Sir Philip Green vs Select committee

[Digga]

crankedup said:

Have lessons been learnt since the Maxwell scandal, seems not

Be fair. They've got hold of the fker before he toppled off the back of a yacht, haven't they?

[treetops]

Tina how is your revising going?

As the owner I'm sure you know exactly what's been going on...

Time this charade of an arrangement was called in.

[sidicks]

crankedup said:

Have lessons been learnt since the Maxwell scandal, seems not

You don't understand the difference between outright fraud and an employer going bust before it can repair a scheme deficit?

[JNW1]

Greenmantle said:

JNW1 said:

I've been watching some of this and frankly Philip Green doesn't come across at all well IMO. The number of things he doesn't remember - or claims to have no knowledge of - frankly beggars belief for a man in his position and at one stage he didn't even seem to understand the question "what do you think the responsibilities of the sponsor of a company pension scheme are?". Although he's now making noises about making sure "everything will be sorted" (whatever his definition of that is!) I'm left with the distinct impression he'd have slid out from under altogether had it not been for all the public scrutiny he's getting...

Phil is just using the same approach that Bob Diamond used when he was asked to appear. It seemed to have worked for Bob.

John

Don't know about worked for Bob, he ended-up having to resign because of things that had been happening on his watch! In the case of BHS, though, I'm actually left with the niggling feeling that it's even worse as I suspect Green was more aware of what was happening than he was prepared to let-on today; at the end of the session he made great play about how honest he is but I certainly wouldn't buy a used car from him!

[crankedup]

Digga said:

crankedup said:

Have lessons been learnt since the Maxwell scandal, seems not

Be fair. They've got hold of the fker before he toppled off the back of a yacht, haven't they?

Hmmmmm, not really, sir Phil has been on one of his boats since BHS collapsed. Sir Phil hasn't jumped off his boat like 'doing a Maxwell' . Nothing much has changed since Maxwell, seems to me that CEO/ company owner can plunder the company for all its worth and wander off leaving a trail of misery behind. In this case off loaded to a punter without a pause. This is the same chap lauded to be the Prince of the High Street, going gets a bit tougher and it's a pack of cards with the boss saying it's not my fault. All sounding to familier to other business bosses getting it catastrophically wrong.

[crankedup]

sidicks said:

crankedup said:

Have lessons been learnt since the Maxwell scandal, seems not

You don't understand the difference between outright fraud and an employer going bust before it can repair a scheme deficit?[/

Yes I understand the difference, but.

Who said anything about fraud? I'm saying serious consequences falling onto the workers pension schemes. Maxwell was certainly fraud, Green, it is known that he was extracting vast sums from the company for his own pocket via divi's.
So, not fraud, at the same time he wasn't aware of the black hole in his workers pensions scheme and clearly not knowing of the basic facts regarding this problem why wouldn't he continue to draw money out of the company for himself, after all boats don't come cheap. In fairness he was suggesting today that he may be able to assist warding the pensions black hole.

[Murcielago_Boy]

I've read that the BHS Pension was in surplus as recently as 2012! IF, and that's a big IF, that's true, then I honestly believe he bears limited responsibility for this debacle.

Don't forget, that like Mike Ashley owning Sports Direct, this company was his. He owned all the equity and it was run to make a profit for HIM (/his wife) - that's it. That's what companies exist to do. Make a profit for shareholders. BHS was his asset to strip. (if indeed he did strip it). If you want to burn your house down, you can do - it's yours to do so. If Mike Ashley wants to run Newcastle Utd into the ground, it's his train set - maybe the fans should get together to buy the club - and remember, no-one is forcing the employees at Sports Direct to take jobs there. There are plenty of other companies that wanted to create jobs in Shirebrook right....err...?

Now I'm not saying that shafting 11,000 employees by asset stripping isn't unethical. It IS. But in this country it's not illegal either. So unless the government legislates to prevent this kind action then this will continue...

And if the pension scheme was in surplus in 2012 then it doesn't matter if he had extracted $10TRILLION dollars as dividends beforehand, he was well within his moral rights to do so.
By the same logic, he could put a full £571m to plug the deficit today. Tomorrow that pension scheme's value could collapse - would PG still be responsible?

Just a thought ladies and gents. Just a thought.

Edited by Murcielago_Boy on Wednesday 15th June 17:29

[Ali G]

I'm a little hazy in recalling company law - but it is something along these lines...

