difference

between accountability and responsibility. Responsibility is

the day-to-day detail, but accountability, who ultimately is

accountable? We are at the Olympics, they have put the bar up and now you

want to jump 12 feet, do you want to go to the pension issue? What I'm

saying is, I'm happy at whatever point we want to come to it but I

think it is unfair or unreasonable to attack me without letting me be

able to respond. And I have letters and I'm happy to debate the pension

and I'm not running away, I'm sitting here. But you cannot

suddenly tell me I am accountable. Let's come to debate the issue. If

you are not, who is? I'm sorry, but am I able to respond? Karen has the

question. It is slightly surprise into me and maybe others, everybody

that has come has said you are this great figure, Napoleon figure, and I

am slightly shocked that you are not this figure, these people got it

wrong, you didn't make all the big decisions. This terrible pension

deficit was sprung on you and you should have noticed it but didn't.

We are a climate I is in ourselves to different imagery. Fine. At what

I want to also make sure we leave here with is that we keep reading on

the daily basis, I have not run away. I haven't tried to run away. I

think I'm going to hopefully be able to satisfy you, right? All this

press I'm reading every day that's just really outrageous. OK? And

pretty rude. Because if we get to the facts. Karen, the question is

with you. To go back, we agreed the pension fund went from a 43 million

surplus to a 7 million deficit, and at the point the deficit was

emerging, around the same time that you were taking the dividends, and

there was an employer contribution holiday in that pension fund. Then

the trustees were making representations to PHS to support

the scheme in late 2005, do you recall the response? I don't recall

at all. I was not involved in that. You were not involved? No. Do you

know whether PHS rejected requests for securities in support of

contributions during the time of that deficit when it was growing in

the second part of the decade? No. You had the knowledge of what was

happening to the deficit or the pension fund? I'm afraid to say no.

Other than when we got to the debate in, whenever it was, we got to the

23 year conversation, and at that point there was a conversation and

I'm happy to apologise. I should have been involved earlier but I

wasn't. When I look at the numbers in front of me it was very easily

resolvable much earlier but for whatever reason it was not resolved.

The only time I did get involved was in 12 when we had this conversation

around the 10 million a year which you will be familiar with. We will

come onto that in a second. I was not involved in it. I cannot answer

you because I was not involved. You can ask me as many questions as you

like, this was not on my table to deal with, I'm sorry. So there's no

question you can answer about any aspect of the pension fund between

2000, and 2012? I would say virtually no is the answer. When did

things get onto your table? Either when people bring them to me, I even

need to know or ask a question about something, strategic things we are

doing. The business, there's a lot of freedom to operate on a day to

day business. And therefore, rightly or wrongly, the two ladies here are

running away, but rightly or wrongly this was not on my table. I read

somewhere, and I quite admired this, that when you took over from BHS,

you were looking at contracts and you ordered a new contractor coat

hangers to save the business ?400,000, it was that level of

detail you were involved in, was that true? Yes, when you take over a

business, you look at basic fundamental things, what I call

pretty basic. I wouldn't do that physically but it would be something

that may have come up and say, phone at three other guys or something,

right? Or it may have been two years in when Arcadia came in, and we

compared what they were paying to what BHS was paying, things like

that. Somebody did this with coat hangers, nobody did this drawing

your attention to the importance of the growing deficit on the pensions?

Unfortunately no they didn't. How does this... You're opening remarks

said you'd been intimately involved with every aspect of your business

is over 40 years, how does that reconcile with what you are saying

about nobody coming to you with the pension deficit? What I think is

easy is this, I don't want to blame anybody else, right? It's my fault.

The answer is it wasn't dealt with, we are here and we have to find a

solution. It's not my style to blame anybody else. I'm still a little

unclear about the extent to which you were involved. I've just

explained to you. I have no involvement and I cannot answer you.

There was a meeting of the Board of Directors of taffeta in January 2010

that you were present at. Lets see how good you are, do you remember

what you are doing on the 26th of January 2010 at 11am. Know I don't.

