Sir Philip Green vs Select committee

[avinalarf]

I knew Green in the 1970/80's and ran a similar business and we mixed in the same business circles.
There was a clique of guys that always sailed either very close or in some cases over the legal boundaries,not suggesting Sir Green did anything illegal.
Some of these guys did very well financially and their names are often in the trade press and newspapers.
Let me add I never got involved in the shinanigans,not my style.
My frustration is that the legislation regarding financial malpractice is either not in place or toothless when it is.
The real blame lies with the great and the good which allows morally bankrupt business people to evade any legal retribution.
The biggest financial scandal of recent times is the banking fiasco which has ruined the lives and expectations of many hard working decent families that tried to do "the right thing" and have been truly fecked.
What Green has done was to take advantage of a MORALLY BANKRUPT SYSTEM .
This is not only a moral issue,it is not an environment in which a business can, long term, flourish.
I stress Long Term.
It is relatively easy to build a well funded business that, whilst growing,produces good results,it is a different thing to consistently produce those results without long term reinvestment and strategic planning.

[Murcielago_Boy]

sidicks said:

In effect the sponsor does have unlimited liability as they have responsibility to pay the benefit promises made. In practice people don't live for ever.

The company sponsor can influence the trustees on the investment strategy to ensure that they are not unduly exposed to markets 'going to hell'.

Talking as a business owner, if I was PG in 2002 on the brink of purchasing BHS, would it have been possible to "offload" the pension scheme to a third party and thereby capping BHS's liabilities to £X amount per year?

[johnwilliams77]

avinalarf said:

I knew Green in the 1970/80's and ran a similar business and we mixed in the same business circles.
There was a clique of guys that always sailed either very close or in some cases over the legal boundaries,not suggesting Sir Green did anything illegal.
Some of these guys did very well financially and their names are often in the trade press and newspapers.
Let me add I never got involved in the shinanigans,not my style.
My frustration is that the legislation regarding financial malpractice is either not in place or toothless when it is.
The real blame lies with the great and the good which allows morally bankrupt business people to evade any legal retribution.
The biggest financial scandal of recent times is the banking fiasco which has ruined the lives and expectations of many hard working decent families that tried to do "the right thing" and have been truly fecked.
What Green has done was to take advantage of a MORALLY BANKRUPT SYSTEM .
This is not only a moral issue,it is not an environment in which a business can, long term, flourish.
I stress Long Term.
It is relatively easy to build a well funded business that, whilst growing,produces good results,it is a different thing to consistently produce those results without long term reinvestment and strategic planning.

You still got your Aston

[avinalarf]

Murcielago_Boy said:

Talking as a business owner, if I was PG in 2002 on the brink of purchasing BHS, would it have been possible to "offload" the pension scheme to a third party and thereby capping BHS's liabilities to £X amount per year?

Year 2000 the ps had a surplus of £43 mil
Year 2015 the ps had a deficit of £345 mil
Green chose not to invest enough money to keep the ps solvent.
The money was there he chose not to invest in the ps.

[avinalarf]

johnwilliams77 said:

You still got your Aston

Yes.

[Countdown]

Murcielago_Boy said:

Talking as a business owner, if I was PG in 2002 on the brink of purchasing BHS, would it have been possible to "offload" the pension scheme to a third party and thereby capping BHS's liabilities to £X amount per year?

It's possible to buy insurance policies which cover the costs of DB pension schemes but they cost a fortune. It's usually cheaper to run them yourself.

[sidicks]

Murcielago_Boy said:

Talking as a business owner, if I was PG in 2002 on the brink of purchasing BHS, would it have been possible to "offload" the pension scheme to a third party and thereby capping BHS's liabilities to £X amount per year?

Yes, that's the one-off £570m buy-out cost quoted in some of the articles.

[sidicks]

avinalarf said:

Year 2000 the ps had a surplus of £43 mil
Year 2015 the ps had a deficit of £345 mil
Green chose not to invest enough money to keep the ps solvent.
The money was there he chose not to invest in the ps.

To be fair he paid all the contributions in accordance with what was agreed with the Trustees at the time.

[sidicks]

Countdown said:

It's possible to buy insurance policies which cover the costs of DB pension schemes but they cost a fortune. It's usually cheaper to run them yourself.