Exposure to liability for a shareholder in a limited company is limited to the value of the shares held. Directors, however, may be held accountable for the offence of fraudulent or negligent trading. A director deliberately running a company into the ground could be found guilty of negligent trading (and perhaps the more serious offence of fraudulent trading)- part of the reason for this is the limited liability they may personally be exposed to from defaulting on company debts owed to creditors in the event of liquidation.

If you want to run an operation into the ground for personal gane - then make it an unlimited partnership and suffer the personal exposure to irate creditors.

Something like that....

[crankedup]

My beef is should bosses be allowed, in a legal sense,to run business in this way. That is big business with so many workers and pension schemes involved. I would like to see Company Boards that disallow asset stripping, but then my World would like to see more fairness in many issues.

[johnfm]

FredClogs said:

The sooner we state jailing ****s like this the better. They wouldn't and don't stand for this stuff in most other developed countries, the guy is little more than a common thief, in fact he's lower than a common thief.

String him up.

Top knee jerking and virtue signalling.

On what basis?

What have you established Green has done with BHS? With the pension funds?

What, exactly, has he stolen.

[sidicks]

Murcielago_Boy said:

I've read that the BHS Pension was in surplus as recently as 2012! IF, and that's a big IF, that's true, then I honestly believe he bears limited responsibility for this debacle.

Not true.

Very high level:
- There was a funding deficit of circa £230m in 2012
- This has increased to around £300m in 2016

In order to buy out the liability with an insurer, the shortfall is closer to £570m.

(This is because insurers have to take a much more prudent approach in terms of a) asset strategy and b) prudent margins for risk and uncertainty).

[sidicks]

johnfm said:

Top knee jerking and virtue signalling.

On what basis?

What have you established Green has done with BHS? With the pension funds?

What, exactly, has he stolen.

Nothing. It's just the usual ill-informed nonsense from the usual suspects.

[Ali G]

There may be a little discomfort in the level of divis paid out to shareholders, whilst the pension fund generated an increasing defecit. The level of obfuscation presented in the hearing by Sir PG could lead one to suspect that he was aware of this at the time (and may have made comercial decisions to squeaze the pension cost to the smallest level palatable, on the basis that the defecit could be made up in the future), but only full disclosure of all papers may reveal that.

However, there now appears to be an appetite to make amends, and the the more cynical may suggesst that this is the cost of too much bad p.r. and a damage limitation exercise.

[JNW1]

Murcielago_Boy said:

I've read that the BHS Pension was in surplus as recently as 2012! IF, and that's a big IF, that's true, then I honestly believe he bears limited responsibility for this debacle.

Don't forget, that like Mike Ashley owning Sports Direct, this company was his. He owned all the equity and it was run to make a profit for HIM (/his wife) - that's it. That's what companies exist to do. Make a profit for shareholders. BHS was his asset to strip. (if indeed he did strip it). If you want to burn your house down, you can do - it's yours to do so. If Mike Ashley wants to run Newcastle Utd into the ground, it's his train set - maybe the fans should get together to buy the club - and remember, no-one is forcing the employees at Sports Direct to take jobs there. There are plenty of other companies that wanted to create jobs in Shirebrook right....err...?

Now I'm not saying that shafting 11,000 employees by asset stripping isn't unethical. It IS. But in this country it's not illegal either. So unless the government legislates to prevent this kind action then this will continue...

And if the pension scheme was in surplus in 2012 then it doesn't matter if he had extracted $10TRILLION dollars as dividends beforehand, he was well within his moral rights to do so.
By the same logic, he could put a full £571m to plug the deficit today. Tomorrow that pension scheme's value could collapse - would PG still be responsible?

Just a thought ladies and gents. Just a thought.

Edited by Murcielago_Boy on Wednesday 15th June 17:29

I'm not convinced you're right about the status of the pension funds. I think there were two schemes (one for the majority of the workers, the other for senior management) and both were in surplus at the time of acquisition of BHS by Philip Green's organisation back in 2000. However, I think they were in deficit even before the financial crisis hit in 2008 and despite the schemes being closed to further contributions in 2009 the deficit had got even worse by 2012. Regulations require the funding of defined benefit pension schemes to be reviewed every 3 years and if there's a deficit the company and the trustees need to put a recovery plan in place; Green looked to do that for BHS albeit the proposal was for the recovery plan to take over 20 years (which I understand is more than double the norm in these situations). During the time the pension funds were moving from surplus to deficit substantial dividends were paid to shareholders with Green and his family being major beneficiaries.