You are asking questions that are impossible to answer. If I was

giving evidence to a committee on the history of pensions I might have

a fresh my memory. Let me respond to that, if I may. We supposedly have

provided so far to the pension, I think you have picked this bit up,

your lady here is sort of suggesting I should know about a board meeting

in whenever it was. We have so far provided 70,000 documents to the

regulator. I don't know who's reading them all, but if they do

read them on that they are the sorts of things they are asking. But

meanwhile nobody has had a conversation about any questions to

do with the documentation that has been provided. But you can ask me

all day, I can't answer you. I'm just going to try a little bit more.

The tablature investment board minutes show that the 2009 recovery

plan began at 20 years and eventually turned into a 12 and a

half year plan. In what year? This was in 2010 when the other to board

minutes showed negotiations around the 2009 pension recovery. Were you

aware of those negotiations? Well, I must have been aware but I was not

involved. Even though you were not present at the board meeting? With

respect, you are asking me about a board meeting in isolation of

thousands of meetings. I don't know. If it says I was there, I was there.

If you ask me a board meeting a year ago, on a specific day, I'm not

going to remember what was said. If somebody brings me the note it might

refer to my memory but I come from member seven years ago, sorry. Do

you feel as a sponsoring employer that you should, in retrospect, have

been more aware of and involved in the deficit recovery plans during

those years? What I want to try to avoid this morning is, I'm a big

boy, to blame anybody else, OK? If I wanted to pass the blame I think I

could spend the next 20 minutes blaming a lot of other people. So we

look at the information on these sheets of paper. There are a lot of

other people that have questions to answer. I am here and happy to be

accountable. I am here to represent our companies, right? I am not a

liar. I will not represent things I cannot tell you about. What I can

tell you, which I want to be able to tell you, is to discuss the pension.

But with respect, you are pressing me for things I cannot answer you.

Just probing the point. You can probe all you like. I'm not hiding,

I just can't answer you. It would help, though... The core point on

the pensions is how much is going in and I cannot believe you were

indifferent as to whether ?10 million was going out of the

business or ?30 million was going out to support the pension fund. You

can't have been indifferent, you must have had a view.

Sir, when I'm looking at these figures now... I don't mean at the

time, I'm talking about now. I'm looking at the sheet of paper in

front of me. I'm not looking to blame anyone else. I'm here. I

haven't brought 20 people with me to share the blame. I'm looking here at

pension contributions made in one, two, three, four, five. That's why I

don't want to get into the debate. That would be unfair. Somebody,

whether it was the trustees, wherever, somebody was asleep at the

wheel. If you look at contributions the company was being asked for, in

the early days we'd one auditor. I think it's unfair, not where I want

to go. If I show you the sheet I'm looking at and recite you the

numbers, the pension contribution in 1 in 3

#4 was 5.6. If somebody came to us from the trusteeses saying we want

?10 million, it would have been a ten minute debate. For whatever

reason, it didn't happen. The minutes of the trustees show the

trustees were regularly making representations to BHS to increase

contributions. We know that letter was received. Your chief operating

officer replied. Mam, they were paid ?650,000 to ?1.5 million. Nobody of

those people who were their representatives or advisers ever

came to see me, will you make that from 3 to five or five to eight. It

would have taken ten minutes. On your other point, Ian's anxious to

look at the fees people earn. We can't trade back. When you look at

this, obviously, the whole issue's beyond sad and ridiculously stupid.

Whether we want to have a debate and ask the auditors or ask whoever, I

don't want to go there... Sir Philip, we understand that. We might

want to. We are very critical about them taking their fees without

giving different advice. I'm hopefully showing to you I'm not

trying to blame. It would be very easy to blame it on somebody else.

Right. Respectfully, all of this stuff got signed off by auditors.

Everybody keeps coming to the dividends. They were signed off with

distributable reeverybodies. Whatever had to be the compliance,

I'm annoyed byself, trust me, I want to go and have a look, understand

some of this trustee stuff in more detail. I know it's very late in the

day. We are here, hopefully we'll leave here with some goodwill to get

where we need to get. There have been some bad mistakes made in these

early days. I don't think the representatives who represented the

trustees can have no responsiblibility or the auditor.