Agreed - 'expected to be cheaper', due to contingency margins and regulatory capital built into the insurance pricing, but can often be more expensive if things don't work out as expected!

[Countdown]

sidicks said:

To be fair he paid all the contributions in accordance with what was agreed with the Trustees at the time.

Apparently the Trustees asked for more but he refused to pay. So any agreement was basically "take it or leave it". It does demonstrate how little power Trustees have over an Employer.

[avinalarf]

The formula used is well known and not unique.
Buy a successful company, sell off property to your wife/partner/Russian totty.
Leaseback properties to company,you win twice,property value increases,rental income,easy peasy.
Many other ways to asset strip a company until it is no longer a viable proposition.
The clever man always leaves enough in before the company is screwed completely,so he can sell it on with a fair chance of survival with new investment.
Some people are just tooooo greedy.....don't give a feck......or can't keep all the balls in the air long enough.
Of course I'm not suggesting any of this relates to Green.

[sidicks]

Countdown said:

Apparently the Trustees asked for more but he refused to pay. So any agreement was basically "take it or leave it". It does demonstrate how little power Trustees have over an Employer.

They don't have to a to the Sponsor's decision - they can escalate to the appropriate channels!

[Murcielago_Boy]

sidicks said:

To be fair he paid all the contributions in accordance with what was agreed with the Trustees at the time.

Then in what way has he not met his obligations?

[Murcielago_Boy]

avinalarf said:

Year 2000 the ps had a surplus of £43 mil
Year 2015 the ps had a deficit of £345 mil
Green chose not to invest enough money to keep the ps solvent.
The money was there he chose not to invest in the ps.

I think your view is incorrect and/or simplifies the issue.
PS could become underfunded even if he was to make the requisite investments through no fault of his.

I'm not saying that's what happened but he's not solely liable for the underfunding.

[Murcielago_Boy]

Private Equity VS Phil Green

More or less do the same thing don't they?
PE houses hardly "create value" do they?

[Digga]

avinalarf said:

This is not only a moral issue,it is not an environment in which a business can, long term, flourish.
I stress Long Term.

There's a lot about the UK business environment that's short-termist and there's a lot of legislation that really discourages both entrepreneurship and long term investment. So having even a small number of participants operating outside of the law, without redress, is particularly damaging.

[avinalarf]

Murcielago_Boy said:

avinalarf said:

Year 2000 the ps had a surplus of £43 mil
Year 2015 the ps had a deficit of £345 mil
Green chose not to invest enough money to keep the ps solvent.
The money was there he chose not to invest in the ps.

I think your view is incorrect and/or simplifies the issue.
PS could become underfunded even if he was to make the requisite investments through no fault of his.

I'm not saying that's what happened but he's not solely liable for the underfunding.

It's not bleeding homework,I made a brief comment of fact.
The ps deficit is not unique to BHS and other companies have pension deficits but no or very little investment in this scheme
eventhough the company for some years was in a position to alleviate some of the deficit.
It was not until 2012 by which time the deficit had ballooned that any solution was considered,by then,too late as by then BHS was starting to have problems problems.

[avinalarf]

sidicks said:

avinalarf said:

Year 2000 the ps had a surplus of £43 mil
Year 2015 the ps had a deficit of £345 mil
Green chose not to invest enough money to keep the ps solvent.
The money was there he chose not to invest in the ps.

To be fair he paid all the contributions in accordance with what was agreed with the Trustees at the time.

l
So what does that tell you ?

[sidicks]

Murcielago_Boy said:

I think your view is incorrect and/or simplifies the issue.
PS could become underfunded even if he was to make the requisite investments through no fault of his.

I'm not saying that's what happened but he's not solely liable for the underfunding.

1. As the business owner he was solely liable for the scheme deficit
2. The cause of much of the deficit was market movements rather than not meeting his agreed scheme payments.

[Zigster]

sidicks said:

avinalarf said:

Year 2000 the ps had a surplus of £43 mil
Year 2015 the ps had a deficit of £345 mil
Green chose not to invest enough money to keep the ps solvent.
The money was there he chose not to invest in the ps.

To be fair he paid all the contributions in accordance with what was agreed with the Trustees at the time.

But with someone like Philip Green, I would guess that the contributions were the bare minimum the Trustees could possibly have accepted rather than what they would have liked him to have paid.