Legally has Green done anything wrong? Almost certainly not (he's probably too smart to get caught like that) but is it morally right to be creaming-off substantial dividends whilst allowing pension schemes to become under-funded? Not in my book and I think that's also why the regulator is wanting to understand the nature of some of the appropriations which took place in the years following Green's takeover of BHS. Hopefully for the sake of his reputation Green will do the right thing by the pensioners of BHS but I have to say I'm not convinced he'd have done anything at all had it not been for the public outcry that's taken place in recent weeks...

[johnfm]

sidicks said:

Murcielago_Boy said:

I've read that the BHS Pension was in surplus as recently as 2012! IF, and that's a big IF, that's true, then I honestly believe he bears limited responsibility for this debacle.

Not true.

Very high level:
- There was a funding deficit of circa £230m in 2012
- This has increased to around £300m in 2016

In order to buy out the liability with an insurer, the shortfall is closer to £570m.

(This is because insurers have to take a much more prudent approach in terms of a) asset strategy and b) prudent margins for risk and uncertainty).

So, there isn't a "570m pension deficit", but that is the liability buy out figure.

[Murcielago_Boy]

sidicks said:

Not true.

Very high level:
- There was a funding deficit of circa £230m in 2012
- This has increased to around £300m in 2016

In order to buy out the liability with an insurer, the shortfall is closer to £570m.

(This is because insurers have to take a much more prudent approach in terms of a) asset strategy and b) prudent margins for risk and uncertainty).

OK. Understood.
I own a company and if my staff's "Employer NI contributions + PAYE tax" not kept flawlessly up to date every month HMRC will jump down my throat and close us.

Can someone elaborate on the legal obligations a company has to make "contributions" to the Employee Pension Scheme? Surely you need to make an adequate contribution?
But surely also, if the value of the scheme falls, you can't be held responsible to the extent where you must plug the gap?

Anyone know?

(also understood the point about Directors "neglecting their fiduciary duty to the company" - but maybe Phil Green could have closed it down, done a pre-pack and started again to save the employees - wouldn't be ethically any better as now you leave creditors/suppliers/ hung out to dry) thoughts?

[johnfm]

Ali G said:

There may be a little discomfort in the level of divis paid out to shareholders, whilst the pension fund generated an increasing defecit. The level of obfuscation presented in the hearing by Sir PG could lead one to suspect that he was aware of this at the time (and may have made comercial decisions to squeaze the pension cost to the smallest level palatable, on the basis that the defecit could be made up in the future), but only full disclosure of all papers may reveal that.

However, there now appears to be an appetite to make amends, and the the more cynical may suggesst that this is the cost of too much bad p.r. and a damage limitation exercise.

What obfuscation?

He said the pension was manage by the pension trustees. Presumably, it is the pension trustees' job to manage the fund, have it audited and calculate what needs to be paid into the fund to ensure it can meet its liabilities to its members.

If trustees don't do that properly, i.e., they ask for £5m, but it turns out it needed £10m, who carries that can?

Is the head of every company now expected to second guess all their management team, advisors, accountants, lawyers, pension trustees because 'the buck stops with them'?

Where is the line for best and reasonable belief to be drawn?

[Murcielago_Boy]

JNW1 said:

Murcielago_Boy said:

I've read that the BHS Pension was in surplus as recently as 2012! IF, and that's a big IF, that's true, then I honestly believe he bears limited responsibility for this debacle.

Don't forget, that like Mike Ashley owning Sports Direct, this company was his. He owned all the equity and it was run to make a profit for HIM (/his wife) - that's it. That's what companies exist to do. Make a profit for shareholders. BHS was his asset to strip. (if indeed he did strip it). If you want to burn your house down, you can do - it's yours to do so. If Mike Ashley wants to run Newcastle Utd into the ground, it's his train set - maybe the fans should get together to buy the club - and remember, no-one is forcing the employees at Sports Direct to take jobs there. There are plenty of other companies that wanted to create jobs in Shirebrook right....err...?

Now I'm not saying that shafting 11,000 employees by asset stripping isn't unethical. It IS. But in this country it's not illegal either. So unless the government legislates to prevent this kind action then this will continue...

And if the pension scheme was in surplus in 2012 then it doesn't matter if he had extracted $10TRILLION dollars as dividends beforehand, he was well within his moral rights to do so.
By the same logic, he could put a full £571m to plug the deficit today. Tomorrow that pension scheme's value could collapse - would PG still be responsible?