I'm happy to take the blame. We're here, I'm not running away passing

it to somebody else. We're not going to look at them at this moment, the

fees of the advisers. We are going to look at that. My grandmother used

to say there are a whole group of people in this world who get money

for old rope. There seems to be a lot of people in this whole activity

who drew very substantial fees and whose advice looks good then or now.

Can we finish, the last question, Sir Philip, this is into the 2012

recovery plan. That was, as you know, a 23-year plan. A successively

large recovery plan for pensions. You were, as I understand it,

refusing to shift from a contribution of ?10 million a year.

Could you tell us what that ?10 million contribution was based on?

At the time, the company was not making any money. It was getting

loans. And I think until we got the company to a better recovery

position, it looked like basically of the funds the company was

borrowing, ?10 million was in number that wasn't affordable but a minimum

number that would be paid. From some information, I don't know whether it

is or not accurate, on some research yesterday I was provided, I think in

2009, the Post Office succeeded in presenting a 38-year recovery plan.

But 23 years is excessive. May not be the only one that's ever

happened? I was presented yesterday in 2009, whether it is accurate or

not, Mr Wright's just checking it... Post Office had a tax post behind

it. Did the ?10 million, was the calculated to reflect the pension

deficit or driven entirely by what you felt was affordable? It is not

about what I felt. It was decided at the time, based on the funds BHS had

to borrow, ?10 million of that would be used to pay the contribution, to

start to pay the contribution. As we know, again, I'm not trying to take

you off track, the whole basis of pension fund calculation and

valuation Mod is the is about guilts and so on. If you go this morning

where currently the whole world's upside down, if you look at guilt

yields, in the last 79 hours or 96 hours, guilt yields have materially

changed again due to the uncertainty of what's going on. With respect, if

they move half a point, no... It's a valid point but a different point.

If they move half a point, that could be up to ?150 million

difference in the right way. The Metology used to make the

calculation... I'm interested in the calculation made. Did the trustees

ask for more than ?10 million? You must have been a mind reader in your

previous life. Where you? I might have been. She is in this life. A

very successful politician. All right. I wasn't being rude. You have

such a wonderful member of what happened on 11th June eight years

ago. It was I was an employer I might have refreshed my memory on

the topic are. I think respectfully, that's unreasonable. I can't read

thousands and thousands of bits of paper. You're focussed on a specific

thing. Looking at a board minute. I've got enough papers on my desk

already. I want to try to get back to work after this. I've been out of

work for four weeks. My last question. Was the size of the

contribution in any way driven by the fact, according to the trustee

minx, the private company status of BHS will the, these payments were

being met by Sir Philip and his family? There was a conversation

based on how the company was performing with the operating board.

It was deemed, at that moment in time based on the losses and

funding, that ?10 million a year, hoping the business would improve,

would be the starting point. That ?10 million was coming from where?

Coming from a loan. You said you have really no responsibility for

the pension scheme and so on. I haven't, with respect. I've said

quite the opposite to that. Could you therefore clarify, what do you

think the responsibilities of the scheme sponsor are towards the

pension scheme? I'm not following the question, sorry are. All right.

You controlled BHS. BHS was the sponsor for the BHS pension scheme.

What do you believe the responsibilities of the sponsor

towards the scheme are? Am I missing something? Probably! But I'll ask it

again. You took control of BHS. BHS had a pension scheme which you, as

the controller of the company, inherited. What do you think the

responsibilities of the corporate, the scheme's sponsor, towards the

pension scheme were? To make the contributions. To make sure that the

pension scheme kept going and that the pensions for the members of the

scheme were paid. Would that be a reasonable summary.

Responsibilities? I think that's what we took on when we started.

Right. So you accepted when you bought BHS, the responsibility of

the scheme sponsor for the pension scheme. Correct? You said earlier

are, it's incredibly important when you buy a company that the people

there have to trust you. What was the average salary, roughly, during

your time of an employee at BHS? The payroll for 1

# 2, #3, 3

#4, was ?103 million. There were 13,600 people. So you could

calculate that out. From there, the payroll rose to 110, 119, 128. And

the number of people employed went up up to 14,500, to 15,000. Your

maths is famously good and no doubt better than mine. Is an average

salary of ?17,000 roughly the figure? If you say so. I'm asking

you. I just gave you the payroll number and the number of people.