Just a thought ladies and gents. Just a thought.

Edited by Murcielago_Boy on Wednesday 15th June 17:29

I'm not convinced you're right about the status of the pension funds. I think there were two schemes (one for the majority of the workers, the other for senior management) and both were in surplus at the time of acquisition of BHS by Philip Green's organisation back in 2000. However, I think they were in deficit even before the financial crisis hit in 2008 and despite the schemes being closed to further contributions in 2009 the deficit had got even worse by 2012. Regulations require the funding of defined benefit pension schemes to be reviewed every 3 years and if there's a deficit the company and the trustees need to put a recovery plan in place; Green looked to do that for BHS albeit the proposal was for the recovery plan to take over 20 years (which I understand is more than double the norm in these situations). During the time the pension funds were moving from surplus to deficit substantial dividends were paid to shareholders with Green and his family being major beneficiaries.

Legally has Green done anything wrong? Almost certainly not (he's probably too smart to get caught like that) but is it morally right to be creaming-off substantial dividends whilst allowing pension schemes to become under-funded? Not in my book and I think that's also why the regulator is wanting to understand the nature of some of the appropriations which took place in the years following Green's takeover of BHS. Hopefully for the sake of his reputation Green will do the right thing by the pensioners of BHS but I have to say I'm not convinced he'd have done anything at all had it not been for the public outcry that's taken place in recent weeks...

Ok - this explains a lot. Great post.

20 years seems reasonable given the extend of the 2008 economic meltdown TBH no?
Also, why didn't the bloody trustees put up a fuss at the time the dividends were paid? They can't have been doing their jobs properly!

Legally, he's done nothing wrong.
Company makes profit. He pays dividend.
Trustees don't do their job. No defined legal obligation to top up pension fund. It doesn't get contributed to.
PLUS he gets unlucky with the meltdown which widens the deficit.

This is purely a moral/ethics debate then. Not a legal one.
Interesting.
IF PG wants to salvage his reputation he'll hand over a few hundred million. But the trustees deserve a massive roasting too.

[wc98]

Murcielago_Boy said:

I've read that the BHS Pension was in surplus as recently as 2012! IF, and that's a big IF, that's true, then I honestly believe he bears limited responsibility for this debacle.

Don't forget, that like Mike Ashley owning Sports Direct, this company was his. He owned all the equity and it was run to make a profit for HIM (/his wife) - that's it. That's what companies exist to do. Make a profit for shareholders. BHS was his asset to strip. (if indeed he did strip it). If you want to burn your house down, you can do - it's yours to do so. If Mike Ashley wants to run Newcastle Utd into the ground, it's his train set - maybe the fans should get together to buy the club - and remember, no-one is forcing the employees at Sports Direct to take jobs there. There are plenty of other companies that wanted to create jobs in Shirebrook right....err...?

Now I'm not saying that shafting 11,000 employees by asset stripping isn't unethical. It IS. But in this country it's not illegal either. So unless the government legislates to prevent this kind action then this will continue...

And if the pension scheme was in surplus in 2012 then it doesn't matter if he had extracted $10TRILLION dollars as dividends beforehand, he was well within his moral rights to do so.
By the same logic, he could put a full £571m to plug the deficit today. Tomorrow that pension scheme's value could collapse - would PG still be responsible?

Just a thought ladies and gents. Just a thought.

Edited by Murcielago_Boy on Wednesday 15th June 17:29

all well and good apart from the fact the british tax payer (again) paid out 367 million quid of family tax credits to bhs employees during the time the slithering green removed 400 million from the business. industry captain my arse , just another well connected spiv on the take.

[Ali G]

The pension fund is a 'trust' held for the beneficiaries, and the primary responsibilty for ensuring the rights of the beneficiaries resides with the trustees.

An actuarial review needs to be completed every three years (for a db scheme) to advise on surplus/deficit and levels of contribution required to meet the benefits as set out in the pension trust deeds.

The pension fund auditors (independent of any opinion provided by company auditors) are required to provide an independent opinion as to the entire pension fund position (fund value, actuarial value, membership, pensions in payment etc.) annually, provided to the trustees.

If there is a disparity in the level of funding provided by the company and that required by the fund, then they (the trustees) eed to make their voices heard.

The company auditors, as part of thei annual audit, and to provide 'true and fair' should be reviewing funding requirements and reporting any discrepancies.

If CEO/FD do not wish to meet company funding requirements, then actuaries, trustees, auditors may come under pressure and legal advice sought by all parties.