Let's say it was around there. Traditionally, in a defined pensions

pen fit scheme, the deal is the #e78 employee contributes 5% of salary.

The employ 10%. On an accrual rate of 60th, after 30 years service, a

person who had been working with BHS for all their working life would

have been able to retire with an occupational pension from the BHS

pension scheme of half their salary. So, if the average salary was around

?17,000, they could expect in return to have a pension of about ?8,500.

That was broadly the responsibility which you inherited. Is that

correct? If you say so. Askar Ren mentioned earlier are, when you

inherited the pension scheme, both of two schemes, the smaller one for

the management and the much larger for around 25,000 employees in 2,000

were in surplus. That is to say, there was an additional amount in

the pension scheme in the as sets over and above the liabilities.

Therefore, the corporate BHS hadn't paid anything in for three years. In

2,000, BHS agreed to start paying contributions but at fairly low

levels, less than 4% of the earnings. Under half what most

defined benefit pension scheme employers were paying into their

employees pension scheme. By 2005, the entire surplus was gone. There

was an opportunity for many pension schemes in similar situations to

plug the gap at a time when interest rates were quite low. What's your

recollection, I understand it is 11 years ago, of whether in 2005, when

the pension scheme went into deficit for the first time, do you recall

any discussions between either you and Dr Downes, the chairman or your

finance director hour the corporate could fulfil its pledge to the

scheme by plugging that gap. No. Not something that crossed your mind? It

wasn't Ka question of crossing my mind. It wasn't se something I was

dealing with on a regular basis. Yeah, but you accepted you had a

responsibility for the pension scheme which had about 25,000

members at that time? I'm listening to you. In 2009, you closed the

pension scheme to accruals. That means no employee could attract

additional rights from the pension scheme. But the deficit had

increased considerably? Again, in 2009, do you have any recollection

of discussions with the trustees or finance director about what the

corporate, the scheme's sponsor should be doing to plug what was a

growing deficit at that stage? No. And by 2012, the next triannual

review that all pension schemes have, there was a discussion in the

pension scheme about what the corporate would do, and that was the

time when BHS decided to offer ?10 million a year to help plug the gap,

which was a 23 year project, double the normal link. Of course that was

a significant amount of money, no doubt from BHS, at a time when the

company was losing money, so you would surely have been involved at

that stage? Yes. And Karen asked earlier how you arrived at the

figure of ?10 million. Did you start by saying my responsibility to over

20,000 pensioners mean that I have to keep this scheme going and I have

to plug the gap, and how much do I need to do that? With respect, you

are asking me questions impossible for me to answer. I don't want to

make up an answer. If I look at the line I am looking at, which I am

happy to share with you, and I don't want to pass this to other people,

but there has clearly been and there has to be some accountability,

respectfully, on the account of the trustees. Looking at the line in

front of me, there have been some terrible, stupid, stupid, idiotic

mistakes made. Thank you, can I bring it back to my question. Let me

give you a response, if I may. OK, but please do answer the question.

When you looked at the scheme deficit and assessed how much was

needed to plug the gap. When was this? In 2012. I think without

remembering all the detail, however we arrived at the conversation,

there was a conversation had that they were looking for a ?10 million

a year contribution. I think based on where the business was at that

time, it was ultimately agreed it would be ?10 million a year as a

contribution. What is interesting about this, is that ?10 million a

year from the company into the pension scheme to help plug the gap,

but at the same time you went to see the pensions minister to discuss an

increase in the pensions levy to the protection fund which I think at

that time was about ?2 million, so considerably less than the amount

you were offering to plug the gap, and hugely less than the deficit

which by then was about ?137 million. There is a slight

disconnect. Don't worry. Let me help you. The pensions minister recalled

that meeting in 2012, and he asked you about the corporate

responsibility for the pension scheme, and he said you had assured

him there was no risk of the BHS pension scheme falling into the

protection fund. Funds "Would be found from elsewhere", is that

correct? I don't have a note of the meeting I had with Mr Webb. He seems

to have a letter now he produced eight years later. If that is what

he has written to you, that is what he has written. You are not

suggesting he is lying? If he's got a note of it, good. I don't know

what the conversation was. The conversation around the levy is

somewhat different to how it got represented previously. On the

commitment to the pension scheme? Why can't I answer the question? You

are not getting the right information. You are answering my

question slowly. Let me finish answering then. You have. I haven't

answered it. I want to answer the question. All. Fine. We received a

letter, I believe, moving the levy from ?200,000 around to about ?3

million, right? I called or arrange to have a meeting with Mr

Rubenstein, who you saw, and asked, why is the levy certainly going from

X to why? Anyway, it is something to do with how the company's rating is,

and so on. If there is really no solution here, and we really want ?3

million, which I believe was the conversation I had with Mr Webb, why

don't you let us put the ?3 million into the pension fund? If there is

no other way to go, let's make the ?10 million, ?30 million. What is

interesting about that, you had an interesting discussion of what

effectively amounts to an increase of ?2.7 million, but the wider

deficit of around ?137 million didn't seem to attract a great deal

of your time or attention. Can you confirm to us today that you said to

Steve Webb there was no risk of the scheme falling into... I just told

you. You are trying to put words in my mouth. I'm offering you his

recollection. The answer is I don't know. You don't remember whether he

made a promise to him or anybody else including the chairman of

pension trustees that funds would be found to plug the gap? Which bit of

don't remember is difficult for you to listen to? I think that is quite

clear. I do not recall what got said at that meeting. If he has sent you

a letter and you have a letter, that's what his recollection is. I'm

saying I recall I thought I had a meeting with Mr Rubenstein query in

the level of the levy, and said why can't we pay more money into the

fund as opposed to paying the levy? I do think I had a conversation with

Mr Webb thereafter. I asked Paul Budge the other day who I think came

with me to the meeting and his recollection of the meeting was

somewhat different to the letter Mr Webb wrote. For the record this is

an opportunity for you to restate what you earlier said was your

commitment and understanding of the corporate scheme sponsored's

commitment to the pension scheme. In those words there was no risk of the

pension scheme falling into the DBA, funds would be found. Where you are

trying to take me is not going to happen. I'm offering you the

opportunity. Thank you very much. To confirm to everybody that you had

the commitment in 2012. Thank you for the commitment. You don't want

to take it? I'm happy to address and whenever the chairman is ready, I'm

happy to address the whole pension situation, without wishing to be

rude, I am happy to address the pension issue. And hopefully we will

be able to leave the committee pretty clear on where I think we

are, and happy to do that whenever you are ready. Like I said, I have

one or two letters and I can also tell you about conversations I have

had. Hopefully that will ban get everybody where they want to be.

That is the next question. He is trying to make me answer things I

cannot answer and force me to give him the answer he wants, I am not

going to. I am trying to lead through the history. You are trying

to lead me to say things I am not going to say. Allow me to finish. I

am trying to lead through the history of the pension scheme so

that everybody including the members of the pension scheme can understand

exactly what happened and where we are today. Can I plead to you, sir.

Can we go to the pension scheme therefore instead of this man

beating me up which is unnecessary, right? I am here voluntarily and I'm

happy to address the pension issue. At whatever time you are ready

during this meeting. Me being bullied into saying something I'm

not going to say. I want to address it in terms of how we have been

dealing with it, and I think it is important you hear all the things

that have been going on and not going on at the same time. I think

it will give everybody a much clearer picture. I want Richard to

finish and then I will open up. Can we move to project for, which was an

attempt by Topp to resolve the pension crisis. -- by BHS. What was

the key underlying motivation of the project? I apologise, I am happy to

answer, I just want to understand, if we are going to address the

pension issue, I think I need to give you the total context of where

we have been on the pension, I am not ignoring your question but I

want to answer it in the context of what is going on. We started in

2000, we have moved forward to 2013. Blues we shouldn't start in

isolation with attempt Project Thor, in isolation that will not give you

what you want. It will not take long, and it will cover Project Thor

as well, and we will hopefully arrive where you want to in respect

to the pension. Would you allow me to do that? It would helpful if it

is relatively brief so we can focus on questions other people want to

know the answer to. I am offering to basically talk to you on the pension

issue, right? If you could address the core issue of the motivation for

Project Thor, that would be helpful. Sir Philip, do tell us now what you

are now proposing. And Richard is presumably right, it is the same

motives that you have had with Project Thor, saving the pension

scheme. If I could, so, we engaged lawyers at the end of 13, early 14,

we had spent a substantial amount of money exploring a conversation,

having got to a place we did not want to be, and the fundamentals

have changed, things have got worse short-term. And so it was

recommended to us that a project like Project Thor, which basically

quote unquote would give a better solution than PBS. I'm not a pension

expert so we were getting educated. I said OK, go away and do whatever

the work was. They went off and met with Chris Martin, chairman of the

trustees, who came after Marlborough Downs, and this dialogue I think

went on for several months while they were developing a plan. We

could get the chronology of all of it, but I think about June, July

time, they presented something to the regulator that didn't get, from

my memory, didn't get rejected immediately. The regulator does take

rather a long time to respond to anything which I will come to in a

minute. And I think this sort of went back and forward and eventually

the project got presented in September which I think you heard a

week or so ago. And then we were explaining the underlying, it needed

contribution from the landlords, from the suppliers and various other

aspects. And basically it was felt that was probably the wrong moment,

rightly or wrongly, to go and try to get a discount from the landlord,

suppliers, we would pick it up. There was debate, the regular cast

for it to be withdrawn. My advisers say they asked it to be paused.

Either which way there was a project there on the table. Come January

2015, where we looks to pick up the project began, and questioned how we

would continue with it, during this time, I brought this letter with

me... After this, you will come back to those key times. That is what I

would like to asks Philip about when he finished this statement. This was

an e-mail 48 hours ago from Chris Martin. "Thank You for the call on

Tuesday, I welcome the opportunity to continue the dialogue we have had

since January 2014 during the time you and Arcadia expressed the desire

to benefit members above PBF compensation. The trustees remain

committed to considering proposals and look forward to hearing from

you. ". In addition I have spoken in the last 48 hours to Malcolm Weir,

who is the PPF officer running the case. He will happily confirm to the

committee that I have been in regular dialogue with him. He has

been in regular dialogue with us over the past months been to our

offices, and is fully well aware that we have been committed to

trying to find a solution. He has been extreme helpful. Unfortunately

we hit a brick call when it comes to trying to arrive at the regulator.

Was he willing to sign off? What I would say to you is this, there were

very encouraging signs that Mr Malcolm Weir felt a proposal like

Thor. It is more generous than PPF, isn't it? He was encouraged and felt

that was a better solution. He was basically happy to advance it. The

last occasion he came to our office, there was going to be a meeting next

day between the head of the PPF and the regulator and we never heard

another word. People who tell that normally say

the word but in the sentence. Local and to answer all your bits of paper

in a minute. I believe representatives of this committee

should be looking to be a chess --BHS and she said they had been

looking certain the since made 2013. We have never had a phone call or a

meeting with and June 2000 16. A summary was to get together with us

and she says she knew still the end of the year and subsequently I

attempted to contact Baroness Altman and my team have told me not to

interfere, they are dealing with it and I thought the boss sat above the

team and I could not get any engagement. In terms of moving

forward, there was one meeting took place with a leg later and the PPF

together which didn't go very well and would it two hours and 45

minutes. We should have filmed at. When was that meeting? Probably

March. Of this year. And since then we have gone nowhere. But we have

been working away to see if that is wait to to Rome. -- away. -- a way.

By a strange quirk of fate, which was not something I was going to

discuss this morning, in the last week the regulator made a phone

call. Maybe somebody had bought them a telephone. They phoned up seeing

they would be interested in having a meeting and maybe Mr Field you have

been instrumental in waking them up. There has been a dialogue with other

adviser and I think to three phone calls over the last seven days which

offend a little bit of coincidence. I said basically yesterday that due

to the factor was here today it was not appropriate to try and have a

meeting 24 hours before coming to see you but that does seem to be

light at the end of the tunnel and I just want to respond to Mr Graham so